WILL THERE BE ANY FURTHER CHANGES TO KIWISAVER?
The government believes that the necessary major changes have been made to ensure the scheme is sustainable and affordable, and will therefore leave the basic architecture of the scheme unchanged. However, as more information is obtained about the scheme’s performance, some of the administrative details of the scheme may be reviewed and adjustments made to make the scheme run more efficiently. The government will endeavour to ensure there is consultation with key stakeholders on any further changes.
I AM ALREADY A MEMBER OF KIWISAVER CONTRIBUTING AT 4%. WILL I AUTOMATICALLY BE MOVED TO THE MINIMUM CONTRIBUTION RATE OF 2%?
No, current members will continue to contribute at their current contribution rate but will have the option to change to 2% if they feel that this is in their best interest.
IF I AM AUTOMATICALLY ENROLLED IN KIWISAVER AFTER 1 APRIL 2009 AND MY DEFAULT CONTRIBUTION RATE IS 2%, CAN I ELECT TO CONTRIBUTE AT A HIGHER RATE?
Yes, once you are enrolled in KiwiSaver you may elect to contribute at a higher rate, either 4% or 8%.
WHY HAS THE FEE SUBSIDY OF $40 A YEAR BEEN REMOVED?
The fee subsidy was designed before further incentives were added in Budget 2007. The current member tax credit gives incentive to members who contribute to KiwiSaver, reducing the need for a fee subsidy.
If I reduce my contribution rate to 2% will this also affect my Mortgage Diversion with Grosvenor?
Yes. But with Grosvenor you don’t need to complete a form or do anything as our System automatically only divert the percentage allowed. Under the current legislation you can only divert up to 50% of YOUR contributions to the Grosvenor KiwiSaver Scheme. You can’t divert any other contributions such as lump sums, employer contributions or Member Tax Credits. So if you change your contribution rate to 2%, you will only be able to divert 1% towards a mortgage for your principal place of residence.
AS AN EMPLOYER, I CURRENTLY CONTRIBUTE 1% INTO MY KIWISAVER EMPLOYEES’ ACCOUNTS. HOW DOES SETTING THE MINIMUM EMPLOYER CONTRIBUTION RATE AT 2% AFFECT ME?
You will need to increase your employer contribution rate to 2% from 1 April 2009, but are not longer required to contribute more than this amount.
AS AN EMPLOYER, I HAVE ALREADY CHOSEN TO CONTRIBUTE 4% INTO MY KIWISAVER EMPLOYEES’ ACCOUNTS. HOW DOES SETTING THE MINIMUM EMPLOYER CONTRIBUTION RATE AT 2% AFFECT ME?
This depends on the contractual arrangement you have with your employee about KiwiSaver employer contributions. You may wish to re-negotiate your superannuation offer with employees.
How does discontinuing the employer tax credit affect me as an employer/ employee?
As an employer, from 1 April 2009 you will no longer be able to claim the employer tax credit of up to $1,040 per employee from the government. This will mean you will have to absorb the cost of employer contributions in the short-term. Over time, the government expects that employer contributions will become a part of the normal wage bargaining process. As an employee, initially the employer tax credit will have no effect. However, over time, employer contributions will become part of the normal wage bargaining process.
HOW DOES THE REDUCTION IN THE EMPLOYER SUPERANNUATION CONTRIBUTION TAX (ESCT) EXEMPTION CAP AFFECT ME AS AN EMPLOYER/EMPLOYEE?
As an employer, you will have to administer the ESCT exemption. If you pay your employees at an employer contribution level above 2% (that is, above the amount exempt from ESCT), you will have to pay ESCT on those contributions. If you are an employee and your employer contributes above 2%, your employer will now pay tax on your employer’s contributions that are above 2%. This in effect means there will be less money going in to your KiwiSaver account. For those employees whose employers pay employer contributions at the minimum amount, there will be no change to your employer contributions.
WILL MY TAKE-HOME PAY BE REDUCED AS A RESULT OF EMPLOYER CONTRIBUTIONS?
The KiwiSaver Act is being amended to ensure that when an employee joins KiwiSaver, the compulsory contribution from their employer is a genuine addition to their existing gross pay. Over time, the changes will make it possible for employers to take total remuneration approaches to wage bargaining. The government will allow such arrangements to occur, if they are negotiated between employees and employers in good faith.