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KiwiSaver inclusive vs. exclusive – clearing up the confusion

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KiwiSaver inclusive vs. exclusive – clearing up the confusion

​In the legal sector it is common for employers to vary between offering either a KiwiSaver exclusive package or KiwiSaver inclusive package. Often creating an area of confusion in the recruitment process, the team of expert legal recruiters at CoLegal are here to outline what this actually means, how to navigate multiple offers with varied exclusive or inclusive packages and give clarity around KiwiSaver as a component to your package.

Firstly, we thought we would take a moment to define what KiwiSaver actually is: a voluntary, work-based retirement savings scheme. KiwiSaver is for all New Zealand citizens and permanent residents living or normally living in New Zealand. Members can still get New Zealand Superannuation when they reach 65.

You are automatically enrolled into KiwiSaver if you are:

•eligible to be enrolled

•starting work with a new employer

•aged between 18 and 65.

You can opt out from contributing to KiwiSaver if you choose.

As an employee if you are enrolled you'll contribute either 3%, 4%, 6%, 8% or 10% of your before tax pay. If you do not choose a contribution rate, your employer will deduct the default rate of 3%. You'll contribute through wage deductions.

Employers will make KiwiSaver deductions from their employees' pay. They also make a compulsory minimum contribution of 3% towards their employees' KiwiSaver savings - unless they are already contributing to another superannuation fund for their employees. An employer will also stop payments if their employee has a savings suspension.

Where the confusion starts to come into play is when a candidate receives a job offer and it is either expressed as being ‘KiwiSaver exclusive’ (on top of the salary) or ‘KiwiSaver inclusive’ (part of the salary). Employers who offer an inclusive package are ensuring pay parity to those who are not part of Kiwi Saver, ie: have opted out or on a visa.

Let’s look at the numbers further:

KiwiSaver Exclusive:

$100,000 KiwiSaver exclusive job offer.

Base salary of $100,000 + $3,000 employer contribution to KiwiSaver.

If you have opted out of KiwiSaver your before tax remuneration will be $100,000.

KiwiSaver Inclusive:

$100,000 KiwiSaver inclusive job offer.

Base salary of $97,000 + $3,000 employer contribution to KiwiSaver.

If you have opted out of KiwiSaver your before tax remuneration will be $100,000.

The CoLegal recruitment team have seen further confusion when a candidate has applied for a new job and is moving from an exclusive package to an inclusive job offer and accessing the actual difference in remuneration. For example;

Current role exclusive package:

$65,000 base, exclusive of Kiwisaver.

Means $65,000 + $1,950 employer contribution to KiwiSaver.

New Job offer with inclusive package:

$70,000 inclusive.

Means $67,900 base + $2,100 employer contribution to KiwiSaver.

Actual increase in total remuneration package in moving between current role to new role would be $2,900 (not $5,000).

As a candidate it is crucial you understand these numbers and access your total remuneration against the exclusive / inclusive calculations to ensure there is no disappointment when it comes to your first pay check in a new role.

Our advice to employers is to make your exclusive / inclusive offer crystal clear when the verbal offer is initially made to a candidate to mitigate any potential for disappointment at the time of seeing the contract or during salary negotiations.

Through clear communication from employers and an understanding from candidates at the outset both parties will be better equipped to negotiate the package effectively. The benefit of working with a recruiter through this process is we do this day in and day out, and can assist to clarify this from the outset.