KiwiSaver is a voluntary, work-based savings initiative to help employees with long-term saving for retirement. Contributions from employees' salary are paid to the IRD in the PAYE returns each month.
Existing employees may request to join KiwiSaver at any time and the employer is obliged to pay a minimum of 3% contributions to a KiwiSaver scheme. The employee may pay up to 8% of their gross taxable pay to a KiwiSaver scheme of their choice. The employer must pay a minimum contribution of 3% to the employee's scheme.
The General Assembly 2016 recommended that parishes pay 5% employer contributions to the lay workers KiwiSaver scheme.
All new employees in permanent roles that are over the age of 18 must be enrolled from their start date. The employee may choose a KiwiSaver provider or, if they don’t have a preferred scheme, the IRD will allocate the employee to a default scheme. Temporary and casual employees do not have to be automatically enrolled into KiwiSaver. Employers are not obliged to pay the 3% contribution to casual or temporary workers.
If the employee does not wish to join KiwiSaver they may opt out. The employer must enrol the employee from their start date and the employee can opt out of the scheme after day 14 and before day 56 by completing an online opt out form at www.kiwisaver.govt.nz. The IRD will instruct the employer to stop making deductions for KiwiSaver from the employee's salary, and they will refund the employer contributions back to the employer. The personal contributions are refunded direct to the employee.
Deductions made from employees' salaries are payable to the IRD each month on the PAYE return IR 345 or IR 346. Employer contributions are subject to ESCT (Employer superannuation Contribution tax).
For existing employees, ESCT rates are based on the total tax paid income at the end of the previous tax year (see the IRD website for ESCT rates).
To determine a new employee's ESCT rate, the employer should estimate their total salary or wage all taxable allowances including the employers KiwiSaver contributions that will be made to the employee in the current tax year.
Accommodation and housing allowances are exempt from KiwiSaver contributions but they are part of the total gross pay to establish the ESCT rate.
More information about the benefits of KiwiSaver refer to www.kiwisaver.govt.nz
Ministers receiving a Stipend
Parishes are deemed by the IRD as the employer because they administer the payroll, and ministers, like anyone else can join a Kiwisaver scheme. However, Presbyterian ministers are obliged to join the Beneficiary Fund which has its own KiwiSaver component. Parishes are also obliged to pay 5% employer contributions to the Beneficiary Fund. The Beneficiary Fund has first call on KiwiSaver contributions, therefore parishes are not obliged to pay any employer contributions to the minister's voluntary scheme.
The minister may join a KiwiSaver of their choice and instruct the parish to deduct personal contributions to this voluntary scheme on their behalf. The parish does not contribute to this scheme. If the minister is not a Presbyterian minister and/or is not a member of the Beneficiary Fund, then the parish must treat such ministers as lay workers and apply the normal KiwiSaver rules.