Since April 2012 any contributions from your employer have been taxed - the Employer Superannuation Contribution Tax (ESCT).
The tax rate ranges from 10.5 per cent to 33 per cent depending on how much you earn.
For example, if your gross salary each week is $1200 - that's $62,400 a year - roughly $243 comes off for PAYE and ACC, and $36 is deducted for your 3 per cent KiwiSaver contribution, leaving you with $920.84 in your pay packet.
The employer will also chip in $36 to your KiwiSaver account, but based on that salary, a 30 per cent employer superannuation contribution tax will be applied first.
This means your employer will be forwarding $25.20 to the IRD for your KiwiSaver fund and $10.80 in tax. That $25.20 is the "net employer superannuation contribution".
All this happens under a "pay + benefits" approach to remuneration whereby the employer's contribution is paid on top of an employee's pay.
Some employers, usually bigger companies, choose to do what is called "total remuneration".
Under these circumstances the employee and employer have agreed to treat some or all of the employer contribution as salary or wages under the PAYE rules.
Employers can't force you to take a total remuneration package and negotiations must be conducted in good faith with salaries reflecting the fact that KiwiSaver contributions are built in.
The self-employed and not employed, such as stay-at-home parents, can generally elect the amount they wish to contribute to KiwiSaver - they're not locked in to a 3 per cent minimum rate.
Depending on which provider you are with there may be some flexibility in the minimum amount you can pay in annually. It may even be possible to make smaller, more regular, payments.
You should aim to add $1042 to your KiwiSaver account each year to get the maximum member tax credit of $521. This works out at around $20 a week.
Even if you don't hit the $1042 you will be paid 50 cents for every $1 you add to your account over the KiwiSaver year, which runs from July 1 to June 30.
