Kiwisaver: Opting in and opting out

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Q: If new staff members do not wish to join KiwiSaver, do I simply pay their PAYE on the IRD form or must I fill in forms advising they don't want to join?

A: Employers are an important part of KiwiSaver, ensuring that eligible new staff over the age of 18 are auto-enrolled in KiwiSaver and deductions begin.

When new staff come on board who are eligible to join KiwiSaver but not already a member or on a contributions holiday, you need to kick off the auto-enrolment process.

This happens regardless of whether the staff member wants to be part of KiwiSaver or not.

When you're going through the formalities, ideally within the first days on the job, give your employee the following information and forms contained in the KiwiSaver information pack from the IRD:

• Your introduction to KiwiSaver - employee information (KS3) fact sheet;

• KiwiSaver deduction form (KS2);

• New employee opt-out request (KS10) form.

You have form-filling to do, too. Employers need to complete the KiwiSaver employee details form (KS1) and send it to the IRD when your next employer monthly schedule for PAYE deductions is due. These can all be downloaded from the IRD website.

Then you need to begin making KiwiSaver deductions and employer contributions from their first pay.

Obviously not all employees will be keen on joining, which is their choice. They will need to fill in the opt-out form -- KS10 -- and give it to you, which you forward to the IRD.

Timing is everything with opt-outs. With limited exceptions, they need to be done within a two-to-eight-week window of starting a new job.

Even if your new staff member gives you an opt-out form on the first day, you will need to process two weeks of KiwiSaver contributions until the opt-out takes effect.

Once it kicks in, all contributions will be refunded. The opt-out process is for people who have never joined KiwiSaver and don't want to become a member when they change jobs.

If you are in KiwiSaver and want to stop contributions when you change jobs you need to arrange a contributions holiday.

This may seem like a faff, particularly if you have a manual payroll system, so the IRD is consulting on ways technology could make it simpler to manage in the future.

• For more information, go to: payeandgst.makingtaxsimpler.ird.govt.nz/

Correction: Last week's question was about how to get information on the performance of KiwiSaver funds. It mentioned Morningstar's quarterly surveys, which provide commentary and analysis for most, but not all, the KiwiSaver funds. Providers don't pay to be included as per the comments by David Boyle of the Commission for Financial Capability, says Morningstar, but for various reasons some providers elect not to participate.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players, email Helen Twose. Helen cannot answer all questions, correspond directly with readers, or give financial advice.