Carin Oelofse, 71, works for Havana Coffee, owned by Lion New Zealand. She's grateful the company continues to pay the 3% employer contribution to her KiwiSaver. Photo / Sylvie Whinray
It’s not illegal, but is it ageist for employers to stop paying the 3% KiwiSaver contribution once employees turn 65? Jane Phare surveys some of New Zealand’s largest companies to find out which ones pay KiwiSaver to older workers.
Auckland accounts worker Carin Oelofse was surprised to find the 3% employer contribution to her KiwiSaver stopped when she joined coffee company Havana, owned by Lion New Zealand, in March.
Aged 71, Oelofse is still saving for her retirement, putting 8% of her salary into KiwiSaver each month. Her previous employer, a North Shore renovation business, continued to pay the employer contribution for the five years she was employed there, so she assumed that would continue.
Behind the scenes, other Lion New Zealand employees raised the issue with management, wondering why they effectively earned less than they did when they were 64. By July, Lion had restarted the 3% KiwiSaver contributions to permanent and fixed-term employees aged 65 and over, including Oelofse.
“I really appreciated that they came to the table,” she says. “They are nice to work for. They have an awesome culture.”
Lion didn’t need much persuasion, says Jacquie Shuker, the company’s people and culture director. It was “illogical” to stop the KiwiSaver contribution to valuable team members just because they turned 65.
“It is absolutely the right thing to be doing,” Shuker says.
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As with most larger companies, the percentage of older workers is relatively small. Of Lion’s 800 employees, only about 2.5% are 65 or over. But those 20 employees, some approaching 70, bring invaluable experience to the company such as master brewer David Meads, who joined 50 years ago as an 18-year-old lab technician.
Retirement Commissioner Jane Wrightson is pleased to hear stories of companies like Lion listening to its staff. She suspects cutting off the compulsory employer contribution (CEC) is not an “active” decision by many companies. Instead, the payment stops automatically after the company receives a standard notification from the IRD advising the employer it no longer needs to pay the CEC, and that the KiwiSaver member is eligible to access their savings.
“For some [employers] it will be an overt decision but for others, I suspect they haven’t thought hard enough about it. And if they want to keep their older workers, and I’m assuming they will, then this is a very obvious way you can contribute.”
Wrightson wants workers to become more vocal on the subject, encouraging them to collectively raise the issue with employers who stop the contribution at 65.
“The more this is talked about, the better.”
Is it ageist? You bet it is, she says. “There is no logic to it from an employer perspective. Absolutely it is age discrimination.”
One long-time and hard-working employee of a large company spoken to by the Herald remembers the brief, “curt” letter that arrived when he turned 65, informing him the company would no longer contribute to his KiwiSaver.
“No conversation, no chat, just a stark three-or-four-line letter. Rather displayed the cold corporate heart behind all the warm fuzzies they generally radiate.”
Another woman spoken to by the Herald remembers a similar letter arriving from her employer.
“I still have deep-seated anger at their meanness.”
South Africa-born Oelofse, part of Havana’s finance team, says age should not matter.
“If you do the work and you do your job, what’s the difference? Why should something change the moment you strike 65? Why should you be treated differently because you are a day older? It’s stupid.”
Wrightson agrees. She wants the Government to make employer KiwiSaver contributions compulsory beyond age 65 – and under 18 – and she wants the 3% default contribution rate increased to at least 4%, with employers matching that level or more.
The present 3%-plus-3% employee/employer KiwiSaver contributions are not enough to save for retirement, she says.
“For all bar the most shaky of organisations, the actual financial cost isn’t enormous.”
Wrightson thinks employer KiwiSaver contributions will become increasingly important as part of employment packages. Older workers, aged 55 and over, represent about one-third of the workforce. New Zealand has one of the highest rates of people still working at 65 and older.
“And the reason people work after 65 is sometimes because they want to and often because they have to,” Wrightson says. Women in particular can see they have a longer period of retirement to fund, so will work while they can.
A large proportion of older Kiwis, 200,000, are still working and have KiwiSaver accounts open after the age of 65. Of the ANZ Investments KiwiSaver members aged 65 and over, 32.5% made an employee contribution in the past two months and 16.4% made a voluntary contribution.
Several companies contacted by the Herald support the concept of a 4% employer and employee contribution, including the ANZ.
“The issue is by how much and when,” a spokesman said. “It’s important that employees and employers have time to plan for this.”
Genesis, too, was supportive, saying it was more sustainable for employees and the New Zealand economy long term to support healthy retirement savings.
Ports of Auckland said it did not oppose the Retirement Commissioner’s recommendation to increase the employer contributions and it already paid higher company contribution rates to some employees as agreed in union collective agreements.
Employees can choose if they put in 3%, 4%, 6%, 8% or 10% of their gross pay and employers can choose what they match, with 3% being the minimum they must contribute.
Ian Fraser, who runs the Seniors@Work employment website and Facebook page for the 55-plus age group, says companies should be encouraged to continue contributing to KiwiSaver past the age of 65, to acknowledge the value and institutional knowledge of those staff.
“Those who are still working and encouraged to keep working by their employers are generally much valued for their experience, their skill set, their mentoring ability and their desire to keep on working for the company without looking for their next job.”
Out of 30 large companies and organisations randomly surveyed by the Herald, all but two continue to pay the 3% KiwiSaver contribution to employees once they turned 65. A few contributed more than 3%.
Media company NZME, owner of newspapers including the Herald, digital platforms and radio stations, does not contribute to employee’s KiwiSaver once they turn 65.
About 6% of more than 1200 employees at NZME are 65 or over.
In a statement, a spokesperson said, “In line with current legislation, currently NZME ceases KiwiSaver employer contributions for employees aged 65+. This is something we will continue to review and monitor.”
Foodstuffs South Island does not continue to pay the employer KiwiSaver contribution once a staff member turns 65. Of the 1900 employees, 2% are 65 or over. In a statement the company said it offered competitive remuneration and benefits packages for its team members.
“We complete regular reviews on the packages we offer to team members which include potential changes to KiwiSaver employer contributions.”
Several major companies contacted by the Herald said they valued diversity and age was part of that diversity.
Bunnings chief people officer Damian Zahra says age is no barrier and the company believes diverse teams create the best mix of perspectives and advice, and provide the best customer experience. Arbout 7% of the company’s workforce is 65 or over and more than 25% are over 50. Bunnings contributes between 3% and 7.5% to staff KiwiSaver accounts, based on employees’ contributions, regardless of age.
IAG New Zealand executive general manager for people Louise Harvey-Wills says all employees are entitled to the same benefits, including the KiwiSaver contribution, regardless of their age. Added benefits offered by the company include five extra leave days a year after five years’ continuous service with IAG, and five days of domestic leave each year to allow employees to take time off to care for a dependent family member.
Air New Zealand chief people officer Nikki Dines says the company deeply values the skills and wealth of experience that long-serving employees bring to their roles.
“Their [employees aged 65 and over] contributions are integral to maintaining the high standards our airline strives for every day.”
The Warehouse Group chief human resources officer Richard Parker says the company is committed to supporting employees with their KiwiSaver contributions as long as they decide to stay in the scheme. The company also continues to contribute to KiwiSaver while staff are on parental leave, as does Woolworths.
Jane Phare is a senior Auckland-based business, features and investigations journalist, former assistant editor of NZ Herald and former editor of the Weekend Herald and Viva.
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