Enrolment	Government Incentives
Contributions	Mortgage Diversion
Benefits payable	KiwiSaver Providers

Enrolment

• Enrolment is automatic for all new “permanent” employees aged 18 years or over but less than NZ Superannuation eligibility age (currently 65), except where the employer offers an alternative “exempt” scheme, for all new employees.

• A “permanent employee” is any fulltime, part-time, fixed term or casual employee other than a casual agricultural worker or someone who is employed on a contract that is for a period of no more than 28 days.

• New employees, when automatically enrolled, can opt out from day 14 to day 56 of their new employment.

• Existing employees below age 65 years, and new employees below 18 years, do not have to join, but they can choose to opt-in and join a KiwiSaver scheme.

• Existing employees and new employees over age 65 years cannot join, but they can remain KiwiSaver members if they joined before age 65.

• Non employed people below age 65 years can apply to join a KiwiSaver scheme.

Contributions

• KiwiSaver contributions for employees must be at the rate of 2% (the default), 4% or 8% of the employee’s total gross taxable salary or wages (including bonuses, holiday pay, overtime etc). From 1 April 2013 the minimum (default) contribution rate increases to 3%.

• Non employees contribute an amount as agreed by the KiwiSaver provider and the member.

• Contributions start on the first pay day after the new employee commences employment.

• Inland Revenue collects the contributions through the PAYE system and forwards them to the employee’s KiwiSaver scheme.

• The employer's contributions are 2% of the employee’s total gross taxable salary or wages (including bonuses, holiday pay, overtime etc).

• The first 2% of the employer's contributions are exempt from employer superannuation contribution tax (ESCT) until 31 March 2012. From 1 April 2012 it will be subject to ESCT.

• Employer contributions must be made through Inland Revenue.

• Employer contributions do not count towards the member's minimum contribution.

• A member who has contributed for at least one year can elect to stop contributions. This is known as a “contributions holiday”. A contributions holiday must be for a minimum period of three months and for a maximum period of five years. After five years, a member can apply for another contributions holiday. There is no limit on the number of successive contributions holidays taken.

Benefits Payable

• Contributions are “locked in” until the later of the member attaining NZ Superannuation eligibility age (currently 65 years) and 5 year’s membership, except in cases of significant financial hardship, serious illness, death, or permanent emigration. A member who has been contributing for at least three years can make a one off withdrawal to be used towards the purchase of their first home.

• Benefits are payable as lump sums.

Government Incentives

• The government will pay an upfront, once only, kickstart contribution of $1,000 to each new KiwiSaver member (which will not be taxable). This kickstart will be paid when the member's contributions are first passed on to the KiwiSaver provider. This will be 3 months after contributions start.

• A first home deposit subsidy is available to qualifying members after three year’s contributory membership. Qualifications on the subsidy include a household income test and regional purchase price caps.The subsidy is administered by Housing NZ.

• The member's contributions are matched by a member tax credit of up to $20 per week ($1,042.86 per year) that is paid directly into the member's KiwiSaver account. From 1 July 2011 the Member Tax Credit will be 50 cents for each $1 contributed by a member up to a maximum of $521.43 per year.

Mortgage Diversion

• Mortgage diversion has been removed from KiwiSaver. Only members who joined the facility prior to 1 June 2009 may continue with this option.

KiwiSaver Providers

• There are three types of “schemes” under the KiwiSaver regime:

An “approved” scheme - a registered KiwiSaver scheme that a member can choose as their provider.

A “chosen” scheme - a scheme selected by an employer (from the approved scheme list) as its preferred provider. If an employee does not choose a KiwiSaver scheme then they will be allocated to the employer’s chosen scheme.

A “default” scheme - a limited group of providers chosen by the government. If an employee does not choose a scheme and the employer has not selected a chosen scheme then Inland Revenue will randomly allocate the employee to one of the default schemes