KiwiSaver

KiwiSaver is a contributory pension savings scheme introduced by New Zealand Govt., but are we using it to its full potential? As an employer, would you happen to know your legal responsibilities regarding KiwiSaver? And do you know how both you and your employees can benefit from it? You must contribute to your employees’ KiwiSaver accounts as a business owner. Keeping up with these contributions ensures your staff’s financial security and helps you avoid penalties for not meeting your legal obligations. It's not just your employees who benefit—there are advantages for you. But where should you begin? KiwiSaver for Your Employees KiwiSaver is a voluntary retirement savings scheme. Employees can contribute a portion of their salary or wages, and employers, along with the government, contribute too. The government adds over $500 annually, and employers must contribute at least 3% of an employee’s gross salary. With these contributions, your employees have a strong incentive to join KiwiSaver, and it’s your role as their employer to make sure everything runs smoothly. Legal Obligations As An Employer Under the KiwiSaver Act 2006, employers must make regular KiwiSaver deductions and contributions every payday. Administering KiwiSaver as part of payroll management includes the following responsibilities: Sign up new staff to KiwiSaver and respond to opt-out requests. Provide information to Inland Revenue about your employee. Provide information packs about KiwiSaver to employees. Make compulsory employer contributions during payroll. Deduct KiwiSaver contributions from employee’s pay. Work out and administer appropriate tax (ESCT) reductions. Keep good records of contribution rates, PAYE deductions, and any saving suspensions or opt-out requests.

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New and Existing KiwiSaver Members When a new employee joins, they may already be enrolled in KiwiSaver from a previous job or may need to sign up. Within seven days of their start date, you as the employer must provide information on how to join KiwiSaver or opt-out. While KiwiSaver isn’t mandatory, it’s automatic, so new employees must opt-out if they don’t want to stay in the scheme. They have eight weeks after enrolling to decide if they want to continue. As an employer, you need to send the completed forms and details to Inland Revenue before the employee’s first payday. More information on the required paperwork can be found on the IRD website. Even if an employee chooses to opt-out, you still need to deduct contributions from their pay at their chosen rate until you receive official confirmation from Inland Revenue on how to proceed. Your Own KiwiSaver Many self-employed business owners focus on their business, and setting up a KiwiSaver for themselves may not be a priority. In fact, only 40% of self-employed workers contribute to KiwiSaver, compared to 73% of employees. Benefits for Self-Employed/Business Owners There are benefits to having your own KiwiSaver. While you won’t receive employer contributions (since you’re your own boss), the government still contributes. For every dollar you contribute to your KiwiSaver, the government adds 50 cents, up to a maximum of $521 per year. To get the full benefit, you only need to save about $20 a week. If you’re still unsure or find it challenging to balance your business and KiwiSaver responsibilities, we’re here to help. Contact our team today for a free Discovery Session, where we’ll guide you and your business through setting up and managing KiwiSaver schemes. Let’s save some time and money together.

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