Opting Out of KiwiSaver: Timelines and Rules
KiwiSaver is a voluntary, work-based savings scheme designed to help New Zealanders save for retirement. While participation is voluntary, most new employees are automatically enrolled in the scheme upon starting a new job. This article outlines the rules and timelines for opting out of KiwiSaver, and the responsibilities of employers in this process.
Automatic Enrolment in KiwiSaver
Upon starting new employment, individuals aged 18 or over who are not already KiwiSaver members are generally automatically enrolled in KiwiSaver [Source: KiwiSaver Act 2006, s 11]. Their employer must provide them with a 'KiwiSaver employee information pack' [Source: KiwiSaver Act 2006, s 14(1)]. Employee contributions, which are deductions from an employee's gross salary or wages, and employer contributions, which are contributions made by the employer to the employee's KiwiSaver account, begin shortly after enrolment [Source: KiwiSaver Act 2006, s 61(1), s 92(1)].
The Right to Opt Out
An individual who has been automatically enrolled has the right to opt out of KiwiSaver [Source: KiwiSaver Act 2006, s 16].
Timelines for Opting Out
There is a specific window within which an individual can opt out of KiwiSaver:
- Earliest Opt-Out: An opt-out request can be made no earlier than day 14 after an employee started their new job [Source: KiwiSaver Act 2006, s 17(1)(a)]. This initial period allows the employee time to receive information and consider their options.
- Latest Opt-Out: An opt-out request must be made no later than day 56 after an employee started their new job [Source: KiwiSaver Act 2006, s 17(1)(b)].
If an employee misses this 56-day window, they are generally unable to opt out, but may be able to apply for a 'contributions holiday' (a period during which an individual can temporarily stop their KiwiSaver contributions) [Source: KiwiSaver Act 2006, s 102(1)].
The Opt-Out Process
To opt out, an individual must complete an 'opt-out request' form (KS10 form) and either give it to their employer or directly send it to Inland Revenue [Source: KiwiSaver Act 2006, s 18(1), s 18(2)]. It is advisable to keep a copy for personal records.
Employer Obligations When an Employee Opts Out
When an employer receives a valid opt-out request form from an employee, or is notified by Inland Revenue that an employee has opted out, specific obligations arise:
- Cease Deductions: The employer must stop making employee deductions and employer contributions from the first pay period after they receive the opt-out notice [Source: KiwiSaver Act 2006, s 19(1)(a)].
- Refund Contributions: The employer must refund to the employee any KiwiSaver contributions that have already been deducted from their pay [Source: KiwiSaver Act 2006, s 20(1)(a)]. If the employer has already forwarded these contributions to Inland Revenue, Inland Revenue will refund the contributions directly to the employee [Source: KiwiSaver Act 2006, s 20(1)(b)]. Employer contributions made by the employer are also refunded by Inland Revenue to the employer [Source: KiwiSaver Act 2006, s 20(2)].
Rejoining KiwiSaver
Individuals who opt out of KiwiSaver can choose to join at a later date if they wish [Source: KiwiSaver Act 2006, s 33(1)]. This generally involves contacting a KiwiSaver provider directly.
Related Legislation
The primary legislation governing KiwiSaver, including the rules for opting out, is the KiwiSaver Act 2006. While the Employment Relations Act 2000 governs the general employment relationship in New Zealand, the specifics of KiwiSaver enrolment and opt-out are detailed within the KiwiSaver Act 2006.
When to Seek Independent Legal Advice
If there are concerns about an employer's compliance with KiwiSaver obligations, or if specific circumstances regarding enrolment, contributions, or opt-out are unclear, individuals may seek assistance. This could involve contacting Inland Revenue, their KiwiSaver provider, or Community Law Centres for free legal advice. Community Law Centres provide legal help to those who cannot afford it, and can offer guidance on employment and KiwiSaver-related issues.