Retirement Commission research showed a third of employees were contributing more than 3 percent of their salaries to their KiwiSaver accounts. Photo: 123RF
While most New Zealand employees are contributing 3 percent of their salaries to KiwiSaver, matched by 3 percent by an employer, there are a number of people for whom their employer's contribution is much more generous.
MPs can have their contribution matched at a rate of 2.5 times, up to a maximum of 20 percent of their salaries.
Judicial officers, such as judges of the district and high courts, can receive a subsidy of up to 37.5 percent of their salaries to their own superannuation scheme.
Junior and senior doctors employed by Health NZ can have their KiwiSaver contributions matched up to a maximum of 6 percent.
Chief executive of KiwiSaver provider Pie Funds Ana-Marie Lockyer said Retirement Commission research showed a third of employees were contributing more than 3 percent of their salaries to their KiwiSaver accounts, but fewer than one in 10 received a rate of more than 3 percent from their employer.
"So in New Zealand, members overall, members contribute more into KiwiSaver than both employers and the government combined, unlike in other jurisdictions where employers tend to contribute more.
"Employers tend to stick to default rates, so given the inevitable increase required over time to contribution levels to support the usefulness of KiwiSaver for its intended purpose, employers will need to be engaged early, noting the impact of increases can be managed through system design."
The rates of additional contributions were higher in some industries than in others.
In financial and insurance services, a quarter of employees had an employer contribution above 3 percent.
In public administration and safety, one in five had a rate above 3 percent.
Accommodation and food services, and education and training workers were the least likely to receive an employer contribution above the minimum level.
It was not surprising that some sectors had higher employer contributions than others, Lockyer said.
Financial and insurance services and public administration tended to offer competitive benefits to attract and retain staff, she said.
Accommodation and food services had lower wages and tighter margins.
More than half of employers had adopted a total remuneration approach for at least some employees, Lockyer said. That meant that their salary was set at a certain level and the employee chose what to contribute to KiwiSaver within that.
"This point makes it very difficult for the inevitable future changes to contribution rates to benefit employees on these schemes in the same ways as non-total rem employees, so this needs to be addressed prior to any increases."
Founder of KiwiSaver provider Koura Rupert Carlyon said some companies had preferred provider arrangements where people would get a 4 percent contribution if they were in that specific scheme.
It would be positive if more employers would consider offering larger contributions, he said.
Most required that the employee increased their own payment, too, which meant more money going into KiwiSaver accounts overall.
"We all know that 3 percent is not enough."
Changes to increase contribution levels needed to be signalled well in advance, Lockyer said.
"This requires long-run notice as to scheduled and planned increases well into the future, potentially provisions for employers to support a steady phase in.
"And of course, consideration of the right time in the economic cycle but government can't wait until then to do the required work to assess and consider or it will miss the window, so work now and well signal changes in future. I think it will be a far more nuanced conversation than it was when KiwiSaver was established."
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