What is KiwiSaver?

KiwiSaver is a work-based savings scheme designed to help employees save for retirement.

Employers will have to automatically enrol most new employees that start after 1 July 2007 and existing employees that choose to opt in from this date. Employers will have to deduct either 4% or 8% from these employees’ salary and wages.

As a result of the incentives announced in the May 2007 budget, there is expected to be a high level of participation in KiwiSaver.

What do Employers Need to do Now?

KiwiSaver is just around the corner and employers need to start planning for it now. Employees will be hungry for information on KiwiSaver and how to invest their money. One decision an employer has to make is whether to choose a KiwiSaver scheme for their employees who do not choose their own scheme.

Employers have the option of either doing nothing or taking a ‘front foot’ approach. If you do nothing, employees that don’t choose their own KiwiSaver scheme will end up being allocated to one of six “default schemes”. These schemes because of their conservative nature (at least 75% in cash investments) may be very inappropriate for employees particularly those 10 years or more away from retirement.

An alternative pro-active approach is to choose a particular KiwiSaver scheme as your chosen scheme. This means that if employees don’t choose their own KiwiSaver scheme they will go into their employer’s chosen scheme. By electing for this option your employees are likely to end up in a scheme that is more suitable to their investment needs.

Essentially, not only will you be taking better care of your employees but you will be guided through the implementation process.

Employers who choose a scheme will not be responsible for the performance of that scheme and will not be regarded as an issuer or promoter of the scheme under the Securities Act.

Key Distinction of the Staples Rodway KiwiSaver Scheme

The major point of distinction of the Staples Rodway KiwiSaver Scheme is that it is not a captive scheme, that is, the investment choices are not confined to investment products provided by one organisation.

Instead, independent investment managers have been selected on the basis of performance and managerial quality. Performance of the managers selected will be monitored and adjustments made if required so as to maximise returns to investors over the long term. This “best of breed” approach avoids the potential conflict of interest issues that can apply to other schemes that only offer related party products.

What will it Cost?

There is no cost to employers for choosing the Staples Rodway KiwiSaver Scheme.

Other reasons for choosing the Staples Rodway KiwiSaver Scheme

1. Low Fees – There are no entry fees. Our ongoing fee will be competitive.
2. Ease of Use – Employees can choose any combination of our Conservative, Balanced and Growth funds. An Investment Attitudes Questionnaire will help them with their choice. Alternatively an employee can choose an age group option which will mean they are automatically invested in a combination of funds considered appropriate for their age group.
3. Flexible Investment Strategy – Employees can allocate any or all of their contributions between our Conservative, Balanced and Growth funds. Flexible allocation means that our offerings suit individuals with varying risk and return profiles.
4. Mortgage Diversion – The Staples Rodway KiwiSaver scheme will provide and administer mortgage diversion facilities with participating lenders.
5. Portfolio Investment Entity (‘PIE’) classification – Our funds will be subject to the PIE regime, meaning tax savings for higher income earners (annual taxable income greater than $60,000 per annum), and tax efficiency for
   lower income earners (annual taxable income less than $38,000 per annum).

Make Staples Rodway KiwiSaver your Chosen Scheme

KiwiSaver for the Employer

Employers’ main KiwiSaver responsibilities include:

• giving a KiwiSaver information pack to new employees when they start if the employer is satisfied the person should be automatically enrolled, and to existing employees who want to opt in or ask for one
• giving Inland Revenue the names, IRD numbers and addresses of all new employees and those who want to join KiwiSaver, using a new form - KiwiSaver enrolment details (KS1) that they send in monthly with their employers monthly schedule
• deducting employees’ contributions from their before-tax pay and forwarding them to Inland Revenue along with their PAYE
• ensuring new employees’ contributions start from their first pay and forwarding them to Inland Revenue along with your PAYE
• refunding any contributions deducted if they haven’t been passed on to Inland Revenue when an employee opts out of KiwiSaver
• providing investment statements to all employees if the employer has chosen a preferred KiwiSaver scheme
• acting on opt out and contribution holiday letters
• start or stop deductions when Inland Revenue advises you to
• keeping the required KiwiSaver records

From 1 April 2008 employers will be required to match employees’ contributions of 1% of salary and wages. This compulsory contribution will increase at 1% annually to 4% in 2011.

Turbo-charge option

In the meantime, employers can also turbo-charge their employees’ KiwiSaver accounts by entering into tax efficient salary sacrifice arrangements. Employees can sacrifice up to 4% of their salary (less compulsory employer contribution) in exchange for additional tax free employer contributions to their KiwiSaver account.

Further information for employers about what KiwiSaver means for them is on the Inland Revenue website.

The Effect on the Employer

Baker Tilly is a trademark of the UK firm Baker Tilly UK Group LLP, used under licence.

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