From 1 July 2007, almost all new employees are automatically enrolled in the voluntary work-based initiative, while existing employees can choose to ‘opt in’ to a KiwiSaver scheme.
The main changes announced by the Government, in the May 2011 Budget, are in relation to:
- Member Tax Credits - The maximum member tax credit has reduced to $521.43 per year and the rate at which member tax credits match member contributions has reduced from dollar to dollar to 50c for every dollar contributed. To receive the maximum member tax credit an eligible member needs to contribute $1,042.86 each KiwiSaver year (1 July to 30 June).
- Employer Superannuation Contribution Tax (“ESCT”) - The current ESCT exemption for compulsory employer contributions will cease from 1 April 2012. From this date, the 2% compulsory employer contributions will have employer superannuation contribution tax (ESCT) deducted from them before being credited to the scheme.
- Proposed changes to contribution rates for employees and employers – The Government has proposed that from 1 April 2013 the minimum employee contribution and compulsory employer contribution rates will increase from 2% to 3% of gross salary or wages. The default employee contribution rate for members who do not choose to contribute at a higher rate will be 3%.
If you’re still deciding what’s best for you, there is a number of things to consider, including: whether or not to enrol, which scheme to join, how much to contribute, and what to do if you are already a member of an existing superannuation scheme. With so many options available to you, it’s a good idea to seek advice before committing to a decision. We are happy to help and offer our advice – please click here for more information.
Disclaimer: This website is operated by Kerstin Bain Insurance Advisors Limited and is not endorsed by, or affiliated with, the NZ government or Inland Revenue. Kerstin Bain Insurance Advisors Limited is using the KiwiSaver trade mark and logo under licence from Inland Revenue. To view the official New Zealand government KiwiSaver website, please click here.