Kiwi Saver

The implementation of Kiwisaver was 1 July 2007. From that date parishes, as employers have to register with Inland Revenue for Kiwisaver, any new employee (including ministers transferring between parishes) must be registered as a member of a Kiwisaver scheme, and any existing employee has the option of joining a Kiwisaver scheme.

Employer Subsidies

The government announced in the 2006 budget that employer contributions would commence from 1 April 2008. The initial rate will be 1 percent of employees salary, rising by 1 percent per year to 4 percent in 2002/13. The government will reimburse employers by way of credits to PAYE payments from April 2008, up to a maximum of $1,040 per annum ($20 per week). This will cover additional staff costs for the first two years but after that, there will be a cost to the parish. For example, using a base salary of $40,000 pa:

  Salary Employee Contribution (4%) Employer Contribution Govt Tax Credit for Employer Cost to Employer
2008 40,000.00 1,600.00 400.00 400.00 -
2009 42,000.00 1,680.00 840.00 840.00 -
2010 44,000.00 1,760.00 1,320.00 1,040.00 280.00
2011 46,000.00 1,840.00 1,840.00 1,040.00 800.00

Minister's Contributions

Parishes are deemed by IRD as the employer because they administer the payroll, and ministers, like anyone else can join a Kiwisaver scheme. However please note that I am receiving conflicting advice about minister’s status as employees and whether a stipend is the equivalent of a salary The issue will be resolved by then but the uncertainty should be explained to ministers who wish to join a scheme prior to 1 April with the expectation of employer contributions commencing on that date. This employment status uncertainty only applies to ordained ministers. Other Lay ministers, non-ordained pastors and other employees will be entitled to the employer subsidy from April 2008. Note that for ministers, the contribution rate of either 4% or 8% will be based on the basic stipend, the New Seniority Allowance.  This is because seniority allowance, like the stipend is subject to PAYE.

Employee Exemption from Kiwisaver

There is a facility in place in which employers can apply to Inland Revenue for exempt status from Kiwisaver. One basis for exemption is the provision of an existing pension scheme. Please note that although Kiwisaver would be in addition to the Beneficiary Fund, parishes cannot apply for exemption on that basis because:

  • In order to be considered for exemption, an employer must provide a pension scheme for all employees. Existing lay employees are not eligible for the Beneficiary Fund
  • The Beneficiary Fund differs from Kiwisaver in that it is a Defined Benefit Scheme (the amount payable to ministers on retirement is defined, whereas Kiwisaver is a Defined Contribution Scheme (the amount payable depends on the amount that has been contributed)

New or Transferring Employees

As stated, new or transferring employees (and ministers) must be automatically enrolled in a Kiwisaver scheme from 1 July. If they do not wish to join, deductions must still be made from their salary/stipend and paid to IRD. An application for withdrawal is made to IRD but that may take up to 8 weeks to be processed, at which point employee and employer contributions will be refunded. The potential cash flow impact on the employee should be explained at commencement of employment.

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