What is Kiwisaver?
KiwiSaver is a long-term savings scheme in New Zealand that was setup in July 2007 with the aim to improve New Zealanders' retirement savings.
KiwiSaver was setup as a voluntary savings scheme, with regular contributions being made automatically along with an employee's PAYE tax.
In addition to the financial security of making regular retirement savings, there are several incentives to invest in KiwiSaver such as:
- an annual Government contribution of up to $521.43
(previously called member tax credits)
- compulsory employer contributions of up to 3% for contributing members
- ability to withdraw most savings early for the purchase of a first home if certain conditions are met
What are Kiwisaver Employee Contribution Rates?
As of April 2019, Kiwisaver members can elect any of the following contribution rates:
Kiwisaver contributions for $50,000 income
Kiwisaver contributions for $100,000 income
How are Kiwisaver payments made?
For employees, Kiwisaver contributions will be automatically deducted from their pay according to their chosen contribution rate.
Contributions will be submitted to IRD by employers on behalf of their employees, along with an additional employer contribution for qualifying employees (effectively, most employees between the ages of 18 and 65 who are not on a savings suspension). IRD then pass the full payments on to the member's nominated Kiwisaver provider, along with a small amount of interest if there are any delays.
Self-employed people may make voluntary payments into their Kiwisaver fund by submitting a payment to IRD with tax type "KSS" through internet banking, or by arranging to make a one-off or regular payment directly to their Kiwisaver fund provider.
Rates and examples on this page are accurate as of the time of writing but should not be considered as financial advice. Kiwisaver rules and regulations do change over time. Visit kiwisaver.govt.nz for more information.
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.
Two new employee contribution rates were added to Kiwisaver on 1 April 2019: 6% and 10% have been added as options for Kiwisaver members to choose, making the full line-up 3%, 4%, 6%, 8% and 10%.
Removal of the employer superannuation contribution tax (ESCT) exemption on 1 April 2012 will mean less cash in your KiwiSaver account.