Understanding the True Cost of KiwiSaver for Employers
Most tradies know they have to contribute to KiwiSaver for their employees — but many don't realise there's a second cost on top: ESCT (Employer Superannuation Contribution Tax).
How Employer KiwiSaver Works in 2026
From 1 April 2026, the minimum employer contribution rate increased from 3% to 3.5%. This applies to all eligible employees.
As an employer, you must: 1. Contribute at least 3.5% of the employee's gross earnings to their KiwiSaver fund 2. Pay ESCT on that contribution to IRD
What Is ESCT?
ESCT is a tax on the employer's KiwiSaver contribution. The rate depends on the employee's income:
| Employee's annual income | ESCT rate |
|---|---|
| Up to $16,800 | 10.5% |
| $16,801 – $57,600 | 17.5% |
| $57,601 – $84,000 | 30% |
| Over $84,000 | 33% |
Example: Apprentice on $52,000/year
- Employer KiwiSaver contribution: $52,000 × 3.5% = $1,820
- ESCT rate: 17.5% (income in $16,801–$57,600 band)
- ESCT: $1,820 × 17.5% = $318.50
- Total employer cost on top of gross wage: $2,138.50/year
This is money leaving your business on top of the wages you're paying — and it's required by law.
See IRD's KiwiSaver employer guide for full details.