CHANGES TO KIWISAVER SUPERANNUATION
(EMPLOYER'S COSTS INCREASE SIGNIFICANTLY)
- Obtain stocks of the new KiwiSaver Information Pack KS3 & KS4 (being printed)
- The same rules apply in terms of enrolment - still compulsory to enroll all new employees eligible to live permanently in NZ who are over 18 and under 65 yrs (unless it's a temporary employment of less than 29 days)
- Employee's mandatory contribution for new members (after 1st April 2009) will be 2%. Therefore for new members, the employer will be deducting 2% of gross pay from the employee's pay.
- For existing employee KiwiSaver members who currently contribute at 4%, the employer will continue to deduct the 4% unless the employee notifies the employer they wish to reduce their contributions to 2%.
- Employer's mandatory contribution increases on 1st April 2009 from 1% of gross earnings to 2% of gross earnings and contributions are now capped at 2%.
- Employers lose the Employer Tax Credit from 1st April 2009 (and this has been covering most of the employer compulsory contributions - so this will really cost the employer - from nothing for most employers to 2% cost on the wage bill for all KiwiSaver members in their workforce).
- Some employers agreed to pay a 'voluntary' contribution to KiwiSaver on top of the compulsory contribution. This will often form part of an employee's remuneration agreement and the employer will not necessarily be able to reduce this contribution / stop this contribution simply because the statutory contributions have been reduced. The employer will need to look carefully at what has been agreed and take advice about the options available.
- The Employer's Superannuation Contribution Tax Exemption is capped at 2% of gross earnings. This means any employer who is paying more than 2% of gross earnings, will have to deal with the superannuation contribution tax for the additional contribution. In some cases it will be that the employer can deduct the tax from the contribution - so that the employee gets a smaller contribution, but in some cases (and this depends on what has been agreed) the employer will have to pay the tax on top of the voluntary contribution.
Some existing employment agreements commit employers to 4% contributions for Kiwisaver.
ALL EMPLOYERS MUST CHECK 'KIWISAVER' IN THEIR EMPLOYMENT AGREEMENTS - IF THE CONTRIBUTION COMMITMENT IS OVER 2% PLEASE SEEK ADVICE- 0800 15 8000