Bid to stop KiwiSaver double-up

Consumer NZ wants it to be mandatory for all employers to put KiwiSaver contributions on top of an employee’s pay package, rather than taking it out of the employee’s back pocket.

“KiwiSaver is meant to help people save,” said Consumer NZ lead investigative writer Dr Cherie Lacey.

“With sky-high prices for essentials such as food, petrol and energy, every cent of a pay cheque counts for many New Zealanders. Allowing this loophole to continue means employees are left short-changed.”

Under current laws, if an employer includes a “total remuneration” clause in an employment agreement, this allows them to deduct their KiwiSaver contributions from the employee’s pay.

For example, if an employee’s total annual remuneration is $56,000 (around the national median income) and they have opted in to KiwiSaver, a total remuneration clause will allow the employer to deduct the minimum employer contribution of 3 per cent from the employee’s salary. This means their actual annual salary is $1680 lower than they may have expected, at $54,320.

A total remuneration clause effectively makes an employee pay for their own KiwiSaver contribution twice.

The Ministry for Business, Innovation and Employment (MBIE) is leading work on reviewing five of 19 recommendations to enhance KiwiSaver. This includes the removal of KiwiSaver in total remuneration packages.

MBIE stated there is no set timeframe for this work.