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Payroll | Superannuation | KiwiSaver
Summary |
KiwiSaver was introduced to NZ on 1 July 2007. It is a voluntary, work-based retirement (superannuation) savings scheme for all New Zealand citizens and permanent residents living or normally living in New Zealand. Employees can choose their own fund provider and can change fund providers any time after enrolment. Employees are referred to as KiwiSaver 'members' Employers must provide a default fund provider for those employees who will be automatically enrolled and haven't yet chosen a a fund provider themselves. The Inland Revenue Department (IRD) administer the scheme through the PAYE tax system. The IRD forwards members' contribution to their KiwiSaver schemes to be invested on their behalf. Employers must maintain accurate details of KiwiSaver and complying funds in PayGlobal, and use the PayGlobal superannuation framework to record, maintain and calculate superannuation data and transactions for New Zealand employees. Further Reading: See the New Zealand Superannuation and Salary Sacrifice Manual on the website. |
Employee vs Contractor |
Employers ARE NOT responsible for making KiwiSaver deductions for employees receiving schedular payments. Do not set-up KiwiSaver for employee's with a Tax code of 'WT' as it may cause possible rejection of your Payday Filing data and calls with the IRD. These employees need to arrange KiwiSaver payments directly with their scheme provider. |
Membership |
New employees Every employee that joins your organisation must supply a completed KS2 form - ideally on/before their employment start date and definitely before the payroll department need to process the employees first pay. The KS2 form tells employers:
New employees not already in KiwiSaver For new employees who indicate they are not KiwiSaver members, you must determine whether the employee is eligible to join. Those who are eligible, must be automatically enrolled. They can choose to opt-out (refer to the KS10 form) on or after day 14 and on or before day 56 of starting new employment. They cannot opt out in the first 13 days. Note: Temporary employees on a 28day or less contract are exempt from automatic enrolment. However, once they complete 29days or more they must be automatically enrolled. New employees already in KiwiSaver New employees that are already enrolled in KiwiSaver are called "Existing Members". Existing members cannot opt-out of KiwiSaver - once you become a member you are in for life. Existing members can however apply to go on a Saving Suspension. The employee has to arrange that directly with IRD and then IRD will provide the effected employer(s) with a letter advising when the Saving Suspension will commence - not it is only valid for 1 year. Existing employees Existing employees who are not KiwiSaver members can opt in - if they are eligible. This would typically apply to (but not limited to):
Refer to the IRD's KiwiSaver Employer Guide for further details. |
KiwiSaver Exempt Employers |
“Exempt” in this context it does not mean that the employer is exempt from making KiwiSaver contributions. It means that the employer is exempt from the employee auto-enrolment requirements of KiwiSaver. A list of KiwiSaver exempt employers can be found here: If an employer has exempt status:
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Contributions |
KiwiSaver contributions must be calculated on EVERY pay an employee receives except:
Employee and Employer contribution rates can only be either: 3%, 4%, 6%, 8% or 10% of the employee's taxable gross earnings. Amounts not equalling one of these rates will trigger a validation error when trying to send/upload Payday Filing "EI" data. If the employee/employer want to apply a different rate, e.g. 5%, only 4% can be processed as KiwiSaver via IRD/Payday Filing. The extra 1% is deemed to be "voluntary/additional" contributions and must be handled externally to IRD/Payday filing. In this situation the employee would require two Employee Superfund records to be setup. The first one setup specifically as KiwiSaver to handle the 4% and the second to be setup as a "Complying Fund" to handle the 1%. Employer contributions and tax All employer contributions to KiwiSaver and complying funds are liable for Employer Superannuation Contribution Tax (ESCT). The exception to this is if the employee and employer have agreed to treat some or all of the employer contribution as salary or wages under the PAYE rules. ESCT is calculated and paid at the same time as PAYE deductions. PayGlobal handles the ESCT calculation automatically during process pay and reporting of ESCT is handled in Payday Filing. IMPORTANT: If the KiwiSaver is calculated from an Allowance Group (typical setup for clients with Complying Funds) there needs to be a non-paying non-taxable allowance added into that Allowance Group for the purpose of reducing the Superable Gross.
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Communication with IRD |
Payday Filing Gateway Users The "Create" file aka Employee Details (ED) data will automatically report the KiwiSaver Status and KiwiSaver Eligibilty of your new employees. Limitation: PayGlobal's Gateway solution does not support the "Update" file, which means KiwiSaver opt-outs need to be reported via the FileUpload solution or directly entry into MyIR. All other KiwiSaver status corrections must be done via direct entry into MyIR Payday Filing File Upload Users New employees can have their KiwiSaver Status and KiwiSaver Eligibility reported via the Create File button in the Pay Status form, i.e. when you want to create both the ED and EI files at the same time for a whole pay sequence. Or you can create an ED file for an individual employee by opening the employee record and selecting the Report New Employment to IR option in the right-click context menu To report a KiwiSaver opt-out, firstly ensure your employee has provided you with a completed KS10 form. Then open the employee record and select the Report KiwiSaver Opt-out to IR option in the right-click context menu. Any other updates or corrections to an employees KiwiSaver Status and KiwiSaver Eligibility can only be done via direct edit in MyIR as IRD do not have amend/update ED file outside of the scenarios mentioned above. |
See also |
IRD material |
Go to ird.govt.nz/forms-guides and look for the following:
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