KiwiSaver is a Government-initiated voluntary savings scheme for employees which involves their employers deducting money from their earnings as retirement savings and making an employer contribution to those savings.

KiwiSaver is open to all NZ residents and people entitled to live in NZ permanently aged up to 65 and who are living (or normally living) in New Zealand.

Any new employee who is 18 years or older (and under 65) is automatically enrolled in KiwiSaver (with some exceptions). The employee may choose a deduction of 2%, 4% or 8% from their gross wages or salary. The employee can opt out of the scheme if they do not wish to belong, provided they do so between day 14 and day 56 from the start of their employment. Existing employees may voluntarily choose to join KiwiSaver at any time provided they meet the eligibility criteria.

Employees joining KiwiSaver get a number of benefits:

• They get a $500.00 kick-start payment from the Government.
• They get a member tax credit of up to $521.43 each year.
• They get an employer contribution to their KiwiSaver account equal to 3% of their gross wages or salary, less ESCT (Employer Superannuation Contribution Tax).
• They may be able to withdraw some or all of their KiwiSaver savings to put towards buying their first home.
• They may qualify to receive a first home deposit subsidy.

Employers have certain duties and responsibilities for administering KiwiSaver, the main ones being:

• Providing employees with the KS3 KiwiSaver Information packs supplied by the Inland Revenue Department (IRD).
• Enrolling all new employees in the scheme; and any existing employees who choose to join.
• Sending IRD the name, address and IRD numbers of employees.
• Deducting 3%, 4% or 8% of a member’s gross pay and remitting that amount to IRD, who then transfer each member’s contribution to their scheme provider.
• Making the 3% employer contribution to the member’s saving scheme (less ESCT).
• Acting on their request if a new employee chooses to opt out within the 6 week opt out timeframe.
• Stopping deductions if IRD or the employee issues the appropriate notice do so (such as when contribution holidays are activated by the employee).