Saving for retirement can be daunting, but KiwiSaver is a practical solution that can help employees set themselves up for the future.
This voluntary saving scheme not only helps your employees plan for their retirement, but it is also a legal requirement for you as an employer to contribute. As experts in employment law, we want to provide you with a brief overview of what this means for your business. If you require a more detailed explanation or have any further questions, give our local employment lawyers a call. We are here to make sure you are navigating KiwiSaver obligations with ease.
So, what are your obligations when it comes to KiwiSaver? Let’s break it down.
Automatic Enrollment and Opting Out
If an employee is eligible to be enrolled and they are starting work with a new employer, they’ll be automatically enrolled in KiwiSaver if they are aged between 18 and 65. It’s important to note that employees can opt-out of KiwiSaver between the end of week 2 and week 8 of starting work, but if they don’t opt-out within this timeframe, they will remain in the scheme.
Employee Contributions
If an employee stays enrolled, they will need to make regular contributions from their pay to their KiwiSaver provider. The contribution rate can be either 3%, 4%, 6%, 8%, or 10% of their before-tax pay, and if they don’t choose a rate, the default rate is 3%. These contributions will be made through wage deductions.
Compulsory Contributions as an Employer
As an employer, you will also need to contribute to your employee’s KiwiSaver over and above their wage or salary, unless you have an agreement in place that the employer contribution is included in the employee’s salary or wages. The current default rate for employer contributions is 3%.
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In a nutshell, KiwiSaver is a fantastic way for Kiwis to save for their retirement, and as an employer, it’s your legal responsibility to contribute at least 3% to your eligible employees’ accounts. If you would like further employment advice about your obligations as an employer, read our Ultimate Guide To Employment Law or give us a call at 0800 339 002 to speak directly to one of our friendly NZ employment lawyers – we’re happy to help.
