KiwiSaver has changed. Find out how.

The KiwiSaver changes that took effect from 1 April 2009 are part of the Taxation (Urgent Measures and Annual Rates) Act passed on 15 December 2008. Further information on the effects of the changes to KiwiSaver, including case studies, can also be found on Inland Revenue’s website at www.ird.govt.nz.

What are the main changes to KiwiSaver?

The following changes took place from 1 April 2009:

1. The minimum member (employee) contribution rate is 2% of gross salary or wages, instead of 4%. Existing employee members can continue to pay 4% or 8%, and new employee members can elect to pay above 2% if that is their choice. However the automatic contribution rate for employed people joining KiwiSaver on or after 1 April 2009 is 2% instead of 4%.
2. The Government will no longer pay an annual fee subsidy.
3. The compulsory employer contribution rate is capped at 2%. However employers can still elect to contribute at a rate higher than 2% if that is their choice.
4. The employer tax credit has been removed. This means that employers won’t be able to claim the employer tax credit of up to $1,042.86 a year per employee from the Government.
5. The tax exemption (Employer Superannuation Contribution Tax (ESCT) previously SSCWT) on employer contributions is capped at 2% (ie equivalent to 2% of the employee's gross salary or wages). ESCT will be payable on employer contributions above 2% of gross salary or wages.

 What hasn't changed?

The following remain unchanged:

• The Member Tax Credit of up to $20 a week
• The $1,000 Government kick-start
• First Home Deposit subsidy
• First Home Withdrawal

KiwiSaver changes from 1 June 2009 - Closure of Mortgage Diversion facility

As part of the Budget announcements on 28 May 2009:

• The KiwiSaver mortgage diversion facility was closed to new applicants from 1 June 2009.  It will remain available to existing members who have requested participation from mortgagees before 1 June 2009, but only where the provider and the mortgagee choose to participate.
• Legislation giving effect to this change was included in the Taxation (Budget Tax Measures) Act 2009 passed on 29 May 2009.