Employer not making Kiwisaver contributions

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Forums › Finance and wealth management › Employer not making Kiwisaver contributions

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#995738 27-Feb-2014 19:07

Mattnzl: This is actually quite common. I'm in the same boat as are a lot of people I talk too. "Total Remuneration" is the speal emloyers use to get around this.
My 3% "Employer" contribution comes out of my salary, same for everyone else in our company of 1000+ staff.

The only time an employer can't do this, is for staff on minimum wage, as taking the 3% out would put them below minimun wage (recent court case I think).

Unbelievable. They failed to think through the impact and make that crystal clear in the legislation. Which probably indicates they were hoping to reduce the minimum wage and wages generally in a very sneaky way. It shows that the change was made for purely ideological reasons and no practical reason at all. The very worst reason to change anything.

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#995749 27-Feb-2014 19:33

gzt:
Mattnzl: This is actually quite common. I'm in the same boat as are a lot of people I talk too. "Total Remuneration" is the speal emloyers use to get around this.
My 3% "Employer" contribution comes out of my salary, same for everyone else in our company of 1000+ staff.

The only time an employer can't do this, is for staff on minimum wage, as taking the 3% out would put them below minimun wage (recent court case I think).

Unbelievable. They failed to think through the impact and make that crystal clear in the legislation. Which probably indicates they were hoping to reduce the minimum wage and wages generally in a very sneaky way. It shows that the change was made for purely ideological reasons and no practical reason at all. The very worst reason to change anything.

Actually, it's quite common. I have been on total cost of remuneration employment contracts where they set out how much in total they will pay, and will divert portions of it to other avenues (KS, medical insurance, a carpark) if I like. I'm comfortable with that, or I wouldn't have taken the job. We agree how much they pay me, and then I get to choose how I want it paid. Seems basically fair to me.

As for "hoping to reduce the minimum wage", I thought they just increased the minimum wage. By more than the rate of inflation. Again.

Plus, my understanding was that it's illegal to deduct KS contributions from a pay packet if the hourly rate this leaves is less than the minimum wage, so this device *can't* be used to reduce the minimum wage?

gzt

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#995766 27-Feb-2014 20:17

No one has questioned any of that and you are comparing an entirely compulsory employer contribution to some entirely optional extras.

Yes, it is now illegal to use this as an out to reduce the minimum wage - that had to be determined in court because it was not written into the legislation imho because reducing wages by moving this cost to employees was exactly the effect the government was hoping for.

Ie; No different for instance than a (hypothetical) attempt to load the cost of compulsory employer ACC payments onto employees by saying that can also be included in hourly rate.

bazzer

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#996051 28-Feb-2014 09:18

My only comment (and it may be off-topic as per your final request) is why would you have 8% employee contributions? You are sacrificing your rights for no benefit.

As long as you are contributing enough to get the full member tax credit (i.e. $1,042.86 per year, and at 8% that's from only $13k pa) then there is no benefit in contributing more to your Kiwisaver. It is admirable to save for your retirement but why lock it away until 65 (or higher by the time you get there) when you get no extra benefit from it? You could just put it in a PIE or something.

Given that your employer can do what they are doing, it would be also best for you not to have them deduct their 3% but unfortunately that's not possible as long as you are contributing, so you'd have to weigh up if it's worth locking away 6% of your pay for $500 a year in benefits.

Klipspringer

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#996071 28-Feb-2014 09:26

I think the moral of this one is that there are generally 3 types of employment contracts here in NZ, here is how I rate them

Permanent: The best of the lot, but not the best pay. Permanent always supplies the bests company employment benefits.

Contract, or short term contract: Depending on the pay, this one can sometimes be the best. Usually its the best if you after money. But the cons are its normally a short term contract. And very rarely has any company benefits, apart from a nice big pay cheque.

Fixed Term contract: The worst of the lot. You get paid like a permanent employee, however benefits are often cut. Its normally a longer contract that standard contracting.

As the OP is on a fixed term contract I think this is pretty standard. As for blaming National, well I think thats a bit lame. If you want better benefits, get a permanent job. I agree with Geektastics advice. Cross this bit out on the contract and return to HR. If you important to the company they will rethink it to keep you on. But keep in mind, because its a contract, they also free to let you go.

Klipspringer

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#996073 28-Feb-2014 09:30

jeffnz:

Good to see its Nationals fault, again, and our 'National' pass time of finding someone to blame is at least consistent. Vote Labour so we can go socialist and have state control of everything so blaming and relying on others is easier. :)

Spot on mate. I cant think of anything worse than having a labour run government again. Just hope it never happens in my lifetime.

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#996131 28-Feb-2014 10:03

bazzer: My only comment (and it may be off-topic as per your final request) is why would you have 8% employee contributions? You are sacrificing your rights for no benefit.

As long as you are contributing enough to get the full member tax credit (i.e. $1,042.86 per year, and at 8% that's from only $13k pa) then there is no benefit in contributing more to your Kiwisaver. It is admirable to save for your retirement but why lock it away until 65 (or higher by the time you get there) when you get no extra benefit from it? You could just put it in a PIE or something.

Given that your employer can do what they are doing, it would be also best for you not to have them deduct their 3% but unfortunately that's not possible as long as you are contributing, so you'd have to weigh up if it's worth locking away 6% of your pay for $500 a year in benefits.

Yeah I totally understand. My taxable income is around that mark, I'll have to make a voluntary contribution to be eligible for the full member tax credit this tax year. I'd prefer to manage the funds myself but I'm also trying to maximise Kiwisaver perks for buying a house within the next few years.

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#996132 28-Feb-2014 10:04

klipspringer
jeffnz:

Good to see its Nationals fault, again, and our 'National' pass time of finding someone to blame is at least consistent. Vote Labour so we can go socialist and have state control of everything so blaming and relying on others is easier. :)

Spot on mate. I cant think of anything worse than having a labour run government again. Just hope it never happens in my lifetime.

Unless you are planning on having a short lifetime, you will be disappointed sorry.
It will happen, the nature of a democracy and MMP means one party cannot hold power for ever (luckily).

Whilst I do not want Labour in government either, I can bear them. It is the Greens that scare me - they have no idea about fiscal responsibility. And for Labout to get into power, they will have to give a fair bit of it to the Greens.

Hopefully, current polling stays true till the election this year, and some of Nationals potential partners manage to scrounge some Party votes.

As for the OP, I, too, am surprised that the Employer contribution can be taken from your wages. Stink really. Glad mine isn't taken from my pay.

Mattnzl

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#996157 28-Feb-2014 10:27

bazzer: My only comment (and it may be off-topic as per your final request) is why would you have 8% employee contributions? You are sacrificing your rights for no benefit.

There is some benefit - the employee contributions are pre-tax (ie: if you are on say $50k, you can contribute $4000 per year to your KS savings tax free, and only pay income tax on $46k)

EDIT - whoops! The above is totally untrue, ignore. The 8% (or whatever you choose) is based on your pre-tax income, but you still pay tax on the whole lot.
Bummer!

bazzer

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#996202 28-Feb-2014 10:59

Mattnzl:
bazzer: My only comment (and it may be off-topic as per your final request) is why would you have 8% employee contributions? You are sacrificing your rights for no benefit.

There is some benefit - the employee contributions are pre-tax (ie: if you are on say $50k, you can contribute $4000 per year to your KS savings tax free, and only pay income tax on $46k)

EDIT - whoops! The above is totally untrue, ignore. The 8% (or whatever you choose) is based on your pre-tax income, but you still pay tax on the whole lot.
Bummer!

This is the one thing I think they should add to Kiwisaver, but I guess they'd argue that benefits the rich mostly since they can afford to sacrifice more of their pre-tax income to savings.

wongtop

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#996214 28-Feb-2014 11:09

Mattnzl:
bazzer: My only comment (and it may be off-topic as per your final request) is why would you have 8% employee contributions? You are sacrificing your rights for no benefit.

There is some benefit - the employee contributions are pre-tax (ie: if you are on say $50k, you can contribute $4000 per year to your KS savings tax free, and only pay income tax on $46k)

EDIT - whoops! The above is totally untrue, ignore. The 8% (or whatever you choose) is based on your pre-tax income, but you still pay tax on the whole lot.
Bummer!

Employer contributions used to be taxed at a lower rate (or maybe even zero, I can't remember the details), but not anymore. Basically the only benefit of KS these days (if you are on a total renumeration package like me) is for the govt subsidy of `$500/yr, and the relatively low fees of many KS schemes compared to other managed funds.

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Jas777

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#996239 28-Feb-2014 11:24

I can't see the issue, your employer wants to pay your a certain amount per hour total. However you have the option to get an automatic 3% pay rise by joining kiwisaver. If the employer wants to only pay that certain amount and they can't be sure you will or will not join kiwisaver then they might as well just offer you 3% less. Which means if you dont want to join kiwisaver you lose out.

The issue arise because kiwisaver isn't compulsory like superann is in Australia. In Aus when employing someone you get the max amount you want to pay them, take the 9% off and offer that as the hourly rate

Kyanar

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#996286 28-Feb-2014 12:17

jeffnz:
Kyanar: They aren't breaking the law no. When Labour introduced Kiwisaver, they wrote into the law that an employer could not discriminate against a Kiwisaver member by paying them less than another employee not in Kiwisaver. However the National Government, as part of its commitment to screwing the working class, removed this clause, allowing employers to incentivise not being a Kiwisaver member by paying more to non-members.

This is just rubbish and shows you have an axe to grind, any employment contract I have been involved in certainly does't change if people decide to opt out or in of KS.

If you know of employers doing this I would suggest you find someone else to work.

There are always bad employers regardless of what governments do and if you really read and understood the original ECA National put in place (and Labour changed very little of) you would know that it gives employees more power in a healthy economy. Paying all employee's the same regardless of how much work they do is just bad business, productivity increases and pay will follow, if you owned a business how would you handle just paying people more each year for doing the same?, I'm guessing if you did you would just pass the cost on or go bust.

No it's not "rubbish" at all, it's absolutely true. And yes, you did catch on that I am idealogically opposed to National, Act, Conservative, and everything they stand for (paradoxically, I'm also opposed to overpowered unions). It also indicates that you have no idea what I'm talking about, as I said nothing about the Employment Contracts Act, and completely ignore that I refer specifically to the Employment Relations Amendment Act 2008, which does nothing except erode employee rights (adds 90 day trial, and removes requirement to pay superannuation in addition to total renumeration rather than as part of).

Klipspringer

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#996303 28-Feb-2014 12:35

Kyanar:

No it's not "rubbish" at all, it's absolutely true. And yes, you did catch on that I am idealogically opposed to National, Act, Conservative, and everything they stand for (paradoxically, I'm also opposed to overpowered unions). It also indicates that you have no idea what I'm talking about, as I said nothing about the Employment Contracts Act, and completely ignore that I refer specifically to the Employment Relations Amendment Act 2008, which does nothing except erode employee rights (adds 90 day trial, and removes requirement to pay superannuation in addition to total renumeration rather than as part of).

You missing the point. The OP is on a contract. Temporary and fixed term contractors do not benefit or have it worse off because of the changes.

This bill amends the Employment Relations Act 2000 to implement Government policy on trial employment periods for new employees of small and medium size businesses, and amends the KiwiSaver Act 2006 to support Government policy on KiwiSaver.

http://www.dol.govt.nz/workplace/knowledgebase/item/1294

If the op is at the end of his contract period he could be let go straight away. And there is no need even for a notice period by the employer.

If the op signs a new fixed term contract its a new employment agreement, and it may be different to the previous employment agreement. Not sure why u blaming government for this?

Kyanar

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#996406 28-Feb-2014 14:13

Klipspringer:

http://www.dol.govt.nz/workplace/knowledgebase/item/1294

If the op is at the end of his contract period he could be let go straight away. And there is no need even for a notice period by the employer.

If the op signs a new fixed term contract its a new employment agreement, and it may be different to the previous employment agreement. Not sure why u blaming government for this?

Wait a minute... OP is on a fixed term contract, and is being asked to sign another one for the same job? That's not actually legal in NZ. A fixed term contract is only legally allowed to be used for a short term need. If the reason for the fixed term no longer exists, legally they must either lapse the contract and go out to market, or hire the employee full time. You could actually take them to the DOL about that.

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