MrsFychan

for everyone who has a paid job the employer HAS to offer you enrolment into a kiwi saver scheme when you start. If they haven't then contact IRD and discuss.
I have found out that my employer should of offered me an enrolment 2 yrs ago when I started but being green and just off the plane I knew nothing. It is also possible that the company will now have to pay me the outstanding amount they should of done over the last 2 years with myself making no contributions. bloody hope so, in the hands of IRD at the moment

jmh

Ooohhh, naughty. I work for a payroll company and we come across fairly frequently (and a few other illegal naughties). Mostly ignorance rather than dishonesty.

There are some exemptions:

Employees exempt from automatic enrolment

Not all new employees need to be automatically enrolled. If your employee is:

under 18
over 65
a temporary or casual employee
a casual agricultural worker
a private domestic worker
on a work permit or visa
changing jobs but not changing payroll
a contractor
a shareholder-employee
a working partner of a partnership
working owners of a look-through company
a seconded employee

Details here: Employees exempt from automatic enrolment (How KiwiSaver affects your employees)

MrsFychan

so if I was on a RV which upgraded to a PRV January 2014 (so 2 yr date) am I still entitled for the time under the RV?

Bo-Jangles

The automatic enrolment only applies if you are entitled to be here indefinitely, so they would not have been obliged to enrol you if you were on RV when you started the job.

MrsFychan

but they should of told me about it and given me an option?

Bo-Jangles

I don't think so. They're not obliged to tell you anything as far as I know - it's an arse upwards system in that the employer has to automatically enrol people who are eligible and then you can choose to opt out. i.e. you don't have a choice other than to state after the fact that you don't want to join.

Therefore I can't imagine there is any onus upon them to invite you to join if they don't have to, because of course there is a cost to them of having you in the scheme.

MrsFychan

speaking to IRD all employers are legally bound to offer it, its up to the employee to say yes or no. the grey area that has cropped up in this discussion is am I entitled to the portion when I was on a RV visa.?
IRD will let me know in approx 2 weeks what their findings are.

Snap Shot

If it turns out that, I'm assuming, 2 years employer contributions are due for your KiwiSaver account, are you liable to pay the equivalent employee back payments into your KiwiSaver too ?

It seems to me that the employer only pays into KiwiSaver if the employee pays into KiwiSaver.

So, if it's agreed that your KiwiSaver account is owed employer contributions and, say, it's paid in one lump sum. Are you somehow going to have to find the equivalent lump sum to pay in too ?

Unless IRD find that only the employer is liable to back pay KiwiSaver contributions, current contributions from you and your employer to continue as normal.

Hang on, something's just dawned on me. You should have been automatically enrolled in the KiwiSaver scheme from the beginning of your paid employment and been given the form to fill in and submit if you wished to opt out. I know I was. I opted out and was advised that a couple of KiwiSaver contributions would be debited from my pay for my KiwiSaver automatically but refunded when I'd completed and sent in my opt out form. The refund was credited to my bank account from IRD in due course.

So, that means you were never enrolled. I'm guessing this may have been done as a cost cutting measure by your employer so they didn't have to pay their contributions. Blimey !

MrsFychan

I do not currently have a Kiwi saver. IRD has informed me that I do not need to pay the employee contributions if they decide I am eligible for the employer back payments as the employer should of informed me about the scheme. IRD are aware that I was fresh of the plane when I started working there, so obviously was being lead by the employer as to my rights. IRD will allocate me a saver provider if I do not wish do the donkey work of finding my own.
I only stumbled across it as I found some documentation dated 2005 from IRD with Kiwi Saver information in it. The whole place is a complete mess with the Chiefs having no idea what they are supposed to be doing.

Snap Shot

Sorry, but that's how it seems from how you describe it.

BTW, you being fresh off the plane should not have been either here or there wrt KiwiSaver contributions. I'm not saying for one minute that it's your fault.

I had been in the country 6 weeks when I got my first job with an employment agency. I was advised how KiwiSaver worked and that I could opt out.

I'm giving serious consideration to starting a KiwiSaver scheme, now I know I can withdraw funds when I've lived overseas for a year. (But not Australia.) Also, I don't have to be in paid employment to open a KiwiSaver scheme, just as well really. So, I'm not quite sure how I'm going to fund my deposits with no personal income. To bad I'm not allowed to claim Unemployment Benefit as my husband earns more than the minimum wage. WTF is that about ? I paid income tax when I was working but when claiming I'm treated as a part of a couple. Culture clash between being unemployed in Britain and being unemployed in New Zealand ? Yes, seriously. (For the record, I would prefer to be employed in either country.)

I don't know which provider to use. What puts me off is there's fees to be paid by me to the organisation that I nominate to run my KiwiSaver. So, it's a glorified insurance scheme, really. Doesn't the scheme administration fees payable by the KiwiSaver scheme holder undermine my contributions rendering the scheme a bit useless ? I don't recall having to pay the British Government any fees to administer my National Insurance contributions.

Is the NZ government 'hand in glove' with all the KiwiSaver providers so the KiwiSaver providers can make money from people who are contributing to their superannuation from their earnings ? Therefore undermining people's overall superannuation contributions and future financial security.

Why isn't the NZ government administering it at no charge to scheme members ?

I understand there's a starting incentive of $1,000 per scheme member payable after a qualifying period. Also a $512 bonus payable each year as long as $512 has been paid as a minimum by each scheme member. I learned those two things from a post by ChCh for Me who posts on this site from time to time.

However, what is the overall interest payable on a KiwiSaver scheme ? If the answer is nothing, it doesn't look like a very attractive or even practical scheme. Also is anything being done so KiwiSaver contributions keep pace with inflation ? If not, it's dead money.

TommyLuck

First thing I'll say about Kiwisaver is that in essence you get "free" money in return for making a small contribution from your own salary.

If you genuinely can't afford to put away 3% of your income each week/fortnight/month to then get the bonus of your employer putting in their bit too that's very unfortunate.


As for contributions keeping place with inflation or having an interest rate - it's irrelevant to think in those terms.

Simply put inflation or interest rates have nothing to do with it.

The money one has in a KiwiSaver is subject to investment by the company administering the money which is why we pay fees.

It will be then up to, proportionately speaking, how much you apportion to a conservative fund, a balanced fund and a high risk fun. A balanced fund being a mix of the conservative and high risk funds.

You can get as much information as you like from the respective KiwiSaver scheme providers about where they look to invest your money to make an informed decision.

So, for example, you can choose to put 50% in a balanced fund, 20% in a high risk fund and 30% in a conservative fund to hedge your bets.

You might go all out and put 90% in a high risk fund an the chance you might be laughing in 20 years.

You can track your KiwiSaver funds and change the ratios of your funds at any time.

So the maintenance of the management and investment of your money is where the fees come in, but remember not all of the money invested was your money in the first place - it was contributions from an employer.

YOU have the choice not to join a KiwiSaver scheme. YOU have the choice to decide which KiwiSaver scheme YOU go with and YOU can decide to it change at any point, although I understand this doesn't happen very quickly. YOU even have the choice of deciding how much you want to contribute; 3%, 4% or 8%. YOU have a choice (to a point) at how that money is invested - conservative, balanced and high risk.

So it's on you as to who much your money makes on top of contributions.

As I understand it, KiwiSaver money is not taxed until to being to make withdrawals except in some circumstances.

That is to say when you are retired perhaps and want an income from your KiwiSaver account you will be taxed according to your overall income which might come from (including but no limited to) - KiwiSaver Scheme, State Pension, Business Interests, Rentals you own, other investments, savings accounts, etc.

So the IRD don't take a cut of any money put away until it starts coming out again. For instance they don't look at your KiwiSaver account at the end of each year and take a percentage according to how much your account is worth. EDIT - They do, but on growth - see chc4me below.


If you want a guaranteed interest rate, you can put your money in a savings account, where no one else will be contributing and you will also pay tax on your interest on a monthly basis.

For most regular people, KiwiSaver seems to make sense.

chc4me

Great post by Tommyluck. However tax does apply:
Your contributions are taxed at source as income (PAYE)
Your Employers contributions are taxed (ESCT)
Growth is taxed at your margin tax rate (10.5% / 17.5%/ 28%)

The good news is withdrawals are not taxed.

Watching this thread with interest in the outcome....

TommyLuck

Ah there you go, although the sentence you quoted of mine doesn't make sense.

My grammer is sew pour

I thought the contributions themselves being taxed was implicit by the fact we pay the relevant income tax. I should've been clearer on this.

I'm interested in the growth being taxed chc4me.

What if there is negative growth in ones KiwiSaver fund?

And over what term is growth measured over?


Either way, the way they've done it is that you don't get "double" taxed which is fair and proper.

chc4me

In simple terms, tax is calculated annually on the Growth + the Income between 1 April and 31 March. Tax losses can occur in which case a refund is paid into your Kiwisaver account. Kiwisaver providers issue tax statements each year showing how much tax has been paid (or rebated). Generally if you have told your provider the correct tax rate (called a PIE Tax Rate), then you wont need to include the details in a personal tax return.

Bo-Jangles

It is actually a fundamental difference to note, as in the UK your income tax is calculated after deduction of pension contributions and here the contributions are paid from your net pay after deduction of taxes.