If your employee is in KiwiSaver or a complying fund you must make a compulsory employer contribution. You’ll need to do this each time you pay them salary or wages.
Compulsory employer contributions
You have to make contributions to your employee’s KiwiSaver or complying fund. They’re called ‘compulsory employer contributions (CEC)’.
The minimum rate for your contribution is 3% of your employee’s gross salary or wages.
You make a contribution to your employees:
- aged 18 and over
- aged under 65 or those that have not been a KiwiSaver or complying fund member for five years (whichever date is later)
- in KiwiSaver or a complying fund and you deduct KiwiSaver contributions from their salary or wages
- not a member of a defined benefit scheme.
Tax you pay on your employer contribution
All of your employer contributions to KiwiSaver and complying funds are liable for tax. This tax is called employer superannuation contribution tax (ESCT).
You do not pay this if you and your employee have agreed to treat some, or all, of your contribution as salary or wages under the PAYE rules.
Starting compulsory employer contributions
- new employees enrolled by you into KiwiSaver, pay compulsory employer contributions (CECs) from their first pay
- employees who asked to be opted into KiwSaver or a complying fund, start CECs from their first pay after you’re notified (by us or your employee ).
Stopping compulsory employer contributions
You can stop making compulsory employer contributions if either:
- we, or your employee, give you an approved savings suspension notice
- your employee gives you a Non-deduction notice – KS51 (because they’re eligible to withdraw their savings)
- we ask you to stop.
Employees who become eligible for NZ Super
You do not have to pay compulsory employer contributions (CEC) when an employee reaches the age of entitlement for New Zealand Superannuation.
You keep paying employer contributions if you:
- have an agreement with your employee to keep paying them
- have an employee aged 60 or over who joined KiwiSaver before 1 July 2019 (see employee with special circumstances)
- want to voluntarily carry on paying employer contributions.
If you keep paying employer contributions you’ll need to pay the employer superannuation contribution tax (ESCT) on them.
Contributions to both KiwiSaver and complying funds
Your employee can be in KiwiSaver and a complying fund. Your compulsory employer contribution can go to either one or be split between them. For example, 2% to KiwiSaver and 1% to the complying fund. Your contribution still has to meet the minimum of 3%.
If your contribution to a complying fund is less than 3%, you must pay the difference as a compulsory employer contribution to your employee’s KiwiSaver.
Voluntary employer contributions to employees
It's up to you if you want to make voluntary employer contributions to employees:
- above the 3% minimum compulsory employer contribution rate
- under 18 years old
- who are eligible for NZ Super.
You’ll still need to pay employer superannuation contribution tax (ESCT) on all of your voluntary contributions.
Contributions for employees with special circumstances
There are some employees whose circumstances affect your employer contributions (and their deductions). Those employees are either:
- employees aged 60 who joined KiwiSaver before 1 July 2019
- on accident compensation
- on paid parental leave
Agreed employment packages
If you and your employee have agreed to a total remuneration package, you must pay employer contributions on top of the package if it's not already included.
Your employee’s take-home pay should not be less because of the compulsory employer contributions (CEC).
You can also negotiate a salary package which specifically includes a CEC component.
Compulsory employer contributions on back pay
If your employee gets backdated payments of salary or wages, and KiwiSaver is deducted from them, you must pay compulsory employer contributions (CEC).
Payment of employer contributions
You include in your employer return the employer contributions and the employer superannuation contribution tax (ESCT).
Payment is different for KiwiSaver and a complying fund. If you’re paying contributions for:
- KiwiSaver schemes, pay them as part of your total employer deductions payment for that period
- complying funds, send the payment to the employee’s complying fund.