SuperLife = superannuation + KiwiSaver + insurance
There are many ways employers can choose to take advantage of SuperLife to meet their employee benefit and business needs. SuperLife is a vehicle that lets employers implement unsubsidised and subsidised superannuation, KiwiSaver and insurance employee benefits plans. SuperLife has the ability to provide total flexibility to help employers meet their KiwiSaver obligations and enhances their employees’ experience. All this in a low-cost, value-focused manner. Common examples include:
- Make SuperLife available including as a chosen provider for KiwiSaver
- As 1, plus meet the administration costs for the superannuation scheme
- As 1, (and possibly 2) and provide a base insurance plan
- Provide a flexible benefit budget
- Provide part of the employee’s remuneration as superannuation
- Provide traditional subsidised superannuation
- Allow flexible remuneration, including salary sacrifice
Make SuperLife available
By making SuperLife available to employees, at no cost to the employer, employees get access to KiwiSaver and non-KiwiSaver savings and insurance options, under a common administration platform. Employees benefit from payroll deduction facilities and can design their own superannuation scheme to meet their needs. They can also continue their super if they leave employment. Their spouse/partners can also join. Under this option, the employer gives employees access to wholesale fees and premium rates.
As part of this process, there are also advantages in making the SuperLife KiwiSaver scheme the default chosen KiwiSaver scheme for the employer’s employees. This also gives the employer access to the SuperLife’s consultants to help with their KiwiSaver compliance obligation.
This is also a good way to bring voluntary benefits to employees and provide supplementary benefits to an employer’s traditional scheme.
Meet administration costs
As for 1, but the employer meets all or some of the administration costs for employees (but not necessarily their spouse/partners). This is a low cost way to make employees aware of their savings and income needs. It lets employees save a few dollars each week and not have fees consume the savings.
Provide base insurance benefits
As for 1 and/or 2, the employer provides a base insurance benefit for all employees. These should meet the employer’s business needs that may include a combination of death, total & permanent disablement, income protection and medical insurance. For example:
|Life insurance||1 times pay|
|Disablement insurance||1 times pay|
|and/or||Disability income insurance||55% of pay (tax-free) after 3months, payable for 2 years|
|and/or||Medical insurance||Major surgical + specialists|
The employer cost of the above is about 1.5% of payroll (before tax). Employers can set the basic insurance benefits higher or lower. Employees can then increase the basic insurance benefits at their cost and also save for their retirement.
Provide a “benefit budget” of say, $500 or $1,000 (gross) per employee
Each employee can use the benefit budget to buy the insurance required by them individually, with the balance being saved. The employee can also make additional savings and meet the balance of the cost of any additional insurance benefits.
Under this option, the employer may impose minimum insurance requirements to meet its business needs.
The employer provides a contribution of, say, 8.3% of pay
The contribution meets basic insurance costs with the balance being saved. The employee can withdraw the savings account balance in December or January each year. At 8.3%, this corresponds to a “13” months’ pay-a-year remuneration system. The 8.3% can include the employer’s KiwiSaver contributions.
Provide traditional subsidised superannuation
This includes retirement savings and insurance benefits for employees. The employer gains the efficiencies and economies of scale of SuperLife. The traditional scheme will wrap around KiwiSaver.
Flexible remuneration - the employer lets employees “salary sacrifice”
Salary Sacrifice can be an effective and convenient way for some employees to save for their retirement and meet insurance premiums. It is part of a philosophy for flexible benefits and provides flexible benefits for employees on a total remuneration basis.
How can we help?
We have a number of articles available to assist employers work out what is best for them.
- KiwiSaver - a general guide for employers
- Superannuation - a general discussion
- Superannuation benefit design - a check list
- Superannuation in a total remuneration cost environment
- Cash is king
- Salary sacrifice - a general discussion
To obtain copies of any of the above articles contact SuperLife. SuperLife also runs financial education seminars for employees and members and has a range of financial educational articles on the website.