Changes to KiwiSaver from 1 April 2012

 

We create customised solutions that best meet your preferences:

  • Adapting your current superannuation set up (if you have one) to be compatible with KiwiSaver requirements
  • Organising a new KiwiSaver scheme for your employees
  • Recommending master trusts providers if needed
  • Conducting superannuation seminars for employees
  • Supporting HR and payroll staff in administering contributions with training

Contact us to see how we can help you and your employees gain the full benefits of KiwiSaver.

 

 

Whilst the review of default providers is getting media attention the general public appears to have overlooked the financial implications of the governments removal of financial incentives in the last budget.

 

Someone on the average wage of $50,000 was contributing 2% but received 6% into their KiwiSaver account before the changes.  This has now reduced to 4.7%.

 

An employee on $100,000 was receiving a 5% contribution but now gets just 3.9%.

 

Whilst these changes save the government money, they will reduce the overall level of private sector savings for New Zealand.

 

The graph below shows the annual changes that took affect on 1 April 2012 to KiwiSaver. Not only are employer contributions now taxed at the member’s PIR rate, the Government is now providing a Member Tax Credit (MTC) at a rate of $0.50 per $1 member contribution, up to a maximum of $521 per year. This has halved from the previous MTC of $1 per $1, to a maximum of $1083 per year.

 

The first graph considers an employee who earns $50,000 per year (before tax).

 

 

 KIWISAVER CONTRIBUTION CHANGES (2% OF SALARY)

 

 

This next graph considers an employee who earns $100,000 per year (before tax)

 

 

 KIWISAVER CONTRIBUTION CHANGES (2% OF SALARY)

 

 

Is there a better way…?

 

  • To get the most bang for your bucks through superannuation and KiwiSaver?
  • To still get the member tax credit from the Government?

 

THE BETTER WAY (2% OF SALARY)

 

  • Save 2% or more of your salary with Super – subject to ESCT**
  • Go on a contribution holiday with KiwiSaver
  • Make voluntary payments of $90 per month to KiwiSaver
  • Gives you the maximum member tax credit with the flexibility to take Super when you leave service (KiwiSaver locked in till age 65)

**ESCT – employer superannuation contribution tax – at your personal marginal tax rate BUT benefits paid out tax free.