Each time you pay salary or wages to an employee in KiwiSaver or a complying fund you deduct contributions from their pay.
Employee contribution rates
The rate you deduct employee contributions can be either 3%, 4%, 6%, 8% or 10% of their gross pay. Your employee tells you which rate to use on their KiwiSaver deduction form – KS2.
If an employee does not choose a contribution rate, use the default rate of 3%.
How gross pay affects employee deductions
Knowing what payments are included in gross pay for KiwiSaver and complying funds helps calculate your employee’s deduction and your contribution.
The way you calculate your KiwiSaver or complying fund contributions is different to how you do other PAYE calculations.
When to start deducting KiwiSaver contributions
You start deducting KiwiSaver contributions for:
- those employees you’ve automatically enrolled from their first pay
- employees who have chosen to opt into KiwiSaver from their first pay after you’re notified (by us or your employee).
Not starting deductions
If you have not started deductions for an employee, and they're not on a savings suspension, we'll let you know.
We'll let you know you have to start deductions for employees:
- you should've enrolled
- who are already in KiwiSaver.
You do not need to backdate deductions for them.
You could be penalised if you do not start deductions after we've notified you.
When to stop deductions from employee pay
You stop deducting KiwiSaver contributions for an employee when they give you either a:
- savings suspension notice approved by us
- Non-deduction notice - KS51 (because they’re eligible to withdraw their savings).
Changing employee deduction rates
Employees can change the rate by which you deduct their KiwiSaver once every three months.
Payments to retired employees
Some ongoing payments you make to your retired employees are not counted as gross pay. This includes these periodic payments:
- retiring allowance
- other allowance or annuity relating to their past employment.
Employees with special circumstances
There are some employees whose situation affects their employee deductions and your employer contributions.