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Your pay and contributions

KiwiSaver is designed to make regular saving easy. If you earn a salary or wage your contributions are deducted from your pay.

If you don't earn a salary or wage you agree with your scheme provider how much you're going to contribute.

In this section find out about:


Note

Personal tax rates are changing from 1 October 2008 and you can find out more about these changes in News and updates. If you're a KiwiSaver member your KiwiSaver contributions won't be affected by these changes and will remain the same.

What is the contribution rate?

If you're ... then your contribution rate is ...

an employee
  • your choice of either 4% or 8%, calculated on your gross pay

    or

  • if you and your employer agree, up until March 2010 your contribution can be made up of 2% from your gross pay and a 2% contribution from your employer.
Note

For KiwiSaver contributions your gross pay is your total salary, wages or allowances, including bonuses, commission, extra salary, overtime, gratuities and any other kind of remuneration, before tax.

This doesn't include redundancy payments, the cost of accommodation overseas or overseas cost of living expenses and allowances. Some types of grants, pensions and benefits are also excluded.

not an employee - for example, if you're:

  • self-employed
  • a contractor
  • not working
  • receiving a benefit

set out in the contract you have with your scheme provider - there may be:

  • a minimum annual sum
  • specific payment periods that apply, such as monthly or quarterly.

Can you change your contribution rate?

If you're ... then you can change your contribution rate ...

an employee
  • to either 4% or 8%
    • by filling in a KiwiSaver deduction form (KS2) indicating your new rate, and giving it to your employer
    • only once every three months, unless your employer agrees to a shorter timeframe.

not an employee

as agreed directly with your scheme provider.

How do you pay your contributions?

If you're ... then your contributions ...

an employee

are deducted from your pay, and sent to us by your employer.

Note:

If you have more than one job when you join KiwiSaver, you can choose which jobs you'll contribute from. This could be one or more of your jobs.


We must hold your contributions for three months from the date of your first contribution, then we transfer them to your scheme provider.

This transfer won't happen immediately after you have made three months of contributions because of the delay caused by:

  • the standard tax and KiwiSaver contribution deduction process that requires employers to pass your contributions to us, either once or twice a month
  • the time we need to process the tax deductions and KiwiSaver contributions they send us.

We pay interest on the contributions we hold. The interest rate is currently 5.36%.

When we pass your contributions to your scheme provider for the first time, we also pay them:

  • the interest, together with
  • the $1,000 government kick-start, and
  • the first $20 fee subsidy.
Note:

If your employer doesn't pass on your contribution to us, we'll still make the payment to your scheme provider (up to a maximum of 8% of your gross pay) and follow up with your employer.


not earning a salary or a wage
  • may be made directly to your scheme provider

    or

  • can be made through us:
    • use the "Pay tax" option through your internet banking service - you need to include:
      • your IRD number
      • tax type "KSS"
      • period "0" (zero), or
    • set up an automatic payment using an Automatic payment authority (IR586), or
    • pay over the counter at any Westpac branch, or
    • send us a cheque with a completed payment slip.
Note:

You will need to wait for your enrolment to be confirmed before you set up an automatic payment.

Can you make extra contributions (lump sum payments)?

You can make voluntary lump sum payments whenever you like, either:

  • directly to your scheme provider

    or

  • through us:
    • choose the "Pay tax" option on your internet banking service - you need to include:
      • your IRD number,
      • the tax type "KSS", and
      • period "0" (zero), or
    • pay over the counter at any Westpac branch, or
    • send a cheque to us with a completed payment slip.
Important:

Once you've made a lump sum payment it's "locked in" until you're eligible to withdraw your savings.

Are your contributions taxable?

Your contributions are deducted from your gross pay, which is taxed.

Example:

If you earned $100 and had 4% ($4) KiwiSaver contributions deducted, you would still pay tax on the full $100 that you earned.

Your investment earnings (the interest earned on your contributions) are taxed by your scheme provider before being paid into your KiwiSaver account.

Any withdrawals you make will not be taxed.

Employer contributions

Compulsory contributions

From your first whole pay period after 1 April 2008 your employer will be required to make compulsory contributions to your KiwiSaver scheme if:

  • you're 18 or over, and
  • contributions are being deducted from your salary and wages (with some exceptions).
Example 1:

If you're paid weekly on a Wednesday for the previous week, you won't receive an employer contribution for the period from 26 March 2008 to 1 April 2008 (paid on Wednesday 2 April 2008). You will receive your first employer contribution on 9 April 2008 for the period from 2 April 2008 to 8 April 2008.


Example 2:

If you're paid fortnightly on a Tuesday for the previous fortnight, you won't receive an employer contribution for the period from 25 March 2008 to 7 April 2008 (paid on Tuesday 8 April 2008). You will receive your first employer contribution on 22 April 2008 for the period from 8 April 2008 to 21 April 2008.

Your employer will start by paying an extra 1% of what you earn to your KiwiSaver scheme, rising by 1% each year up to a maximum of 4% by 2011. Here's a quick breakdown of the compulsory employer contributions:

Date from % of your gross salary or wage
1 April 2008 1%
1 April 2009 2%
1 April 2010 3%
1 April 2011 4%

There are some exceptions, for example, if you already receive an employer contribution to another superannuation scheme.

The Government will give your employer up to $20 a week to help them meet the cost of making contributions, so in the first year it won't cost your employer anything if you earn less than $104,000 a year.

Initially, your employer's compulsory contributions must be on top of your regular pay. This means that if you have agreed to a total remuneration package, the compulsory employer contributions must be paid on top of that package. Your take-home pay should not be reduced because your employer is making a compulsory contribution.

Over time, employer contributions may effectively form part of the wage negotiation process, which will be for you and your employer to agree mutually. The Employment Relations Act 2000 requires all employers to act in good faith in their negotiation process and employment agreements.

ACC and paid parental leave

If you're a KiwiSaver member receiving ACC or paid parental leave, you won't receive employer contributions from ACC or us.

Sharing contributions

If your employer agrees, their contribution can count towards your minimum contribution of 4%. This means that:

  • until 31 March 2010 you could contribute 2%, matched by your employer contributing 2%
  • from April 2010 you would both need to contribute 3%, and
  • from April 2011 onwards you would both need to contribute 4%, as set out below:
Year Minimum employee contribution Minimum employer contribution Total contribution

1 April 2008 to 31 March 2010

2%

2%

 4%

1 April 2010 to 31 March 2011

3%

3%

 6%

1 April 2011 onwards

4%

4%

 8%

You will need to discuss and agree to this option with your employer before you can start paying less than the minimum.

How can you view your contributions online?

You can view your contributions online by registering for our personalised information service "Manage my KiwiSaver".

To use this service you need an Inland Revenue user ID and password. This will give you access to online services on both the KiwiSaver and Inland Revenue websites, including our secure email facility.

If you don't already have a user ID and password, you can register online.

Note

If you're an employee, the KiwiSaver contributions shown in your online account may differ from those shown on your payslip. This is because even if you're paid weekly or fortnightly, employers file their payroll information with us monthly, after they've deducted tax and KiwiSaver contributions from your pay. We then need time to process the information.

Will a benefit, entitlement or tax debt affect your KiwiSaver contributions?

If you ... then ... Find out more

receive weekly compensation from ACC

you can choose whether to have KiwiSaver contributions deducted from your payments, but you won't receive an employer contribution.

Receiving payments from ACC

receive an income-tested benefit

you can't have KiwiSaver contributions deducted from your benefit. However, you can choose to pay contributions directly to us or to your scheme provider.

Information about income tested benefits on www.workandincome.govt.nz

get paid by your employer while also receiving a benefit

contributions will be deducted from your pay unless you apply for a contributions holiday.

Contributions holidays

have a Working for Families tax credit entitlement

it won't be affected if you're a member of KiwiSaver.

Working for Families tax credits on www.ird.govt.nz

are making or receiving any child support payments

they won't be affected by having KiwiSaver contributions deducted.

Child support on www.ird.govt.nz

have a student loan

you must still meet your student loan obligations, whether or not you are a KiwiSaver member.

Student loans on www.ird.govt.nz

have a tax debt with us

you must still meet your tax obligations. Your KiwiSaver contributions won't be used to pay off tax debts.

Managing financial difficulty and debt on www.ird.govt.nz

Can you salary sacrifice KiwiSaver contributions?

What is salary sacrifice?

Salary sacrifice is an arrangement where part of your salary is sacrificed for an employer superannuation contribution. You and your employer mutually agree that your salary will be reduced by a specific amount. This amount is instead paid as an employer contribution to your superannuation scheme.

What will salary sacrificing mean for you?

The benefit for you is that you will pay less income tax because your annual salary will be reduced.

However:

  • any contributions you make using a salary sacrifice arrangement won't count towards your member tax credit entitlement, as they are treated as an employer contribution, and
  • any of your future salary-based entitlements (for example, to ACC and redundancy) may be affected.
Important

We strongly recommend that you seek professional advice before considering salary sacrifice.

Your employer is also affected by salary sacrifice.

Find out more

Forms and guides

Check out what KiwiSaver forms and guides are available.

Date published: 18 Sep 2008
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