Small Business Tax Dictionary
KiwiSaver
KiwiSaver is a voluntary, long-term savings scheme in New Zealand designed to help individuals save for retirement. Contributions are made by individuals, employers, and the government.
How KiwiSaver works
When you join KiwiSaver as an employee, a percentage of your wages is automatically deducted and contributed to your KiwiSaver account. Your employer also contributes, and the government provides additional support through a member tax credit.
Contribution rates — Employees can choose to contribute 3%, 4%, 6%, 8%, or 10% of their gross pay. Employers must contribute at least 3%.
Investment funds — Members select an investment fund based on their risk tolerance and financial objectives (e.g. conservative, balanced, growth).
Government contributions — The government provides a member tax credit of up to $521.43 per year for those who contribute at least $1,042.86 in any year.
KiwiSaver and self-employed
Self-employed individuals are not automatically enrolled in KiwiSaver, but can join and make voluntary contributions. There is no employer contribution for the self-employed, but the government member tax credit still applies.
Employer obligations
Employers have specific obligations regarding KiwiSaver, including:
- Automatically enrolling new eligible employees (employees can opt out within a set period)
- Deducting employee contributions from wages
- Making employer contributions of at least 3%
- Communicating KiwiSaver information to new staff