Compulsory Employer Contribution

Compulsory Employer Contributions are mandatory payments that NZ employers must make to their employees' KiwiSaver accounts. As of 2026, the minimum employer contribution rate is 3.5% of the employee's gross pay (before tax). This contribution is in addition to the employee's wages and is not deducted from their salary—it's an extra payment on top of their regular earnings.

Employers are only required to contribute if the employee is actively contributing to KiwiSaver. If an employee takes a savings suspension, employer contributions also stop. Employer contributions are subject to Employer Superannuation Contribution Tax (ESCT), which ranges from 10.5% to 39% depending on the employee's income. Some employers offer higher contribution rates (e.g., 4% or 5%) as part of their employment packages.

Real-World Example If Marcus earns $50,000 annually and contributes 4% ($2,000) to KiwiSaver, his employer must contribute a minimum 3.5% ($1,750). After ESCT deductions (assuming 17.5%), Marcus's KiwiSaver receives approximately $1,444 from his employer. Combined with his own contribution and the Member Tax Credit, Marcus saves significantly for retirement.