KiwiSaver for employers: contributions, obligations, and how it works

Published Saturday 15 August 2026

Table of contents

• What is KiwiSaver?
• KiwiSaver contribution rates
• KiwiSaver changes from 2026
• Employer KiwiSaver obligations
• KiwiSaver opt-out and exemptions
• How to calculate KiwiSaver contributions
• Simplify KiwiSaver with Xero payroll
• FAQs on KiwiSaver employer contributions

Key takeaways

• As an employer, you're required to contribute a minimum of 3.5% of each eligible employee's gross salary or wages to KiwiSaver from 1 April 2026, rising to 4% from 1 April 2028.
• You must automatically enrol new employees aged 18 to 65, deduct their chosen contribution rate from each pay, and report contributions through payday filing alongside PAYE.
• Employer contributions attract Employer Superannuation Contribution Tax (ESCT), which you calculate and pay based on each employee's earnings bracket, with rates ranging from 10.5% to 39%.
• From 1 April 2026, employees currently contributing 3% will move to 3.5% automatically, though they can apply for a temporary rate reduction back to 3% for three to 12 months.

What is KiwiSaver?

KiwiSaver is New Zealand's voluntary, work-based savings scheme designed to help people save for retirement. It's backed by the government and managed through private fund providers. Most employees are eligible to join, and many will already be members when they start working for you.

Three sources fund a KiwiSaver account: the employee's own contributions (deducted from their pay), the employer's contributions (paid on top of salary), and government contributions (a top-up based on member contributions). As an employer, you play a central role by handling enrolment, deductions, and reporting.

How KiwiSaver works for employers

Your responsibilities fall into three main areas. First, you need to automatically enrol eligible new employees and provide them with a KiwiSaver information pack. Second, you deduct the employee's chosen contribution rate from their gross pay each pay period and pay your own employer contribution on top.

Third, you report all KiwiSaver contributions to Inland Revenue (IR) through payday filing, alongside your regular PAYE returns. If you're new to employing staff, KiwiSaver is one of the first payroll responsibilities you'll need to set up.

KiwiSaver contribution rates

KiwiSaver contributions come from three sources, each with different rates and rules. Here's how they break down.

Employee contribution rates

Employees can choose from five contribution rates: 3.5%, 4%, 6%, 8%, or 10% of their before-tax pay. If an employee doesn't choose a rate, they'll contribute at the default rate of 3.5%. Employees can change their rate at any time by contacting their KiwiSaver provider or filling out the relevant IR form. You then update their deductions from the next pay period.

The employee contribution is deducted from their gross pay before they receive their take-home amount. You're responsible for making this deduction accurately each pay run and passing it on to Inland Revenue.

Employer contribution rates

You must contribute a minimum of 3.5% of each employee's gross salary or wages.This contribution sits on top of the employee's salary; you can't include it within their agreed pay.

You're free to contribute more than the minimum if you choose. Some employers offer higher contributions as a benefit to attract and retain staff. Any amount above the minimum is voluntary and can be changed at your discretion.

All employer contributions, whether at the minimum rate or above, are subject to Employer Superannuation Contribution Tax (ESCT). You'll find more detail on ESCT rates and calculations later in this article.

Government contributions

The government also contributes to each member's KiwiSaver fund. The rate is 25 cents for every $1 the member contributes, up to a maximum of $260.72 per year. To receive the full government contribution, a member needs to contribute at least $1,042.86 during the year (running from 1 July to 30 June).

Two changes take effect from 1 July 2025. A new income threshold of $180,000 applies, meaning members earning above this amount won't receive government contributions. And 16 and 17-year-old members become eligible for government contributions for the first time.

KiwiSaver changes from 2026

The government's Budget 2025 introduced several reforms to KiwiSaver that affect both employers and employees. If you employ KiwiSaver members, these updates affect you directly.

New contribution rates from April 2026

Since 1 April 2026, the minimum contribution rate rose from 3% to 3.5% for both employees and employers.A further increase to 4% takes effect from 1 April 2028.

Temporary rate reduction option

Employees can apply to keep their contribution rate at 3% for a period of three to 12 months, rather than moving to 3.5%. Applications open from 1 February 2026.

If an employee receives approval for a temporary reduction, you can also match the reduced rate of 3% during that period. Once the temporary reduction ends, contributions bump up to 3.5%. Employees can apply for another temporary reduction after the first one expires; the option is repeatable.

Changes for 16 and 17-year-old employees

KiwiSaver is expanding to better support younger workers. From 1 July 2025, 16 and 17-year-old KiwiSaver members became eligible for government contributions for the first time.

Since 1 April 2026, employer contributions also became compulsory for these younger employees, aligning their entitlements with adult workers. If you employ anyone in this age group who's a KiwiSaver member, you'll need to start making employer contributions from that date.

This is a new obligation that didn't previously apply. Check whether any of your current employees fall into the 16 to 17 age bracket to make sure they’re set up correctly.

Employer KiwiSaver obligations

You have several compulsory responsibilities when it comes to KiwiSaver. Missing these obligations can result in penalties from Inland Revenue, so it's worth understanding each one clearly. You're also required to keep records of all KiwiSaver-related transactions and correspondence for at least seven years.

Enrolling employees

You must automatically enrol any new employee aged 18 to 65 who isn't already a KiwiSaver member. Within seven days of their start date, provide them with a KiwiSaver information pack (the KS1 form).

Employees outside the 18 to 65 age range, independent contractors, and casual workers aren't subject to automatic enrolment. However, they can choose to opt in by completing a KS2 form and giving it to you.

Keep the following in mind when enrolling staff:

• Provide the KiwiSaver information pack within seven days of the employee's start date.
• Begin deducting contributions from the employee's first pay.
• Notify Inland Revenue of the new enrolment through your payday filing.
• Store enrolment records for at least seven years.

Deducting and paying contributions

Each pay period, you need to deduct the employee's chosen KiwiSaver contribution from their gross pay before calculating net pay. You also calculate and pay your employer contribution on top of the employee's pay.

Report both the employee's and employer's contributions to Inland Revenue through payday filing. KiwiSaver contributions follow the same payment schedule as your PAYE; you pay them together to IR by the due date for the relevant period.

If you pay employees on different cycles (for example, some weekly and some fortnightly), you'll need to include the correct KiwiSaver amounts in each payday filing. Accuracy matters here, as discrepancies between what you've deducted and what you've reported can trigger queries from IR.

ESCT (Employer Superannuation Contribution Tax)

Employer Superannuation Contribution Tax, or ESCT, is a tax that applies to the contributions you make to your employees' KiwiSaver accounts. It's not a deduction from the employee's pay; you pay it on top of your employer contributions.

ESCT rates depend on the employee's earnings and range across five brackets:

• 10.5% for earnings up to $18,720
• 17.5% for earnings from $18,721 to $64,200
• 30% for earnings from $64,201 to $93,720
• 33% for earnings from $93,721 to $216,000
• 39% for earnings over $216,000

To work out the right ESCT rate, add the employee's gross salary or wages to your employer KiwiSaver contribution for the year. The total determines which bracket applies.

You also have the option to treat employer contributions as salary or wages and tax them under PAYE rules instead. This can simplify things if you already have PAYE processes in place, but for most small employers, using the ESCT brackets is the standard approach.

KiwiSaver opt-out and exemptions

Not every employee will stay in KiwiSaver, and some situations mean contributions pause or stop altogether. Here's how each scenario works.

Employee opt-out process

New employees who've been automatically enrolled have an eight-week window to opt out of KiwiSaver. The opt-out period starts from the date of their first contribution deduction.

To opt out, the employee completes a KS10 form and gives it to you. Once you receive a valid opt-out request within the window, you stop making deductions and refund any employee contributions already deducted. Your employer contributions for that employee are also refunded.

If the employee doesn't opt out within the eight-week window, they remain a KiwiSaver member and contributions continue. They can still apply for a savings suspension later, but they can't opt out entirely after the window closes.

Savings suspensions

Employees who've been KiwiSaver members for at least 12 months can apply to Inland Revenue for a savings suspension (previously called a contribution holiday). The default suspension period is three months, though IR may grant up to one year depending on the member's circumstances.

When you receive notification from IR that an employee has an active savings suspension, you stop deducting their contributions. You also stop making employer contributions for that employee during the suspension period.

Once the suspension ends, Inland Revenue will notify you, and you resume deductions from the next pay period. The employee can also choose to end their suspension early by contacting IR directly.

When employer contributions stop

You stop making employer contributions in several specific situations:

• The employee reaches New Zealand Superannuation qualifying age (currently 65).
• You receive a non-deduction notice from Inland Revenue.
• The employee has an active savings suspension.
• The employee's employment ends.
• The employee opts out within the eight-week window.

How to calculate KiwiSaver contributions

Calculating KiwiSaver contributions is straightforward once you know the rates and the employee's gross pay. Here's how to work through both the employee and employer sides, with worked examples.

1. Calculate the employee contribution

Multiply the employee's gross salary or wages by their chosen contribution rate. For example, an employee earning $60,000 per year at the 3.5% rate would contribute $2,100 per year, or $175 per month if paid monthly.

For an employee paid fortnightly on the same salary, the gross pay per period is $2,307.69. At 3.5%, the KiwiSaver deduction would be $80.77 per fortnight.

2. Employer contribution and ESCT calculation

Your employer contribution follows the same formula: multiply the employee's gross salary or wages by your contribution rate (minimum 3.5%).

Using the same $60,000 salary example, your default employer contribution at 3.5% is $2,100 per year. To find the ESCT rate, add the salary ($60,000) to the employer contribution ($2,100), giving a total of $62,100. This falls in the 17.5% ESCT bracket.

The ESCT on your $2,100 contribution is $367.50 per year. So adding these together, your total annual cost for this employee's KiwiSaver is $2,467.50.

Here's a summary of the numbers for this example:

• Employee's annual gross salary: $60,000
• Employer contribution at 3.5%: $2,100
• Combined earnings for ESCT bracket: $62,100 (17.5% bracket)
• ESCT payable on $2,100 contribution: $367.50
• Total annual employer cost: $2,467.50

If the same employee chose a higher personal contribution rate, for example 6%, that wouldn't change your obligation. Your minimum employer contribution stays at 3.5% of their gross pay regardless of the employee's chosen rate.

Simplify KiwiSaver with Xero payroll

Managing KiwiSaver deductions, employer contributions, and ESCT calculations each pay run can add up to a lot of manual work.Xero automatically calculates employee and employer KiwiSaver contributions based on each person's chosen rate. ESCT is built in, so you don't need to look up brackets or do separate calculations. When the 2026 rate changes take effect, Xero will update automatically, so you won't need to manually adjust each employee's settings.

Payday filing is built into the workflow too: Xero sends your employment information to Inland Revenue directly, including all KiwiSaver details, so you can file with confidence every pay run.

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FAQs on KiwiSaver employer contributions

Here are answers to common questions employers have about KiwiSaver contributions and obligations.

Do you have to pay KiwiSaver for part-time employees?

Yes. If a part-time employee is a KiwiSaver member and meets the enrolment criteria, you must make employer contributions on their gross earnings, just as you would for a full-time employee.

What happens if an employer doesn't pay KiwiSaver contributions?

Inland Revenue can charge penalties and use-of-money interest on unpaid employer contributions. Consistent non-compliance may lead to further enforcement action.

Can an employer contribute more than the minimum?

Yes. You can voluntarily contribute above the minimum rate. Additional contributions are still subject to ESCT. Some employers offer higher contributions to attract and keep good staff.

Do you pay KiwiSaver for contractors?

No. Independent contractors aren't employees, so automatic enrolment and employer contribution obligations don't apply. KiwiSaver contributions are only required for people engaged under an employment agreement.