This is an appendix to:

•  'KiwiSaver - a general guide for employers'.

Employee savings

KiwiSaver¹ started on 1 July 2007. 

 The initial standard minimum employee savings rate was 4% and this applied between 1 July 2007 and 31 March 2009. The alternative rate to 4% was 8% through the PAYE system.  The 4% standard minimum employee savings rate applied unless the employer offered the transitional “2%+2%” option. 

 From 1 April 2009 the minimum standard rate became 2% and employees could choose to increase it to 4% or 8%.

 From 1 April 2013, the minimum employee rate increased from 2% to 3%.

 Employer savings

 From 1 July 2007, all employer contributions were voluntary.  An employer’s contributions up to 4% that matched an employee’s contributions were paid tax-free.

 From 1 April 2008, employers had to subsidise an employee’s savings.  The Employer subsidy started at a minimum of 1% and the minimum was to increase on 1 April each year by 1% to 4% from 1 April 2011. 

 In December 2008, the 3% and 4% steps were removed and the 2% employer rate from 1 April 2009 became the ongoing minimum rate.  The tax free employer contribution was reduced from 4% to 2%.

 Until 31 March 2009, there was also a transitional “2% + 2%” option that provided a different implementation regime for the contributions from both employers and employees over the period to 2011.  This option effectively ceased on 31 March 2009 and was replaced by the default “2% + 2%” option.

 From 1 April 2012, all employer contributions became taxable under the ESCT rules.

From 1 April 2013, the minimum employer contribution became 3%.

 Employer Tax Credit – pre 1 April 2009 Between 1 April 2008 and 31 March 2009, where an employer contributed, the government paid the employer an Employer Tax Credit of $1 for $1 up to $1,042.86 a year.  This is paid through the PAYE tax system by deduction from the regular PAYE tax payments made by the employer.  The actual calculations are based on the number of weeks in the PAYE period.  This no longer applies.

 Member tax credit (MTC)

  Until 30 June 2011, the government subsidised a member’s contribution if they were 18 or older at $1 for $1 up to $1,042.86 a year.  From 1 July 2011, the subsidy was reduced to 50 cents for $1 and the maximum MTC reduced from $1,042.86 to $521.43.

 Administration fee subsidy

  Prior to 1 April 2009, the government met part of the annual administration costs.  It paid a $40 a year subsidy in instalments of $20 every six months starting 3 months after the member first joined.  The $40 a year fee subsidy stopped from 1April 2009.

 Mortgage diversion 

  Prior to 1 June 2009, where a member had completed at least 12 months’ membership, a KiwiSaver scheme could let the member divert up to half of the member’s personal contributions, to help pay off their mortgage.  The maximum that could be diverted was 2% of the member’s pay.  There were rules around the type of mortgage and the mortgage had to be on the member’s principle place of residence.  From 1 June 2009, this facility stopped for new people.  Existing KiwiSavers who were already using it could continue.  This change was part of the May 2009 budget.

Children under 18

 Prior to September 2010 parents and grandparents could enrol their children/grandchildren.  

 From that date, to enrol a child under 16 both guardians must sign the form.  To enrol a 16 or 17 year old one guardian and the child must sign, unless the child is in a relationship and has no guardian.

1. The KiwiSaver Act 2006 establishing KiwiSaver came into force on 1 December 2006.