The minimum employee contribution rate is reduced from 4% to 2% of gross salary or wages.
Download our EzyBrief paper on it here – Kiwsaver Changes April 1st 2009
The default rate for new members joining after 1 April 2009 will be 2%, but existing members will retain their current contribution rate unless they elect to reduce to the new 2% rate. The effect is that employees will now have a choice of contributing at 2%, 4% or 8% of their gross salary
The compulsory employer contribution is capped at 2% of the employee’s gross salary or wages (rather than the previous plan of a maximum of 4% by 2011).
- The Employer Tax Credit is removed completely.
- The Employer Superannuation Contribution Tax (ESCT) exemption is reduced and capped at 2% of the employee’s gross salary or wages.
- The member fee subsidy of $40 per year is removed completely.
The new legislation also allows a return to a “total remuneration” approach to KiwiSaver. While the core legislation still retains the earlier requirement that employer contributions are paid on top of an
employee’s total gross salary or wages, the latest legislation also allows an employer and employee to disregard this requirement and agree their own contractual terms. An employee’s total remuneration package may therefore be such as to include the KiwiSaver employer contributions.
This total remuneration approach has been made available as of 15 December 2008. However, the default option will remain as under the earlier legislation – i.e. unless an employer and employee have agreed to disregard the requirement, the employer contribution will be paid on top of an
employee’s gross salary or wages.