Labour’s compulsory Kiwisaver exemptions

Labour have indicated they may exempt some people from compulsory Kiwisaver.

From David Parker’s speech:

Distributional and hardship effects for the lower paid would need to be considered, but could be accommodated in the detail of how the variable rate was applied.

Labour would ensure that everyone was treated fairly.

From the detailed policy document:

5.12 The New Zealand Labour Party is proposing that the existing KiwiSaver scheme become a universal work place savings scheme. This would be achieved by making KiwiSaver compulsory, with exceptions limited to those which apply to the Australian scheme.

So there would be some exceptions similar to Australia’s Superannuation Guarantee

5. Exemptions
An employer is not required to provide superannuation contributions to the following categories of employees:
  • employees receiving a salary/wage of less than $450 (before tax) in a calendar month
  • employees under 18 years of age working less than 30 hours per week
  • non-resident employees paid for work done outside Australia
  • resident employees paid by non-resident employers for work done outside Australia
  • employees receiving salary and wages under the Community Development Employment Program
  • some foreign executives holding certain visas or entry permits under the under the Migration (1993) Regulations
  • employees earning above the maximum super contribution base – super is not paid on the portion of income above the maximum super contribution base
  • employees paid to do work of a domestic or private nature for not more than 30 hours a week, (eg part-time nanny or housekeeper)
  • members of the army, navy or air force reserve for work carried out in that role 
  • eligible employees who made a choice, prior to the abolition of reasonable benefit limits, to not receive employer super contributions because their accumulated super benefits exceeded the pension reasonable benefit limit
  • employees temporarily working in Australia who are covered by a bilateral super agreement – employers are required to keep a copy of the employee’s certificate of coverage to verify the exemption.
  • non-resident employers are not required to provide SG for resident employees for work they do outside Australia.
Note: employees aged 75 years and over used to be exempted from the requirement, however from 1 July 2013 there is no longer an age threshold.

I’ve seen somewhere that they would also tighten up on payment holidays and withdrawals for extreme hardship.

As a comparison here are the Australian rates:

Percentage increase to minimum contribution
In the 2010 Federal Budget, the Treasurer announced important changes to the superannuation guarantee scheme.
  • From 1 July 2013, there is no longer be an age limit on employees for whom employers have SG obligations.
  • The minimum SG contribution will increase from 9% to 12%, phasing in from 1 July 2013. The minimum contributions required to comply with the SG law will be:
Year commencing Minimum SG contribution
1 July 2013 9.25%
1 July 2014 9.5%
1 July 2015 10%
1 July 2016 10.5%
1 July 2017 11%
1 July 2018 11.5%
1 July 2019 12%


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