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Employees need to track their own contributions
 
Q.        I opted out of KiwiSaver a few weeks after starting work 3 months ago. The payroll services company failed to submit my opt-out form, so according to IRD I have been enrolled in KiwiSaver since I started work. However, no amount from my wages has been deducted and no contributions made from the employer, but I am enrolled in KiwiSaver. Now I have decided to join KiwiSaver, and have submitted a KS2 form so both the company and I will start contributing towards the end of this month.  Is the company liable to pay around $200 of employer contributions to my KiwiSaver account, as they have failed to submit my opt-out form?  Do I need to match my contributions with theirs?
 
A.         Everyone who starts a new job is automatically enrolled in KiwiSaver, unless they are not eligible (for instance, people who are not entitled to live in New Zealand indefinitely). You can opt out 2 to 8 weeks after starting in the new job and I assume that is what you did. The reason for the 2 week delay, is that it gives the new employee time to get used to seeing KiwiSaver deductions from their wages and they can then make an informed decision as to whether they want to be part of the scheme or not. It also feeds into our preference for the ‘do nothing’ option, and many reluctant KiwiSavers do not get round to opting out.
 
The employer is in a somewhat tricky situation, as they have to deduct KiwiSaver contributions, and then refund them to the employee if they do go ahead with their decision to opt out. If this all takes place before their PAYE return is due, they may not make those KiwiSaver contributions at all, but refund the employee contributions directly in week 3. If they have already sent both employer and employee contributions to IRD, they have to claim them back - a tedious process.
 
Your company knew that you had opted out, so it is unreasonable to expect them to make up the employer contributions that you have missed out on, even if the payroll company did not submit the opt out form. As a new employee you will want to make a good impression and making demands of this nature would be counterproductive. 
 
It appears that Inland Revenue did not follow up with your employer when contributions did not come through. As not everyone is eligible to join KiwiSaver, staff at Inland Revenue are possibly not in a position to check that every new employee has been opted in. So whose responsibility is it to see that contributions are being made as they should be?
 
I asked the staff at Inland Revenue to comment on your situation.   A spokesperson replied that ‘An employee has an obligation to monitor their employer’s actions regarding their regular wage or salary. They need to be aware of what deductions are being made and what (in the case of KiwiSaver) employer contributions are made.  If they have any issues they should contact Inland Revenue and their particular case can be dealt with.’
 
So it is up to each individual to make sure that their KiwiSaver contributions are correct – don’t rely on the payroll company or Inland Revenue. Make sure you check your payslip each week and cross check with the statements you get from your KiwiSaver fund manager in due course. 
 
Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 870 3838. The information contained in this article is of a general nature and is not intended to provide personalised advice. Send your KiwiSaver questions to shelley.hanna@peak.net.nz