Grace period for employers – opting in and automatic enrolment

Clause 538

Submission

(67 – New Zealand Institute of Chartered Accountants)

Section 101FB(1)(b) should be deleted. Section 101FB(1)(a) talks about automatic enrolment, whereas section 101FB(1)(b) is in relation to opting in. Therefore, there cannot be a circumstance where both apply.

Comment

A preferred solution would be to make paragraphs (a) and (b) of section 101FB(1) alternatives rather than conjunctive. That would cover both automatic enrolment and opting in directly to a KiwiSaver scheme provider, whereas the submission’s proposal would cover only automatic enrolment. An employer should not have to face unlimited liability to back-pay compulsory employer contributions if an employee who is not eligible for automatic enrolment opts in directly through a provider and the employer is not informed.

Recommendation

That the submission be accepted, subject to officials’ comments.