Currently, KiwiSaver works on an opt-out system. This means that when you start a new job, if you’re not already a KiwiSaver member, you’ll get automatically enrolled into the employer’s chosen scheme, or a default fund, if you’re eligible.
If you’re aged between 18 and 64 years, automatic enrolment in KiwiSaver applies when you start a new job with a new employer and your job is:
- permanent part-time
- a temporary contract for more than 28 days
- as a casual agricultural worker for more than three months.
Within the first eight weeks, you need to decide whether to remain in KiwiSaver, or opt out. While Canstar can’t advise you either way, we would caution you to think long and hard before opting out. There are many benefits to KiwiSaver that you’ll miss out on if you leave.
Are there any exceptions to auto-enrolment in KiwiSaver?
There are some exceptions to automatic enrolment into KiwiSaver. These exceptions include if you:
- are under 18
- are a casual agricultural worker
- are an election day worker
- are a private domestic worker and you pay your own PAYE
- are employed under a temporary contract for fewer than 28 days (if the contract’s extended beyond 28 days, you’ll be automatically enrolled on day 29)
- are a casual employee who receives holiday pay with your wages
- are on paid parental leave or ACC
- stay on the same payroll
- when a business is taken over or amalgamated, or
- if you relocate with the same employer eg transfer between branches, or if you are promoted
- only receive schedular payments (formally withholding payments)
- aren’t required to have PAYE deductions made from your salary and wages
- revert to an employer from whom you were seconded, straight after that secondment
- are already employed as a teacher and transfer to another state or state integrated school
- are an employee of the New Zealand State Services working overseas
- are a shareholder employee and your income is not subject to PAYE.
Inland Revenue takes up to three months after you’ve been automatically enrolled to send your contributions and your employer’s contributions to your KiwiSaver provider.
KiwiSaver contribution rates: a new job could be a prompt to review yours
When you start employment, you’ll be given a KiwiSaver employee information pack, called KS3. You need to complete the KiwiSaver deduction form in the KS3 pack and return it to your employer.
The KiwiSaver deduction form states what percentage of your before-tax salary you want to go towards your KiwiSaver savings. If you are already enrolled in KiwiSaver, this is a good prompt to review whether you’re in a position to contribute more.
Your employer must make a minimum of 3% contribution to your KiwiSaver account. But there’s flexibility around how much you contribute to KiwiSaver. Since the KiwiSaver savings scheme started in 2007, the government has expanded contribution rates to include five options: 3%, 4%, 6%, 8% and 10%.
Due to the nature of compound returns, making a small increase to your KiwiSaver contributions should, hopefully, make a minimal difference to the salary you receive on pay day, but help you to build more substantial retirement savings, or a first home deposit.
Also, you can change your contribution rate every three months, unless your employer agrees to a shorter time frame. To make a contribution rate change, you need to let your employer know, in writing, by completing a KiwiSaver deduction form (KS2) or by writing a letter, indicating your new contribution rate.
What if you want to switch KiwiSaver provider or scheme?
If you’re automatically enrolled into a default KiwiSaver scheme, or the scheme nominated by your new employer, you should not use this as an excuse to set and forget. You might think being in any KiwiSaver scheme is better than nothing and, in some ways this could be true, but you should still be proactive in checking that your KiwiSaver scheme is the best fit for you and your finances. For example, what fees are you paying and do your scheme’s investments align with your personal values, for example your environmental concerns?
To help you with your choice, Canstar researches, rates and compares KiwiSaver providers and schemes, so you can weigh up your available options more easily. You can check these KiwiSaver comparisons on our website. The button below will take you directly to Canstar’s free KiwiSaver comparison tools.