The employer cost of KiwiSaver per employee.
Employer cash cost (gross)
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ESCT
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Net to employee
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Your breakdown
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Budgeting KiwiSaver as a real payroll line
When you hire someone in New Zealand, the salary on the offer letter is not the whole cost. On top of gross pay you owe a compulsory employer KiwiSaver contribution of at least 3 percent for any member who is contributing. That 3 percent is your cash outlay. What confuses a lot of business owners is Employer Superannuation Contribution Tax, or ESCT. ESCT is a tax on the contribution, but it comes out of the 3 percent rather than sitting on top of it, so your bank balance moves by the gross figure and the employee receives the contribution net of ESCT. This tool splits those two numbers so your forecast matches what Inland Revenue actually expects you to pay and file.
How ESCT is banded
ESCT is not a flat rate. Inland Revenue sets the rate from the employee’s prior-year salary plus the employer super they received, and the bands for the 2025-26 year run at 10.5 percent up to $16,800, 17.5 percent up to $57,600, 30 percent up to $84,000, 33 percent up to $216,000, and 39 percent above that. The tool reads the salary you enter, finds the matching band, and applies it to the gross contribution. Note that ESCT bands and PAYE income brackets are close cousins but not identical, which trips up people who assume a $70,000 earner sits in the same band for both.
A $90,000 hire, contribution split out
Say you bring on a developer at $90,000. The minimum 3 percent employer contribution is $2,700 a year. At $90,000 the worker falls in the 33 percent ESCT band, so ESCT on that contribution is $891, leaving $1,809 landing in their KiwiSaver account. Your true annual cash cost stays $2,700; the split simply shows how much of it Inland Revenue takes as tax before the money compounds for the employee.
The total remuneration clause that quietly cuts pay
Here is the judgement call that matters most. By default the 3 percent sits on top of salary, so it is a genuine extra cost to you. But an employment agreement can be written on a total remuneration basis, where the KiwiSaver contribution is funded from inside the headline package. If you go that route, a worker who lifts their own contribution rate effectively sees their take-home pay fall, because the same total pot now splits differently. Courts and the Employment Relations Authority have looked hard at whether such clauses were genuinely agreed. My advice: if you intend total remuneration, say so in plain words in the agreement and walk the candidate through a worked example, or you risk a dispute later.
Who should run this
This is built for founders, small business owners, and hiring managers sizing the fully loaded cost of a role before they make an offer, and for finance staff reconciling payroll. A common mistake is forgetting that employees aged 18 to 64 are auto-enrolled and that the 3 percent applies the moment they are contributing, so a 12-person team can carry a five-figure annual KiwiSaver bill that never appears in the salary spreadsheet. Run each salary through the tool, sum the gross column, and you have the number to budget. There is no general capital gains tax in New Zealand, so once the contribution is invested the employee’s KiwiSaver growth is taxed only through the fund’s PIE regime, not as a separate gain on you.
Does the 3 percent count toward the minimum wage?
No. The minimum wage is measured on gross cash wages. Your employer KiwiSaver contribution is paid on top and cannot be used to lift someone to the legal floor, unless a valid total remuneration agreement is in place, which still has to leave cash wages at or above the minimum.
Do I pay the contribution while staff are on leave or paid parental leave?
You contribute on the salary or wages you actually pay, including paid annual leave. Government-paid parental leave is different, because it is paid by Inland Revenue rather than you, so the compulsory employer contribution generally does not apply during that period unless you top up the pay yourself.
Can I contribute more than 3 percent?
Yes, and many employers offer 4 or 5 percent as a recruitment perk. The tool lets you raise the rate to model the extra cost. ESCT still applies at the same banded rate on the larger contribution, so a 5 percent contribution simply scales the gross, ESCT, and net figures up proportionally.