CHANGES TO KIWISAVER FROM 1 APRIL 2009
For Members
From
·
The minimum employee contribution will reduce
to 2% of your gross pay.
·
The compulsory employer contribution (CEC) will
increase to 2% and won't increase further in future years
·
The employer superannuation contribution tax
(ESCT) exemption will be capped at the Compulsory Employer Contribution of 2%.
·
The employer tax credit (ETC) will be removed -
this change affects employers, not KiwiSaver members.
·
The fee
subsidy will be removed.
·
The KiwiSaver Act has been amended and the
Employer Relations Act amendment relating to KiwiSaver has been repealed so that
your gross pay can't be reduced if you join KiwiSaver. This change is effective
from
If you're already a member of KiwiSaver you'll be able to
reduce the amount you contribute from your pay to 2% from
If you want to reduce your contribution,
you'll need to let your employer know in writing. Either complete a new KiwiSaver
deduction form (KS2) or write to your employer.
If you're a new member and you don't
tell your employer how much you want deducted from your pay, the employer will
assume you want to contribute 2%.
Your employer will increase their contribution to 2%
(and won't increase it any further) from
If your employer contributes more than
2% to your KiwiSaver account, from
If your employer contributes 2% there'll
be no change to your employer contributions.
Reducing your contribution to 2% may affect the
amount of Member Tax Credit you receive.
Depending
on your income, if you do reduce your contribution to 2% it may affect how much
member tax credit (MTC) you receive.
If you're eligible, the Government will pay into
your KiwiSaver scheme an annual member tax credit matching your contributions up
to $1,042.86 per year (this works out to about $20 per week). If you reduce your
contribution to 2% of your gross pay, you might not contribute enough to your
KiwiSaver scheme to receive the maximum member tax credit. You can make
voluntary contributions to your KiwiSaver account so that your contributions
total $1,042.86 each year.
If
your income is... |
Then
your annual KiwiSaver contributions at 4% of your gross pay are... |
Voluntary
contributions required to reach $1,042.86 |
Annual
KiwiSaver contributions at 2% of your gross pay |
Voluntary
contributions required to reach $1,042.86 |
$15,000 |
$600 |
$442.86 |
$300 |
$742.86 |
$26,000 |
$1,040 |
$2.86 |
$520 |
$522.86 |
$35,000 |
$1,400 |
|
$700 |
$341.86 |
$45,000 |
$1,800 |
|
$900 |
$142.86 |
$52,000 |
$2,080 |
|
$1,040 |
$2.86 |
If
your income is less than $52,000 and you reduce your contributions to 2% of your
gross pay, you'll need to make voluntary contributions if you want to receive
the maximum member tax credit.
If your income is more than $52,000 you can reduce your contributions to
2% of your gross pay and you'll still receive the maximum member tax credit.
For Employers
From
·
The
minimum employee contribution rate will reduce to 2% of a member's gross pay.
·
The
compulsory employer contribution
(CEC) will increase to 2% and won't increase further in future years.
·
The
employer superannuation contribution tax exemption (ESCT) will be capped at the
compulsory employer contribution rate of 2% from
·
The
employer tax credit (ETC) will
be removed.
·
The
fee subsidy will be removed - this change affects KiwiSaver members, not
employers.
·
The
KiwiSaver Act will be amended and the Employer Relations Act amendment relating
to KiwiSaver will be repealed so that gross pay can't be reduced for staff who
join KiwiSaver.
You'll
need to increase your employer contribution rate to 2% from 1 April 2009,
but won't be required to contribute more than this amount in future
years unless you want to.
You
may need to reduce the contribution rates for existing KiwiSaver employees
if they notify you that they would like to change their contribution rate to
2%. You should ask your staff for
written confirmation of their intention to reduce their contribution rate - ask
them to complete a new KiwiSaver
deduction form (KS2) or to write to you. There is no need
to contact IRD. New
employees who join and are automatically enrolled after
If
you choose to contribute more than 2% into the KiwiSaver accounts of your
employees
(that is more than the amount exempt from employer superannuation
contribution tax), you'll have to pay employer superannuation contribution tax
(ESCT) on the contributions above 2%.
ESCT
can be taxed in one of the following ways:
·
at
a flat rate of 33 cents in the dollar;
·
an
optional ESCT rate based either on the annual
·
treat
the employer contribution as
Examples:
Eddie is a KiwiSaver member and employed by ABC
Limited. He is having 4% of his
His weekly
KiwiSaver deduction |
$36.00 |
Employer contribution |
$18.00 |
Total
savings |
$54.00 |
From
Joanne is a KiwiSaver member and employed by Black
Limited. Joanne is having 4% of her
Joanne's weekly
KiwiSaver deduction |
$48.00 |
Employer contribution |
$48.00 |
Total
savings |
$96.00 |
However, from
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