Contents
Who is eligible for KiwiSaver?
Frequently Asked Questions for KiwiSaver as an Employer
Employer Obligations for KiwiSaver: What Do You Need to Do as an Employer?
Managing KiwiSaver: Manual vs Payroll System (Crystal Payroll)
KiwiSaver Calculations Explained
As a New Zealand employer, you’re required to understand and manage KiwiSaver correctly. But between figuring out who needs to be enrolled, what forms to submit, how to handle contributions, and keeping up with IRD requirements, it’s easy to feel overwhelmed—especially on top of everything else you already need to know about payroll.
That’s why in this guide, you’ll find full explanations of your obligations, deduction calculation examples, common questions answered, and tips on how to stay compliant without making things harder than they need to be.
What is KiwiSaver?
KiwiSaver is a voluntary, work-based retirement savings scheme designed to help people prepare for retirement or potentially for their first home. Essentially, employees can choose to contribute a portion of their pay to their KiwiSaver fund, and as an employer, you must also contribute if your employee is enrolled.
Who is eligible for KiwiSaver?
As an employer, you’ll need to know who meets the criteria for KiwiSaver as well as the criteria for automatic enrolment. Your employees are generally eligible if they are:
- Aged 18–64
- A New Zealand citizen (must be normally living in New Zealand) or permanent resident
- Are working in New Zealand
Most new employees who meet these criteria will be automatically enrolled in KiwiSaver when they start working for you.
There are some situations where employees may not be automatically enrolled for KiwiSaver (but still eligible) or may not qualify for employer contributions, such as:
- Employees classified as casual or temporary (working for less than 28 days) are not automatically enrolled but can still join KiwiSaver.
- Employees aged 65 and over can still contribute to KiwiSaver if they choose to, but as an employer, you’re not required to continue contributing to their fund.
- Employees under 18 can join KiwiSaver, but are not eligible to be automatically enrolled. Under 18 employees will need to directly contact and be accepted by a KiwiSaver scheme provider. As an employer, you’re not required to make compulsory contributions to their fund.
Employees on temporary, visitor, work, or student visas, or those simply visiting New Zealand, are not eligible to join KiwiSaver.
Frequently Asked Questions for KiwiSaver as an Employer
Yes. If your employee is eligible and enrolled in KiwiSaver, you are legally required to make at least the minimum 3% employer contributions and manage deductions correctly. This is set out in the KiwiSaver Act.
As an employer, you can face penalties and fines if you fail to provide required KiwiSaver information to employees or IRD, don’t enrol eligible new staff, or don’t comply with the minimum contributions. The penalty is $50 per month if you file monthly, or $250 per month if you file twice a month.
If you don’t pay compulsory employer contributions on time, IRD may apply a 10% non-payment penalty, with an additional 10% each month the amount remains unpaid. Voluntary contributions aren’t penalised.
You won’t be penalised if an employee refuses to provide information, provides false details, or if IRD didn’t supply enough information packs, provided you notify them promptly.
Yes. KiwiSaver is handled through the PAYE system, so deductions and contributions are part of your regular payroll tasks. If you’re using payroll software, this process is usually automated.
KiwiSaver helps employees build long-term savings for their retirement or first home. It’s also seen as a valuable workplace benefit that shows you care about your team’s financial future.
While contributions are a legal requirement, offering KiwiSaver support shows you’re a responsible and supportive employer. It can boost staff retention and satisfaction, help attract talent, and strengthen your reputation as a business that invests in its people.
A savings suspension is a temporary break from KiwiSaver contributions. Employees can apply for one with the IRD 12 months after their first KiwiSaver contribution. It can last from 3 months to 12 months. When the suspension period finishes, IRD will notify you to restart deductions.
ESCT stands for Employer Superannuation Contribution Tax. It’s a tax you must deduct from your employer KiwiSaver contributions before passing them on to IRD. You can work out an employee’s ESCT rate on the IRD website.
Employer Obligations for KiwiSaver: What Do You Need to Do as an Employer?
When you’re an employer in New Zealand, it’s important to stay on top of your KiwiSaver responsibilities. Doing so helps you comply with the law, avoid penalties, and support your employees’ long-term savings.
Here’s an easy to follow KiwiSaver checklist of what you need to do to stay compliant and your obligations as an employer.
Check If Your Employee is Eligible
The first step to getting your employees correctly registered for the KiwiSaver scheme is to check whether they meet the criteria to become a member.
- If they are a new employee, anyone aged 18–64 who is a New Zealand citizen or permanent resident and working in New Zealand is generally eligible and should be automatically enrolled
- If they are an existing employee who is not currently a KiwiSaver member and would like to join, check that they’re eligible to join KiwiSaver. Existing employees aren’t automatically enrolled but can still join if they meet the eligibility criteria.
- You are required to enroll them within their first two weeks of employment. If the IRD notices that an eligible employee was not enrolled into KiwiSaver within their first two weeks of employment, they may require you to backdate the deductions.
Enrol Your Eligible Employee Into KiwiSaver
Once you’ve confirmed that the employee is eligible to join KiwiSaver, you’ll need to gather the required registration information so you can correctly set them up to start deductions.
- Give the employee the KiwiSaver employee information pack (KS3) within 7 days of the employee starting work.
- The employee must also fill out a KiwiSaver deduction form (KS2) to choose their contribution rate. Don’t submit this form to the IRD, but make sure to keep it as part of the employee’s employment records.
- As the employer, you will need to fill out the New employee and KiwiSaver details (IR346K form). You’ll need to provide this information to the IRD online. You must submit the enrollment information before their first pay day. This must include their full name and IRD number.
Deduct Employee KiwiSaver Contributions
Once your employee is correctly set up for KiwiSaver, you’ll need to start managing their deductions based on their chosen contribution rate.
- Employees can choose a contribution rate of either 3%, 4%, 6%, 8% or 10% of their gross salary or wages. Make deductions at the default rate of 3% if an employee doesn’t specify a rate.
- You deduct this from their pay and send it to the IRD (with PAYE). You’ll do this via payday filing, which is usually submitted either:
- Automatically via your payroll software, or
- Manually through your myIR account.
Make Your Compulsory Contributions (Employer Contribution):
As an employer, you’re required to contribute a minimum of 3% of your employee’s gross salary and wages towards their KiwiSaver fund.
- You must also pay the Employer Superannuation Contribution Tax (ESCT). This tax is deducted from the employer contribution you are paying towards the employee’s KiwiSaver fund.
- Employers are legally only required to contribute the minimum 3% but you’re welcome to contribute more if you wish. Contributing a higher percentage is entirely voluntary.
Submit Contributions to Inland Revenue
Once you’ve deducted your employee’s KiwiSaver contribution and calculated your employer contribution, your next step is to submit both to Inland Revenue (IRD). This is done as part of your regular PAYE process either automatically through your payroll system or manual filing.
Some payroll systems, like Crystal Payroll can automatically file your pay runs to the IRD. Crystal Payroll’s Payday Filing Dashboard helps you monitor what has been filed and allows you to identify the specific amounts of the KiwiSaver contributions made to the IRD.
Once IRD receives your filing and payment, they distribute the KiwiSaver contributions to your employee’s KiwiSaver provider, who then adds it to their individual fund.
Managing Employee Opt-outs
When a new employee is automatically enrolled in KiwiSaver, they have the right to opt out. As the employer, you play an important role in managing this process correctly. Once an employee is automatically enrolled in KiwiSaver, they have a six week window between day 14 and day 56 of employment to opt out of the scheme. If an employee tries to opt out after this timeframe, they’ll need to contact the IRD directly to discuss their options.
If your employee gives you a valid KS10 form within the opt-out window:
- Stop KiwiSaver deductions and contributions from their next pay.
- Refund any contributions you’ve deducted but haven’t yet sent to IRD or pass them to IRD with your PAYE payment and IRD will refund the employee directly. (If you refund directly, the employee gets their money back faster.)
- Submit the KS10 opt-out form as well as the IR346K new employee KiwiSaver details form to IRD. These can be completed online through your myIR account.
- IRD will refund your employer contributions and ESCT, with interest, provided you don’t have any unpaid amounts owing.
Manage Employee Contribution Changes
Employees may opt to adjust their KiwiSaver contribution at any time. If an employee decides to change their KiwiSaver contribution rate, you’ll need to make sure to update the new rate in your payroll system to ensure the correct amount is deducted from their wages moving forward.
If you don’t use a payroll system or your payroll system doesn’t handle simple KiwiSaver adjustments, make sure to adjust your calculations manually going forward.
Keep Accurate Records
Good recordkeeping is a legal obligation and protects you in case of an audit or dispute. Make sure exact dates of when KiwiSaver changes were made to ensure records are accurate.
Keep records of:
- Whether the employee opted in or out, and when
- If they’re on a savings suspension
- Their KiwiSaver contribution rate and any adjustments made
- Your own employer contribution rate
- All KiwiSaver and ESCT amounts deducted
These records must be kept for at least 7 years, even if the employee has left or has been terminated.
Summary of Your Employer KiwiSaver Obligations
- Check if the employee is eligible to be enrolled.
- Provide the KS3 information pack, keep the filled KS2, and send the IR346K new employee KiwiSaver details form to IRD.
- Once enrolled, deduct their contribution from their gross wages.
- Add your 3% (or more) employer contribution minus the ESCT.
- Send both KiwiSaver deductions with IRD with your payroll.
- Stop deductions if they opt out.
- Manage any employee contribution adjustments.
- Keep all records of KiwiSaver forms, changes, and deductions.
Managing KiwiSaver: Manual vs Payroll System (Crystal Payroll)
While it’s possible to manage KiwiSaver manually, using a dedicated payroll system like Crystal Payroll can save you a lot of time, reduce errors, and help you stay compliant with IRD requirements, especially as your team grows.
| Feature | Manual Management | Using a Payroll System |
| Contribution Calculations | You must calculate both the employee and employer KiwiSaver contributions manually each payday. | Contributions are automatically calculated during each pay run based on the employee’s selected rate and current earnings. |
| ESCT (Employer Superannuation Contribution Tax) | You must manually determine the ESCT rate based on total income and calculate it for each employee. | ESCT is automatically calculated and deducted at the correct rate according to IRD rules. |
| Payday Filing to IRD | You’ll need to submit employment info and KiwiSaver deductions through myIR manually every payday. | Crystal Payroll automatically files payday info and contributions to IRD once you finalise each pay run. |
| Tracking KiwiSaver Status | You’ll need to track opt-ins, opt-outs, contribution rate changes, and suspensions in separate records. | The system stores all KiwiSaver details for each employee and tracks any changes in contribution status. |
| Record Keeping | You’re responsible for maintaining accurate KiwiSaver records for at least 7 years. | Records are automatically stored and easily accessible, ensuring you meet IRD record retention requirements. |
| Error Risk | High risk of miscalculations, missed deductions, or incorrect filing. | Low risk. Automated calculations and validations reduce errors significantly. |
| Time & Admin Load | Time-consuming, especially as your number of employees increases. | Saves time and simplifies payroll. Even with multiple employees. |
| Reporting | Limited unless you build your own spreadsheets or logs. | Built-in reports show all KiwiSaver deductions, contributions, ESCT, and IRD filings at a glance. |
| Employee Contribution Changes | Must manually update and apply changes to each employee’s record. | Easily update contribution rates in the employee profile. System handles the rest automatically. |
KiwiSaver Calculations Explained
If you’re not using payroll software, you’ll need to calculate KiwiSaver deductions manually each payday. This involves working out both the employee’s contribution and your employer contribution, based on their gross pay.
You can use our nifty Crystal PAYE calculator to figure out how much an employee’s KiwiSaver deductions should be. Here’s an example of KiwiSaver deductions in action so you have a better idea of how the calculations are done:
Say your employee earns $500.00 gross per week and has chosen to contribute 3% to KiwiSaver. As an employer, you are making the minimum contribution of 3% to their KiwiSaver as well.
- Calculate employee contribution:
3% of $500 = $15.00
→ This is deducted from their gross pay. - Calculate PAYE:
Let’s say PAYE for $500 is $74.85 (this can vary based on tax code, and in this case we’ve used M). - Work out net pay:
$500 – $73.85 PAYE – $15 KiwiSaver = $410.15 net pay - Calculate employer contribution:
3% of $500 = $15.00
→ This is paid by you on top of the employee’s gross pay. - Apply ESCT (Employer Superannuation Contribution Tax):
ESCT is deducted from your employer contribution before it’s paid to the employee’s KiwiSaver fund. For example, if the ESCT rate is 17.5%, then:
$15 × 17.5% = $2.62 ESCT,
$15 – $2.63 = $12.38 goes to their KiwiSaver fund as part of your employer contribution.
Creating a Stronger KiwiSaver Scheme for Your Employees
Most employers in New Zealand stick to the legal minimum when it comes to KiwiSaver, contributing just 3% of an employee’s gross earnings. While that’s perfectly compliant, it’s worth knowing that 3% is just the baseline, not the ceiling.
If you want to build a reputation as an employer who truly values long-term staff wellbeing, offering a stronger KiwiSaver scheme can be a simple but meaningful benefit.
Why Go Beyond 3%?
Boosting your KiwiSaver contribution rate can:
- Attract top talent, especially in industries where candidates are comparing benefits
- Improve retention, especially for experienced staff who value long-term financial security
- Show your commitment to being a future-focused and people-first employer
- Help level the playing field with Australia, where compulsory employer superannuation is now 12%
If you want to offer a stronger scheme, here are some ideas to consider:
Matching Schemes
Match an employee’s contribution above 3% up to a cap (e.g. match 4% or 5% if the employee also contributes that amount). This gives employees a reason to increase their own savings.
Tiered Contributions Based on Tenure
Reward loyalty with increased contributions over time:
- 3% for new employees
- 4–5% after 2 years
- Up to 7% after 5+ years
Conclusion
KiwiSaver doesn’t have to be complicated. Once you understand the key requirements it becomes just another part of running payroll, especially if you have a great payroll system to back you up. And if you choose to go beyond the minimum, KiwiSaver can also be a great way to offer real long-term value to your employees.
Curious about how KiwiSaver is managed with Crystal Payroll? Get in touch today to find out how we can help you manage KiwiSaver and simplify your payroll process.
If you’d like additional details about KiwiSaver, you can check out IRD’s official KiwiSaver guide for employers which includes extra information not covered in this guide such as KiwiSaver during parental leave or what to do when there are contributions made in error.
Disclaimer: This blog post is intended for informational purposes and should not be considered as financial or legal advice. Always consult with professionals for tailored guidance.
