KiwiSaver & Student loan changes Webinar for Employers & Not-for-profit organisations 19 February 2020, 2:30pm – 3:30pm IN CONFIDENCE
Welcome to our webinar Rata Kamau, Transformation Account Manager IN CONFIDENCE
How to participate Submit your questions here Slides Presenter info Control panel IN CONFIDENCE
KiwiSaver & Student Loans changes Student loans: KiwiSaver : A quick summary What customers • • A few numbers • are saying Recent policy • Policy changes • changes Key changes & • Key changes & • impacts impacts myIR changes • IN CONFIDENCE
KiwiSaver summary Started on 1 July 2007 • Long-term savings habit for • retirement Employers & scheme providers • play an important role IN CONFIDENCE
KiwiSaver numbers 3,011,000 $799 million New Zealanders use KiwiSaver Government contributions paid out to 1.9 to save for their retirement - million members in 2019 processed in an as at 31 December 2019 average of 6 days in 2019 $6.06b In the last year, 39617 first home Transferred to scheme providers buyers withdrew a total of $953 for New Zealanders’ retirement million, a 32% increase from prior year saving in 2018/19 ($723 million) 80m Employer contributions passed on in an B2B messages were sent to average of 26 days in 2018/19 scheme providers in 2018/19 $46.1 billion Employee deductions passed on in an average of 22 days in 2018/19 Passed on to KiwiSaver scheme providers since 2007 IN CONFIDENCE
Recent KiwiSaver policy changes From 1 April 2019: Two new contribution rates: 6 % & 10% • Contribution holiday renamed to Savings Suspension • Member tax credit (MTC) renamed to Government Contribution • (GVC) From 1 July 2019: KiwiSaver opened to all ages • New members not locked in for 5 years before they can withdraw • From 1 April 2020: Members who enrolled before July 2019 (aged 60 – 64) can opt • out of 5-year lock-in period IN CONFIDENCE
Key changes from April 2020 KiwiSaver administered in our new system • Several proposed policy changes to alleviate pain points • o Voluntary transfer period reduced from up to 35 to 10 days o Provisional period for new members reduced from 3 to 2 months o Employer contributions government guaranteed o Interest calculations calculated from pay date reported by employer o Three month residency grace period will be removed o Members can make full or partial withdrawal before turning 65 (life-shortening conditions) o New B2B platform and improvements IN CONFIDENCE
Member impacts New enrolments – notify member and provider of PIR rate • More info to determine correct PIR on our website • Employer contributions invested sooner • Increased visibility of contributions and deductions in myIR • Request option to export customer (for HomeStart grant) • IN CONFIDENCE
myIR for KiwiSaver Members IN CONFIDENCE
Impacts for scheme providers Transition to new B2B service over time • New digital platform – more self-service options and reduced effort • Access to myIR – complete actions previously managed via B2B/mail • Improved investment opportunity • Increased obligation - 10 working days instead of up to 35 to • complete voluntary member transfer Member calls transferred to scheme provider in some instances • Provide new information to IR not previously requested • o Member transfers initiated o Government contribution claim information o Increased number of reason codes to determine action required IN CONFIDENCE
myIR for scheme providers IN CONFIDENCE
Reports in myIR for scheme providers IN CONFIDENCE
Impacts for employers Improved onboarding process for new employees • o Supply employee’s legal first and last name o KS1 (enrolment) and IR346 (new employee details) combined into one “Employee Details” section o KiwiSaver status collected for new employees, not existing employees o One-off, advise of any income received exempt from KiwiSaver contributions (new employee) Frequency of contact with IR will be different • New notifications • IN CONFIDENCE
Employee onboarding - myIR Employee onboarding will include both the IR346 and the KS1. First and last name fields mandatory and will default to being the name on the EI. If employer wants to have a different name, they will have the option to change this. Employers need to advise of any income that will be received by a new employee that is exempt from KiwiSaver contributions. Employers will only need to provide IR with a KiwiSaver status for new employees. This will no longer be collected for existing employees. - 15 - IN CONFIDENCE
Student Loans IN CONFIDENCE
What’s changing? Administer student loans on new system • Increased administrative efficiency and process • automation More effective management of loan debt • New customer centric loan services • Better promotion of options already available, currently • not used by student loan customers IN CONFIDENCE
Recent legislative changes Interest no longer charged and written off – from 1 April 2020 • Changes to definition of adjusted net income • o Removing certain contributions to retirement savings schemes. o An amount of depreciation loss allowed in 2002-3 or earlier years. o Including – dependent children’s interest of major shareholder attributed income Provision included to clarify interest free or not after leaving NZ. • Reinstates provision – return to NZ after 5 months (but less than 6 months) treated as NZ-based customer IN CONFIDENCE
Other legislative changes Scheduled to pass in March 2020, effective 1 April 2020: Interest no longer charged and written off – prior to 1 April 2020 • Adjusted net income threshold reduced from $1500 to $500 • Assessments/reassessments prior to 2013 only in cases of fraud • IR able to write off fraudulent loans prior to 1 April 2020 • Repayment Holiday renamed to Temporary Repayment • Suspension to clarify suspension is temporary Employers notified when loan is close to paid off • Serious illness or disability – IR can treat as “based in NZ” • Repayment deductions allocated by payday rather than 15 th • Salary/wage deductions can be used to repay unpaid student loan • assessment amounts if loan balance fully repaid Overdue amounts $20 or less – can be written off • Payments allocated against oldest unpaid period first • IN CONFIDENCE
Student loans: key changes From April 2020, fully administered in new system: Due dates for assessments/reassessments change from 60 to 30 days • after due date Student loan commissioner initiated recovery (SLCIR) notices • automatically issued if customer meets requirements Customers eligible for entitlements identified through data analytics • myIR payment functionality expanded to include UK, SEPA, Canada & • USA NZ based customers can make payments 24/7 through SPK2IR • IN CONFIDENCE
myIR changes Improvements and new functionality: Account summary screen – loan balance, balances owed, making • extra payments, and interest rate Student loan account optimised for mobile use • See international travel movements in myIR • Repayment calculator in myIR • Update “Alternative Contact Person” • Make extra payments in myIR • New interest status calculator – see impact of travel • Apply to be “overseas and interest free” • Set preference – overpayments on loan • Apply for hardship and reduced rate on salary and wages • IN CONFIDENCE
myIR for New Zealand based student loan customers IN CONFIDENCE
Reducing effort for employers New employee onboarding process – ensure correct tax • code, advise employer Similar types of information consolidated • More streamlined information: • o Successful repayment deduction exemption – direct to employer o Employers notified if loan is close to being paid off IN CONFIDENCE
Travel movements in myIR IN CONFIDENCE
Repayment transactions in myIR – Salary/wage earner IN CONFIDENCE
Assessments in myIR Interim assessments and overseas based assessments will show on the student loan account summary page. Under the ’I want to’ section on the summary page, customers will be able to click on ‘View assessments’ to view a break down for each period. If the due date has passed, it will show the total amount that is due now. IN CONFIDENCE
Repayment calculator in myIR IN CONFIDENCE
Student loan statements IN CONFIDENCE
Refreshed website content IN CONFIDENCE
Time for Q & A Enter your questions on your screen in the “Enter your question” section IN CONFIDENCE
Next steps Please complete the Feedback Survey when the webinar ends Watch the presentation on demand IN CONFIDENCE
Thank you for your time www.ird.govt.nz/webinars: Register for future webinars • Watch previous sessions On Demand • Webinar presentation pack, questions & answers available on our webpage • Any other questions? Send them to IRTransformation@ird.govt.nz IN CONFIDENCE
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