7 April 2022

How a KiwiSaver loophole short-changes employees

How a loophole allows employers to include their KiwiSaver contribution in an employee's wages.

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Warwick A.
09 May 2022
Employers Short Sighted

Any employer rorting their employees by paying the employer contribution from the employees salary is being very short sighted. New Zealand along with other countries in the developed world are beginning to experience population decline due to the baby boomer generations retiring from our paid workforce.

New Zealand is starting to experience heightened competition for its skilled workers from Australia and elsewhere in the developed world. Our unemployment rate (May 2022) is the lowest it has been for many years, so NZ employers are also competing with other employers in NZ to a greater extent.

Wages and conditions in NZ need to be improved to attract and retain young people in our workforce and mean spirited employers will undermine their own businesses if they do not change their remuneration policies and pay employer Kiwisaver contributions on top of attractive and fair wages and conditions.

Colin N.
10 Apr 2022
Consumer Bias

I think this is a biased presentation. The employer has to protect the position where they have agreed with an employee's request to have a higher salary/wage rather than the same aggregate amount as salary/wage plus Kiwi Saver. Without the protection of a "total remuneration" clause, an employee who later wishes to make the employer pay Kiwi Saver contributions will be rorting the agreement.

Sarah W.
10 Apr 2022
It’s all about the initial ‘salary’ discussion

This is only an issue if you don’t realise what you are signing up to at the time you discuss and agree your package. It happened to us, and what we thought was a pay rise to move jobs left us no better off. It’s trickery if it’s not clearly spelled out by the employer in their offer (NOT buried in the small print). It leaves a terrible taste in the mouth at the start of an important relationship. If you know the arrangement and go in with your eyes open that’s different. Thanks for raising awareness of the practice. I always ask now.

09 Apr 2022
My employer does this: I think it is wrong

I moved job recently. Did not know my new job was a total remuneration package until I had left my old job and was pretty much committed to the move. They are a big, profitable multinational and I think this ill becomes them. In other respects they are a great employer. This just seems mean and petty. The result was that the small pay increase I thought I'd negotiated went on my Kiwisaver, leaving me no better off.

John T.
07 Apr 2022
Oranges and lemons: they're all citrus

As long as the employer is paying the minimum wage plus 3%, I cannot see any difference between the employer's contribution being paid on top of the remuneration package or as part of it.
An employee might be on a salary package of, say $55,620, from which 3%+3% is deducted for KiwiSaver, or a salary of $54,000 from which the employee's 3% is deducted and to that the employer's 3% added, arriving at (more or less) the same result.
I can see that clarity would come from one or the other method being mandated, but if anything it seems more logical to make total remuneration the default. That would, however, probably require the employer's 3% contribution to be compulsory, regardless of whether the employee wished to contribute or not.
And that, surely, would be a good thing.