From the first pay period on or after 1 April 2013, the contribution rates for both employees and employers increased from 2% to 3% of gross salary. However, employees will still be able to select a higher employee contribution rate of 4% or 8%.
All employer cash contributions to a superannuation fund (including KiwiSaver schemes and complying funds) are liable for ESCT (Employer Superannuation Contribution Tax). The exception is if the employee and employer have agreed to treat all of the employer contribution as salary or wages under the PAYE rules.
For employers, there are two approaches to calculating minimum contributions to KiwiSaver:
1. The "Default Approach"
2. The "Total Remuneration Approach"
The "Default Approach" arises when an employee is a member of KiwiSaver and receives a 3% employer contribution in addition to normal remuneration.
The "Total Remuneration Approach" is where an employer sets a fixed amount to be paid to the employee as remuneration and then takes the cost of paying any employer KiwiSaver contributions out of the employee’s pay. This gives certainty around wage costs and also removes any perceived bias between KiwiSaver versus non-KiwiSaver employees.
However, it should be noted that if an employer wishes to adopt a total remuneration approach to KiwiSaver, the employer must provide for this in the employment agreement, and it must be agreed to and signed off by both employer and the employee. If an employer does not include a total remuneration clause in an employment agreement, the default approach will apply.
Hi Mathew. Thanks for meeting with us. I took your advice and have started on Property 101 and more than half way through. I now realise why you advised us to stay where we are and look for properties with land in Hamilton or Waiuku. Information, calculations and case studies in this book are priceless. I'm so glad you decided to write this book and managed to find time to do it. Thanks very much for this and for advising us to check with you should we need to. Thanks - Helen - July 2015
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