If you’re self-employed in New Zealand (a sole trader, a partner in a partnership, or a company owner who doesn’t take a PAYE salary), KiwiSaver works differently from the way it works for employees. There’s no automatic enrolment and no employer contribution, but you can still join, contribute what and when you choose, and receive the government contribution of up to $260.72 a year for putting in $1,042.86 of your own money.
Are You Self-Employed for KiwiSaver Purposes?
What matters is whether you’re paid a salary or wage with PAYE deducted. Inland Revenue says that if your business is run through a trust, partnership or company and you’re paid a PAYE salary or wage, you join KiwiSaver either directly with a provider or through your business’s payroll; if you’re not paid a salary or wage with PAYE deducted, you enrol directly through a provider (IRD: Joining KiwiSaver).
So, broadly:
- Self-employed for KiwiSaver: you invoice clients without PAYE deducted, you’re a sole trader or a partner, or you draw income from your company other than as a PAYE salary.
- An employee for KiwiSaver: you’re paid through payroll with PAYE deducted, including a shareholder-employee on a PAYE salary from their own company. Employer contributions apply; see KiwiSaver employer contributions.
Contractors fall on either side depending on how they’re paid. KiwiSaver for contractors covers schedular payments, labour-hire arrangements and when an employer contribution applies.
How Self-Employed KiwiSaver Works
Joining
Self-employed people aren’t automatically enrolled. IRD says “You can join KiwiSaver by contacting the scheme provider of your choice directly”, and you can do so at any time (IRD: Joining KiwiSaver if I’m self-employed or not working). You and the provider agree any terms and conditions. The general steps are in how to join KiwiSaver, and KiwiSaver providers lists the schemes.
No employer contribution
The compulsory employer contribution of at least 3.5% applies to employees whose contributions are deducted from their pay. With no employer, a self-employed member receives none, so the balance comes from your own contributions, the government contribution and investment returns. ESCT, the tax on employer contributions, doesn’t arise either.
Contributions are voluntary
You decide whether to contribute, how much and how often, and can change it at any time. IRD says you can pay your contributions directly to your provider or through Inland Revenue; through IRD, you “use the ‘Pay tax’ option and select ‘KiwiSaver’ through your internet banking” or set up an automatic payment.
If you pay yourself a PAYE salary
A shareholder-employee on a PAYE salary can contribute through the company’s payroll like any employee, and the company is then the employer for KiwiSaver purposes: If you're aged 16 or over and under 65, in KiwiSaver and contributing from your pay, your employer must contribute at least 3.5% of your gross pay (unless you're on a temporary rate reduction or in a defined benefit scheme), less employer superannuation contribution tax (ESCT). Whether that arrangement suits your company’s tax position is a question for your accountant; the self-employed tax guide covers the tax side of running your own business.
The Government Contribution for Self-Employed Members
The government contribution doesn’t depend on having an employer. It pays 25 cents for every dollar you contribute between 1 July and 30 June, up to $260.72 a year, which you reach by contributing $1,042.86 (about $20.06 a week). It’s available to members aged 16 to 65 with taxable income of $180,000 or less.
You don’t apply for it yourself: IRD says “Your KiwiSaver provider applies for the contribution after 30 June”, and it usually shows in your account between the end of July and the end of August (IRD: Getting the government contribution). Payments to IRD and payments to your provider both count, as long as they’re made by 30 June.
| Your contributions in the year | Government contribution | Total credited |
|---|---|---|
| $500 | $125.00 | $625.00 |
| $1,042.86 | $260.72 | $1,303.58 |
| $5,000 | $260.72 | $5,260.72 |
Contributing more than $1,042.86 doesn’t increase the government contribution. The KiwiSaver government contribution page covers the full rules, including pro-rating in a year you join or turn 65.
Weighing It Up Without an Employer Contribution
For a self-employed member, the government contribution and investment returns are the gains, and locking money away until 65 or a first home is the cost; an employee gets the employer contribution on top. Business owners who may need cash for equipment or a slow month have more reason to weigh that lock-in, since hardship withdrawals need significant financial hardship. Is KiwiSaver worth it? sets out the trade-offs in full, and what each KiwiSaver rate adds up to shows how different amounts compound.
Fees come out of your own money too. KiwiSaver fees compared sets out each provider’s percentage and dollar fees.
First Home Withdrawal for Self-Employed Members
Self-employed members can use the KiwiSaver first home withdrawal on the same criteria as employees, including at least 3 years of membership. The full criteria are in first home withdrawal eligibility.
Tax and Self-Employed KiwiSaver Members
KiwiSaver contributions aren’t deductible from a self-employed person’s taxable income. Returns inside the fund are taxed at your prescribed investor rate (PIR), which is worked out from your income in the previous two years and is capped below the top personal tax rate; with variable income, check it each year. The rates and how to update yours are in KiwiSaver PIR rate explained, and the wider tax picture is in the KiwiSaver tax guides.
Frequently Asked Questions
Do I have to join KiwiSaver if I am self-employed? No. You aren’t automatically enrolled; joining is your choice. Without joining, you don’t receive the government contribution.
Is there an age limit for joining? No. IRD describes KiwiSaver as open to New Zealand residents of any age, and the self-employed can join at any time. The government contribution is paid to members aged 16 to 65.
I had KiwiSaver through a previous employer and became self-employed. What happens to my old balance? Your account stays open and invested. Payroll deductions stop, and you can keep contributing voluntarily.
If I take a PAYE job later, does my self-employed KiwiSaver history count? Yes. Your membership and balance carry over, and the first home withdrawal needs at least 3 years in KiwiSaver. Tell your employer you’re in KiwiSaver so contributions are deducted from your pay.
What to Read Next
- KiwiSaver by life stage and situation
- KiwiSaver for contractors: PAYE, schedular payments and employer contributions
- What is KiwiSaver?: how the scheme works
- KiwiSaver voluntary contributions
- Self-employed tax in NZ