As an employer you have to make KiwiSaver, or a complying superannuation scheme, available to all your staff, give them an information pack and pass on their details, such as names, addresses and IRD number to Inland Revenue.
You also need to deduct their contributions from their salary and forward them to Inland Revenue. You also need to contribute to your staff's KiwiSaver schemes (subject to certain exceptions). All contributions are paid to Inland Revenue through the PAYE system.
Currently, employees must contribute a minimum of 2% of their gross salary or wages and, in most cases employers must also contribute a minimum of 2% of their gross salary or wages. In the 2011 Budget it has been proposed that the minimum contribution rate for both employees and employers will rise to 3% from 1 April 2013.
To start with, when staff first sign up to their first KiwiSaver scheme they'll get a $1,000 kick start from the Government towards their savings, subject to conditions. The Government is also providing up to $521.43 worth of member tax credits each year to employees who meet the qualifying criteria. The member tax credit and kick-start are paid into their KiwiSaver schemes.
It is also compulsory (unless your employee is under 18 or older than the age of eligibility to receive a retirement benefit from KiwiSaver, or is having complying fund member contributions already deducted from their salary) for employers to make contributions on behalf of their staff, meaning employees will save even more.
Of course the most important reason for your staff to get into KiwiSaver is that it's an easy and effective way to get into retirement savings – and the earlier they start, the better off they'll be.
The TOWER KiwiSaver Scheme offers employers a lot of great benefits.
For a start (because you probably spend enough time administering your business) we'll help you set up access to the TOWER KiwiSaver Scheme, and provide one point of contact for all the questions you and your staff might have.
We'll work with you to make sure the TOWER KiwiSaver Scheme fits with your business. Whether you've got an existing workplace superannuation scheme or you're new to superannuation savings, we can create a solution that's right for you and your staff.
We'll make it easy for your staff to understand all the KiwiSaver benefits they're entitled to, such as the $1,000 kick start and any member tax credits.
We have five investment funds that are professionally managed and easy to understand.
And we can provide you with access to other staff benefits, such as health, life and income protection insurance.
Your staff will have 24 hour access to KiwiSaver information, right here through this site.
Finally, we'll give your employees all the support they need to set up their TOWER KiwiSaver Scheme account, such as annual statements and other financial information to help them. We can also come and present to your staff and explain it all in person if you like.
There are no fees or extra costs in choosing the TOWER KiwiSaver Scheme for your workplace.
If your staff join the TOWER KiwiSaver Scheme, currently you'll need to pay a minimum contribution of 2% into their scheme (subject to certain exceptions). See details under the question "Why would my staff get into KiwiSaver." In the 2011 Budget it has been proposed that the minimum contribution rate for both employees and employers will rise to 3% from 1 April 2013.
KiwiSaver works by deducting money straight from your pay and putting it into a fund of your choice. It works like PAYE, and uses the PAYE system to get your money to Inland Revenue.
Your employer is responsible for providing you with information on KiwiSaver. If you are enrolled or sign up they'll manage your contributions and send them through to Inland Revenue to your chosen KiwiSaver scheme. Your employer is currently required to make a minimum contribution to your TOWER KiwiSaver Scheme account of 2% of your gross salary or wages. (subject to certain exceptions, refer to the TOWER KiwiSaver Scheme investment statement for further details). In the 2011 Budget it has been proposed that the minimum employer contribution rate for all new and existing members will rise to 3% from to April 2013.
You have a lot of choice when it comes to KiwiSaver, including who you want to look after your money. If you don't choose a provider, Inland Revenue will choose a default provider for you. Your employer may also choose a provider.
There are six default providers including TOWER, but it's much better for you to choose your own KiwiSaver provider.
If you start a new job you are automatically enrolled in KiwiSaver, however you can opt out between week 2 and week 8 of your employment, and any contributions you've made will be refunded to you.
When you first enrol in KiwiSaver the Government will give your KiwiSaver scheme a $1,000 kick start to help get you going.
If you are between 18 and the age of eligibility for a retirement benefit from KiwiSaver, the Government will currently contribute 50 cents for every $1 (dollar) you contribute, up to a maximum of $521.43 per year, subject to qualifying criteria.
It is also now compulsory for employers to make contributions into their staff's KiwiSaver Scheme accounts, if you are over 18 years old the current minimum employer contribution rate. In the 2011 Budget it has been proposed that the minimum employee contribution rate for all new and existing members will rise to 3% from 1 April 2013.
Your employer can contribute more than the minimum if they wish.
As long as you meet certain criteria, you can also use your TOWER KiwiSaver Scheme savings to put towards the purchase of your first home.
KiwiSaver is a long term retirement savings scheme. This means contributions are generally locked in until you're eligible for NZ Super (which is age 65 at the moment), or until you have been a member of a KiwiSaver scheme for five years – whichever is the later ('retirement age').
After that, you can choose to withdraw part or all of your savings as a lump sum, or you can make regular withdrawals, or you can simply continue saving.
You may be able to cash in a portion of your investment in KiwiSaver (which may or may not include the $1000 Government kick-start and member tax credit) prior to reaching retirement age. These circumstances are:
When cashing in your investment, any member tax credits are not payable if your withdrawal is for permanent emigration, or where your permanent residence was outside New Zealand but you had received the member tax credit for that period. You cannot access the $1000 Government kick-start or your member tax credit if you wish to make a withdrawal due to significant financial hardship or for the purchase of your first home. The $1000 Government kick start contribution and member tax credit will be payable on a withdrawal for serious illness. You may not charge or borrow against the security of your KiwiSaver balance.
* Legislation has been passed, which once in effect, will not permit KiwiSaver members to withdraw their balance from the TOWER KiwiSaver Scheme where they permanently emigrate to Australia. Instead, such members will only be able to transfer their scheme entitlement to certain qualifying Australian superannuation schemes. This change is expected to come into effect in late 2011. As at 19 September 2011 no specific date can be provided as the legislation relies on equivalent legislation in Australia being passed. For further information please call TOWER on 0800 379 372.
The TOWER KiwiSaver Scheme offers heaps!
With the TOWER KiwiSaver Scheme you may be eligible for all the benefits of a KiwiSaver scheme. These include:
You'll also have 24 hour access to information about how your savings are performing, right here through this website!
The TOWER KiwiSaver Scheme is an easy way to save through automatic deductions from your bank account. Lump sum payments can also be made at any time. More importantly the Government has provided incentives which make KiwiSaver a very attractive savings option.
For example: if you are over 18 years old and join now, you have the potential to accumulate an investment of up to $8,800 or more over 5 years, and under current legislation $2600 of that is funded by the Government:
YOURCONTRIBUTION
GOVERNMENTKICKSTART
MEMBERTAX CREDIT
RUNNINGTOTAL**
Total
$5,200
$1,000
$2,600
$8,800
* Based on you paying $1,040 a year (or $86.67 a month) to get the maximum benefit from the Government's member tax credit (subject to meeting qualifying criteria)
** No adjustment has been made for investment returns, fees or taxes. The amounts shown are for illustrative purposes only and are in no way guaranteed.
If you are over 18 and are either not employed or are self employed you may be eligible for most of the benefits of a KiwiSaver scheme except for employer contributions. You may be eligible for:
Once you have read the investment statement, there are two ways to join up to the TOWER KiwiSaver Scheme; you can sign up online or download an application form complete it and send it back to us at Freepost 521, PO Box 1849, Wellington. Contact us for an investment statement or download one here.
You will be required to verify your identity to us; follow the requests in the online sign up process or see the application form at the back of the investment statement for full details.
TOWER KiwiSaver Scheme members get access to five investment funds, covering a range of investment profiles. The five funds have been selected to provide a range of investment options to suit your needs, and you can choose the one(s) that suits you best.
If you are self employed, or not employed, there is no minimum payment required under the TOWER KiwiSaver Scheme rules, but to maximise the member tax credit benefits (for over 18 year olds and on the basis that you qualify for these benefits), you should contribute $1,040 each full year to 30 June (this can be paid annually, or on a regular basis). You can stop contributions to the TOWER KiwiSaver Scheme at any time.
To contribute on a regular basis, complete the direct debit authority form in the back of the TOWER KiwiSaver Scheme investment statement and send it to TOWER with your completed application form.
The TOWER KiwiSaver Scheme gives you the choice of five investment funds with differing profiles. Details are in the investment statement and we do recommend that you work through the 'What is your investment profile?' questionnaire in the investment statement to assist you in getting an idea as to the sort of investment that may be the appropriate investment for you and consult a professional financial adviser.
You can change your investment choice at any time and you may invest in more than one investment fund.
Provided you are making personal contributions to your TOWER KiwiSaver Scheme account, the Government will contribute on an annual payment basis the KiwiSaver member tax credit (MTC), an amount of 50 cents for every $1 (dollar) you contribute up to a maximum of $10 per week to your TOWER KiwiSaver Scheme account (approximately $521.43 per year). Your employer will also contribute to your TOWER KiwiSaver Scheme account when your wage or salary is paid. Your employer’s current minimum contribution is 2% of your before-tax annual wage or salary and is paid over and above what you earn from your job. In the 2011 Budget it has been proposed that the minimum employer contribution rate for all new and existing members will rise to 3% from 1 April 2013. With the power of compound interest, these employer contributions can make a big difference to the amount you save up through your TOWER KiwiSaver Scheme account. Employer contributions are well worth having and you are entitled to receive them under certain conditions. These benefits are subject to qualifying criteria.
a) The Government’s KiwiSaver member tax credit (MTC)
The Government will automatically contribute your MTC payment after the end of the KiwiSaver financial year (June 30) provided you have made personal contributions within that year and your permanent place of residence is in New Zealand, subject to qualifying criteria.
This MTC payment will match your personal contributions to your TOWER KiwiSaver Scheme account at the rate of 50 cents for every $1 (dollar) you contribute up to $10 per week (if you join the TOWER KiwiSaver Scheme part way through the year you will be entitled to a pro-rata MTC based on the duration of your membership)
To maximise this entitlement, you would need to save the equivalent of $20 per week into your TOWER KiwiSaver Scheme account
You can make this saving by regular contributions (including deductions from wage or salary) or lump sum payments
b) The employer’s KiwiSaver contribution
The employer’s contribution is worth an extra 2% per year of your wage or salary before tax and is paid on top of your earnings from your job (Meaning it is not deducted from your wage or salary). In the 2011 Budget it has been proposed that the minimum employer contribution rate for all new and existing members will rise to 3% from 1 April 2013.
So long as you are currently making personal contributions of at least 2% (proposed to increase to 3% from 1 April 2013) from your wage or salary before tax to your TOWER KiwiSaver Scheme account, the employer’s contribution is payable too whether you are working full time or have a part-time job.
Your employer cannot legally refuse to pay the employer contribution to your TOWER KiwiSaver Scheme account provided you are making your own contributions.
If you are working already or when you start a new job, you can obtain the employer’s contribution into your TOWER KiwiSaver Scheme account by telling your employer that you want to begin making personal contributions to your TOWER KiwiSaver Scheme account by regular deduction from your wage or salary.
Subject to qualifying criteria, if you want to buy your first home and intend to live in it (i.e. not rent it out) you can use the KiwiSaver funds you've accumulated to help purchase your first home once you have been a KiwiSaver member for at least three years. (Note the $1,000 kick start and Member Tax Credits are not able to be withdrawn for this facility). Not only can you make a one-off withdrawal of your funds to help buy your first home, but after 3 years of contributing you may also be entitled to a first home deposit subsidy from the Government of $1,000 for each year you have been contributing. The maximum available subsidy is $5,000 after 5 years of contributing.
There are certain qualifying criteria for the first home deposit subsidy. This is administered by Housing New Zealand. The current qualifying criteria can be found at the Housing New Zealand website http://www.hnzc.co.nz/hnzc/web/rent-buy-or-own/buying-your-first-home-with-kiwisaver/buying-your-first-home-with-kiwisaver_home.htm
The member tax credit is a Government contribution into your KiwiSaver Scheme.
For individuals able to permanently reside, and resident in New Zealand, aged between 18 and the age at which they can access their KiwiSaver savings, the Government will contribute 50 cents for every $1 (dollar) you contribute up to a maximum of $10 per week (approximately $521.43 per annum) and pay this as a lump sum into your TOWER KiwiSaver Scheme account as at 30 June each year, subject to qualifying criteria.
The amount of the tax credit you are eligible to receive depends on when you joined KiwiSaver and how much you contribute. For example if you joined halfway through the KiwiSaver year (1 January) and made a contribution you would be eligible to receive half of the member tax credit.
No. KiwiSaver is not a life sentence!
Some parents have held off from signing their children up to KiwiSaver because they think they are committing their children to making contributions until retirement age. Well, there's good news here. Although children in a part time job will have to contribute at the minimum contribution rate, with the TOWER KiwiSaver Scheme, if the children are not earning a salary or wage they will not have to make regular contributions to their TOWER KiwiSaver Scheme account. In addition, each KiwiSaver member can apply to take a contributions holiday after 12 months membership. Therefore, the sooner they join, the sooner they can take advantage of the benefits of KiwiSaver.
Remember, children get the one-off $1,000 Government kick-start when they first join too! Kick start your children's KiwiSaver account today!
If you sign up by completing a physical copy of the application form, nominate your school by inserting the school name in full in section 9 (School Nomination) of the form.
When signing up online enter the name of your school in full, under the section headed up Adviser Details.
If you are already in the TOWER KiwiSaver Scheme, and want to nominate a school, or wish to change your nominated school, please complete this form.
Note: It is important that you clearly write the full name of your chosen school. This way you will make sure we know who you want us to be donating money too!
There are so many reasons to join the TOWER KiwiSaver Scheme, and TOWER has just given you one more. If you have any questions at all about our Cash 4 Schools programme, or to obtain a copy of the TOWER KiwiSaver Scheme investment statement contact us or call 0800 379 372 and we'll be happy to help.School Registration Form