All Inclusive Employer's Kiwisaver

For the majority of companies, Employer Kiwisaver (KSER) is paid in addition to one's salary but some companies take a Total Remuneration (all inclusive) approach to this whereby, their Salary is deemed to be inclusive of Kiwisaver.

Historically we have dealt with this by reducing an employee's salary by 3% (assuming the employer's rate is 3%), by dividing the salary by 1.03 and adding this as their salary figure.  This created a lot of headaches when doing salary changes and lacked transparency.

Going forward, we will use a transaction code KSTR (KiwiSaver Total Rem) that will automatically create a negative allowance matching the value of the KSER add-on calculation.  This will appear on the Pay Advice and Payslips as a negative value.  The employee's salary, or hourly rate, will be set inclusive of KSER or at the stated value.  

The Pay Advice Report will show this as follows:

You can see that the KSTR Total Rem negative allowance matches the Add-On value on the very right. So essentially we deduct and add the same figure.

Things to Note

• An employer can either put forward a Total Remuneration agreement that clearly states the 3% Employer's Kiwisaver Contribution on (all items) is included, OR put forward an IEA that states Employer's Kiwisaver is in 'addition to' their salary/wage etc.
• The agreement should be very clear around what happens with other payments that might occur – like a bonus – is it inclusive of the 3% or excluding?
• The employee can at any time ask an employer to remove them from a Total Remuneration Agreement in NZ under the Employment Relations Act.