Imagine negotiating an $80,000 salary, then discovering that your employer's 3% KiwiSaver match comes OUT of that $80,000, not on top of it. Your actual cash salary is $77,600. That is total remuneration packaging, and it penalizes KiwiSaver members.
Under this structure:
- Non-KiwiSaver member: receives $80,000 cash
- KiwiSaver member at 3%: receives $77,600 cash + $2,400 employer KiwiSaver (same total cost to employer)
The result: KiwiSaver members are effectively paying for their own employer match through a reduced salary. The "employer contribution" is an illusion. It is your money reclassified.
Why it exists
Employers use total remuneration to control costs. They budget $80,000 per head regardless of whether the employee joins KiwiSaver. It keeps payroll predictable. About 30-40% of NZ employers use this structure, concentrated in professional services, banking, and government contracts.
The Nicola Willis signal
The Finance Minister has signaled that under compulsory KiwiSaver, total remuneration packaging for KiwiSaver will be banned. All jobs must advertise salaries on the same basis, with employer KiwiSaver paid as an ADDITIONAL cost: forcing genuine employer contributions.
Impact on take-home pay
If the ban passes, every employee on a total remuneration contract effectively gets a 3-6% pay rise (the employer match becomes genuinely additional). But employers face a direct payroll cost increase of the same amount: creating tension during the transition.
