Effect of KiwiSaver on employees

Employees who join the KiwiSaver savings initiative may be making a positive move towards their retirement. You should speak with our Authorised Financial Adviser regarding changes effective from 1 July 2011.

Savings amounts

The current default rate for contributions is 3% of a member's before-tax salary or wages (that means total salary, including bonuses, commission, extra salary and overtime). OR you can choose to contribute 4%  or 8%. You can also switch between savings rates.

KiwiSaver members can make one-off lump sum payments any time, through their scheme provider or Inland Revenue.

When KiwiSaver deductions start

KiwiSaver deductions start from a new employee's first pay onward. If you decide to opt out you will need to complete an opt-out form and pass it on to your employer. You can only Opt Out between weeks Two to Eight of commencing employment.

If you opt out your employer may refund any contributions they still hold to you. If they have already passed the contributions on to the Inland Revenue they will refund them directly to you. If your employer has made any contributions, the Inland Revenue will refund these to your employer.

Deductions for existing employees will start on the first pay after they join KiwiSaver. If you opt in you will not be able to opt out, however you will be able to apply for a Contributions Holiday after contributing for one year.

The Inland Revenue will hold contributions deducted in the first three months while a new member is deciding which scheme to go for. The contributions are then paid, with interest, into their KiwiSaver account with their scheme provider.

Employer contributions

Employers can choose to help employees save, through lump sum payments or by providing part or all of an employee's regular contribution, which can count towards the employee's contribution of 3%.

More than one job

You can choose which job(s) you contribute from.

If you stop working

If you stop working for any reason,  your contributions will cease unless you make arrangements with your Fund Provider to continue them.

Temporary breaks from saving

People who have been saving with KiwiSaver for 12 months can apply for a temporary break from saving, called a Contributions Holiday, of between three months and five years. The Contributions Holiday is renewable every five years.

If a KiwiSaver member suffers financial hardship or serious illness within the first 12 months of contributing to KiwiSaver, they should talk to Inland Revenue. They may be eligible for an early contributions holiday.

Contributions holidays are flexible and an employee may ask to re-start deductions before their holiday period expires.

Going on holiday

If you take a holiday, overseas or in New Zealand, and continue to be paid by your employer in that time, your KiwiSaver deductions continue unless you take a Contributions Holiday.

In or out?

KiwiSaver suits different people at different times in their lives. It can be a good option if you're just getting into your career, or are older and want an easy way to save.

KiwiSaver may not be right for you if:

  • you would be better off repaying debt
  • you think your retirement income from NZ Super and other savings plans will be enough.

If you already have a retirement savings scheme, you have several options including:

  • continue with it and opt out of KiwiSaver
  • contribute to both your existing scheme and to KiwiSaver.
  • put your existing scheme on hold and join KiwiSaver

Getting financial advice

Before deciding you should seek advice from a professional Authorised Financial Advisor at Superannuation New Zealand Ltd.

Contact us


Special circumstances

NZ Super

KiwiSaver is designed to complement NZ Super, to give people a better standard of living in retirement. Being a KiwiSaver member does not affect eligibility for NZ Super.


KiwiSaver members who receive weekly compensation from ACC will be able to choose whether to have KiwiSaver contributions deducted from their payments. More information is available from ACC.

Paid parental leave

KiwiSaver contributions will not automatically continue during paid parental leave, but they can be kept going if the parent contacts the Inland Revenue.

Under age 18

You will not qualify for the government tax credit of up to $521.43 per year or the employers subsidy.

A child who starts earning and pays PAYE, even from a part time job, will have KiwiSaver deductions taken from their wages unless they are eligible to apply for a Contributions Holiday. In order to become eligible you must have been a contributor for 12 months. To start the 12 month clock ticking we recommend that you make a one off $20 (minimum) payment at least 12 months before a child is likely to start their first job.



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