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KiwiSaver changes on 1st April 2013

KiwiSaver contributions change from 1st April 2013.

These changes affect BOTH the Employee contributions AND the Employer contributions.

Minimum Employee contributions are increasing to 3%

This doesn't affect everyone, but it does affect you if you are currently making the minimum KiwiSaver contribution of 2%.  When KiwiSaver was launched in July 2007, the minimum employee contribution was 4% (and the other option was to contribute 8%).  For many people, if they joined up between July 2007 and 31 March 2009, unless you have consciously changed your contribution to KiwiSaver, you will be contributing at 4%.

However, if you joined KiwiSaver after 1 April 2009, or you changed your contribution after that date, your contribution will only be 2% of your income.

Your employee contribution increases to 3% on 1st April 2013. 

What does this mean for you? 

This will depend on how much you earn.   If you earn $50,000 a year, this is an extra $10 that you will save towards either your retirement or your first home deposit.  It means maybe 2 less coffees a week, but if you are aged 40 - and you are going to retire at age 65 - this could mean an extra $27,600 in retirement savings.

What if things are so tight that you can't afford the extra 1%? 

If you have been in KiwiSaver for a year, you can go on a contributions holiday.  For more information on how to arrange your contributions holiday - check out our blog post How do you take a contribution holiday in KiwiSaver?

Employer contributions are increasing to 3%.

These contributions have been steady at 2% since 1st April 2009.  From 1st April 2012, the employer contributions changed and became liable to taxation.  This tax is called the ESCT (Employer Superannuation Contribution Tax) and is different to the marginal tax rate regime.  For more information, check out our blog post What is ESCT for KiwiSaver and how does it work?

It is important that you make sure that you are making your KiwiSaver tax payments to the IRD.  It is also important that you are aware of your responsibilities in relation to KiwiSaver.  It is rumoured that some employers have not caught up with the fact that they need to take ESCT off employees KiwiSaver contributions.  It is now a year since these were to be deducted.  If you think that this might affect you - have a look at some ideas to help you in this blog post - KiwiSaver, tax changes – why you should use a payroll provider

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