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Kiwi Saver for Overseas Employees in New Zealand

If you are responsible for handling global mobility in your company and are planning to send an employee on assignment to New Zealand, we have some information that you may find useful.  One of the benefits available in New Zealand to both resident and expat workers is the Kiwi Saver, a retirement program with a few unique elements.

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Here is a quick overview for you of how this benefit works:

Is Kiwi Saver Mandatory?

The first question you might have is whether the Kiwi Saver is a mandatory employee benefit for your company to offer, and the short answer is yes, but only if the employee wants it.  So, what this means is that it is at your employee’s discretion to ‘opt in’, and you are not allowed to influence their choice.  If they do, then you have to contribute the employer share.

How Much is the Required Contribution?

If the employee elects this benefit, both the employer and employee contribute 3% each of the monthly salary, for a total contribution of 6%.  This makes the basic cost to employer a maximum of 3% for their share. 

What are the Time Limits for Vesting and Withdrawal?

Like many retirement plans, the amounts contributed to the Kiwi Saver vest at retirement age (currently 65 years old in New Zealand).  But there is another requirement for vesting that the employee must also have been a Kiwi Saver member for at least 5 years.  For this reason, it is not really a good benefit for employees on short term assignment, and there may other ways to give them retirement benefits while working abroad.

How are Kiwi Saver Withdrawals Handled?

One of the great features of the Kiwi Saver for employees is that the entire amount contributed can be withdrawn as one lump sum at retirement age, if the vesting rules are met.  If your employee permanently leaves NZ, they can still withdraw the accumulated amounts after one year outside the country.

How Can I Set This Up for My Employee?

If you are taking a DIY employment approach in New Zealand, you will have to obtain the right forms to give to the employee, and then include the deductions from the paycheck, as well as make employer contributions. 

In the alternative, companies that use a local employer of record through the Shield GEO service don’t have to do anything, and can just inform us of the employee’s choice, and we will submit the forms to your employee and make sure all deductions and contributions are correct. 

If you have questions about how we can help you with these types of employment tasks in New Zealand or any foreign country please contact us.  Our goal is to make international employment simple for you, and to make sure your employees are meeting local payroll and contribution rules.

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