This article covers your obligations as an employer for KiwiSaver, and how to manage deductions and contributions in PaySauce.

When you hire a new employee, you need to determine whether they must be automatically enrolled in KiwiSaver, are exempt, or are already a member.

You must automatically enrol new employees who:

You don't need to auto-enrol employees who:

Exempt employees can still choose to join KiwiSaver voluntarily.

While employees aged 16 and 17 are not subject to automatic enrolment, they can join KiwiSaver voluntarily. From 1 April 2026, if an employee aged 16 or 17 is a KiwiSaver member and is contributing from their wages, you are required to make employer contributions for them. Before 1 April 2026, employer contributions are only required for employees aged 18 to 65.

If a new employee is already a KiwiSaver member from a previous job, get them to complete a KS2 form to confirm their membership and contribution rate.

Employees can opt out of KiwiSaver between 2 and 8 weeks after starting employment. They do this via myIR or by completing a KS10 form. You cannot opt out an employee on their behalf.

If the opt-out is accepted, IRD will refund both employee and employer contributions.

To update their status in PaySauce:

Outside the opt-out window, employees who want to pause contributions must apply to IRD for a savings suspension.

From 1 April 2026, the minimum contribution rate for both employers and employees in New Zealand will be 3.5%. Employees can choose to contribute at a higher rate. The available rates (set by IRD) for employees to select are 3.5%, 4%, 6%, 8%, or 10%. Your employee must choose one of the available rates. If they want to make additional deductions over 10%, they can arrange for them to be paid personally.

Employees can also update their own KiwiSaver rate in the PaySauce app, and we have included those instructions here (below).

Employees who are unable to afford the increased contribution rate of 3.5% can apply to IRD for a temporary rate reduction back to 3%. This is different from a savings suspension - the employee continues to contribute, just at the lower rate.

Temporary rate reductions can be approved for periods of between 3 and 12 months. Employees can reapply if needed. They apply directly through myIR, and IRD will issue a certificate confirming the reduction and the period it covers.

You will be notified of the rate reduction either by the employee providing their certificate or by a letter from IRD. As an employer, you can choose to match the employee's reduced 3% rate during the reduction period. However, once the temporary reduction ends, your employer contribution must return to at least 3.5%.

Before you start, ensure the employee's current pay is in 'data entry'. If the pay is already calculated, the change will not take effect until the next pay.

Employees are able to update their KiwiSaver deduction rate using the PaySauce app.

If you want KiwiSaver to be included within an hourly rate or salary, this is called a salary sacrifice. This means the employee is paying for their employee deduction and the employer contribution out of their earnings: the base pay is adjusted accordingly to account for the employer KiwiSaver contribution.

To set this up, the employer contribution needs to be reduced from the salary or hourly rate as the KiwiSaver employer contribution is paid as a separate component on top of wages.

Note that the increase in the minimum employer contribution from 3% to 3.5% will affect employees on salary sacrifice arrangements. Review your salary sacrifice calculations and discuss any impact with affected employees.

Check out our article on calculating inclusive rates here:

We're often asked if payments needs to be included in KiwiSaver calculations or not. The answer is usually yes, as only some specific payments are excluded from KiwiSaver.

We recommend you review the IRD guidance on this topic here: Gross Pay for KiwiSaver.

For KiwiSaver schemes, gross pay is total salary or wages including:

If you incorrectly turned off KiwiSaver for an employee or incorrectly turned off KiwiSaver on a payment to an employee (such as a bonus, backpay or other one off payment) then you may be contacted by IRD about undercalculated KiwiSaver contributions.

If you provide an accommodation allowance or other exempt payment, refer to this article:

Unless your payment was genuinely exempt from KiwiSaver, you will owe backpay for the missing employer contribution to the IRD. IRD does not try to recover the missing employee deduction, as the employee has the money. They can send it to the scheme voluntarily if they wish.

Your employer contribution is compulsory. You will need to pay the missing amount to IRD directly, as this can't be collected and paid through normal pay runs.

If PaySauce is acting as your PAYE Intermediary (i.e. PaySauce is collecting your PAYE funds and sending it to IRD on your behalf), we can support you with correcting this. If it is for a single payment or short period, we can support you with this as part of our standard service. If you need to make extensive corrections over a period of time, our team will discuss the details with you as additional charges may apply. Email a copy of the letter you received to [email protected] so that we can advise you on next steps.
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If PaySauce is not your PAYE Intermediary and you are paying and filing your own PAYE payments, you will need to resolve this directly with IRD by filing amendments and making the required payment directly to IRD.