Why Your Employer's Contributions Don't Match Your 3% Kiwisaver

Posted on 14 May 2019

Unless agreed otherwise within your individual employment agreement, employers are required to match your regular Kiwisaver contributions to a value up to 3% of gross salary as long as you are eligible to receive those payments.

Since the minimum employee contribution rate is 3%, for all intents and purposes this means that (unless exempted) your employer will pay 3% into your Kiwisaver in addition to the amount that is being paid through your regular salary contributions.

To many employees it then comes as a shock to see their employer contributions consistently lower than expected on their kiwisaver statement. Why is that?


There are two main reasons why the amounts received from your employer in your kiwisaver account don't match the amounts that have come from your salary contributions:

1. Tax is deducted from employer contributions

Employer kiwisaver contributions are subject to Employer Superannuation Contribution Tax (ESCT), so although the employer pays 3% towards kiwisaver, the amount received into your account will be less than that due to the deduction of ESCT tax.

Since employees also pay tax (PAYE) it's easy to presume that the employer and employee payments should still match, however employee contributions are calculated on the basis of gross income but paid out of net income.

Example for $100,000 salary using 2019-2020 tax rates:

Gross salary:$100,000
PAYE & ACC:$25,310
Kiwisaver @3% of gross income:$3,000 (employee contribution to kiwisaver)
Cash In Hand$71,690.00
ECST rate33%
Approx. Net employer contribution$2010

2. The timing of employer contributions may not match

Employers pay their kiwisaver contributions to IRD in bulk along with other payments such as PAYE tax, and student loan payments. The timing of the distributions from IRD to your kiwisaver provider likely won't match the timing of employee contributions since IRD have to perform a different set of calculations, checks and balances for each payment type. At times there may also be delays in when you employer files their returns or payments with IRD.

Are there any circumstances under which an employer might be exempt from making KiwiSaver contributions?

Employers are generally required to contribute to their employees' KiwiSaver accounts if the employees are eligible and contributing themselves. However, there may be exceptions under certain circumstances, such as if the employee is under 18 years old, over the age of eligibility for New Zealand Superannuation, or if they are on a savings suspension.

Additionally, some employment agreements might have specific terms regarding KiwiSaver contributions. Both employers and employees need to be aware of the conditions outlined in their employment contracts and KiwiSaver regulations.

Eligibility to receive Employer Contributions to Kiwisaver

Employers are not required to make compulsory contributions to KiwiSaver for ineligible employees. Voluntary contributions may still be offered to those employees.

Ineligible employee criteria:

  • under 18 years of age
  • over 65 years of age and have been a member of KiwiSaver for five years
  • already receiving payments into another registered superannuation scheme from that employer
  • not contributing sufficient employee contributions

How can you ensure that your KiwiSaver contributions are being correctly calculated and paid by your employer?

Employees should regularly review their pay slips to ensure that the correct amount of KiwiSaver contributions is being deducted and that their employer is making the matching contributions.

But to ensure that employers are actually making those payments, you need check your KiwiSaver account statements to verify that the contributions are being correctly deposited. Note that there can be delays of a few weeks or even a couple of months before the payments show up.

If you have a myIR login with IRD then you can also login there and check the "Contributions summary" under the "KiwiSaver member" area.

When things go wrong

It is quite normal for there to be delays of 3 months or more from the time of you receiving your salary until the time that all kiwisaver payments relating to that salary are received by your kiwisaver provider.

If you are concerned that your kiwisaver payments are still wrong after several months then you can phone the IRD Kiwisaver team on 0800 KIWISAVER.

The content of this page is provided for informational purposes only and does not constitute financial advice. Please check with your accountant or IRD to clarify your exact tax position.

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