KiwiSaver and paid parental leave

KiwiSaver is a voluntary retirement savings scheme in New Zealand that offers various benefits, including employer contributions and government contributions. While KiwiSaver contributions are typically deducted from an individual's salary or wages, it is important to note that they can also be deducted from paid parental leave payments.

Women generally face a less secure financial situation in retirement compared to men. Despite having a longer life expectancy, women tend to have lower average KiwiSaver balances, with men's balances being approximately 36% higher. This disparity can be attributed to several factors, including the over-representation of women in lower-paid positions, lower rates of labor force participation, and periods of time taken out of the workforce to raise children or care for family members.

Employer contributions

From 1 July 2024, if you decide to have KiwiSaver deductions from your paid parental leave payments, Inland Revenue will also contribute 3% as an employer contribution. If you are still receiving a salary or wage from your employer during your parental leave, they will continue to deduct KiwiSaver contributions and make compulsory employer contributions, unless you have opted for a savings suspension.

Benefits of contributing to your KiwiSaver while on paid parental leave

  1. Maximising Retirement Savings: By continuing KiwiSaver contributions during paid parental leave, you are ensuring that your retirement savings continue to grow. The additional employer contributions during this period can significantly enhance your KiwiSaver balance, providing a solid foundation for your future financial security.
  2. Taking Advantage of Government Contributions: KiwiSaver members are eligible for government contributions. The maximum you may be entitled to is $521.43 per annum. To receive the full amount, you need to have contributed at least $1,042.86 to your KiwiSaver account during KiwiSaver financial year (between 1 July and 30 June). By maintaining KiwiSaver contributions during paid parental leave, you can continue to receive these valuable government contributions, further boosting your savings. To read more on government contributions click here.

If you have any questions about paid parental leave, please contact Inland Revenue. If you have any questions about your Mercer KiwiSaver scheme you can either contact our helpline team on 0508 637 237 or email KiwiSaver@mercer.com

Additional resources

The information contained in this article is intended for general guidance only. It does not take into account your particular financial situation or goals. Before making any investment decision, you should refer to the Product Disclosure Statement or consult an appropriately qualified financial adviser.

03 July 2024