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If you are an employer who already offers access to a registered superannuation scheme you:
Alternatively you can continue to operate your existing scheme independently of KiwiSaver.
The Financial Markets Authority can approve a registered superannuation scheme as a complying superannuation fund for purposes of the Income Tax Act 2007 if it was registered by 1 July 2007.
For a scheme to be approved as a complying superannuation fund it must have certain membership rules:
You are required to make compulsory employer contributions to your employee's KiwiSaver account or complying fund. Any employer contributions you make to existing superannuation schemes reduce the amount of compulsory employer contributions you're required to pay as long as you meet certain criteria. These include:
Contributions to a registered superannuation scheme which meets these requirements are known as "other contributions". They reduce the amount of compulsory employer contributions you are required to pay even if the scheme does not have similar lock-in rules to complying funds or KiwiSaver schemes.
If your employer's contribution to a registered superannuation scheme is at a rate less than the Compulsory employer contributions (CEC) rate, they will need to pay any difference as a compulsory employer contribution to your KiwiSaver or complying fund scheme.
Here is the formula to use if you are currently making employer contributions to a registered superannuation scheme:
|minimum compulsory employer contribution =|
|payment of gross salary or wages x compulsory rate|
|minus other contributions|
|minus hybrid scheme amounts|
"Other contributions" means specified superannuation contributions you make for the employee during the pay period. These include those contributions which meet the above criteria or employer contributions or subsidies for MPs, judicial officers and sworn police.
"Hybrid scheme amount" is the amount calculated by using the following formula:
|member's contribution x vesting percentage|
"Member's contribution" is the amount of the employee's contribution for the period to which the payment of gross salary or wages relate.
"Vesting percentage" is the percentage of the employee's total contributions to be added to those contributions five years after the employee first becomes a member of the registered superannuation scheme.
Check with your existing scheme to see if your contributions are hybrid scheme amounts.
You do not have to make any additional payment to your employee's KiwiSaver scheme if you are making employer contributions to the registered superannuation scheme at a rate the same as or greater than the compulsory employer contribution rate.
This information doesn't apply to contributions to defined benefit scheme. A defined benefit scheme is a scheme where the benefit does not relate to the investments of the scheme but is based on a formula that includes such things as a member's length of service and final salary.