Changes to Kiwisaver

25 August 2015

The minimum contribution rate for both employers and employees is now 3%.

This change has caused a number of clients to reconsider their remuneration structures because of concerns about:

  • The increasing cost of employer contributions, and
  • The apparent inequity of employees in KiwiSaver receiving greater benefits from their employer than those employees who are not in KiwiSaver.

As a result many employers have changed to a Total Remuneration structure whereby employer contributions are funded out of the employee’s remuneration. Whether the employee is in Kiwsaver or not, the cost to Company is the same. A similar approach applies to other benefits such as medical insurance.

Note that overtime, bonuses or other payments earned by employees also must be taken into account in calculating the amount of employer contribution to KiwiSaver.

Meanwhile in Australia the minimum employer contribution rate is increasing from 9% to 12% over the next 6 years as follows:

1 July 2013 9.25%
1 July 2014 9.50%
1 July 2015 10.00%
1 July 2016 10.50%
1 July 2017 11.00%
1 July 2018 11.50%
1 July 2019 12.00%