LESS THAN SUPER

ANDREW CHICK, JOURNALIST

There is clear evidence that many SMOs and SDOs employed by Te Whatu Ora are not maximising the opportunity for employer contributions to their superannuation scheme. The question is whether that is by choice or because of system failings.

Matched superannuation contributions from your employer are an obvious benefit to any individual’s retirement savings. For an employer they are also an important staff retention tool. But for an employer like Te Whatu Ora – which is highly dependent on attracting staff from overseas – they are a significant recruitment issue.

The ASMS–Te Whatu Ora SECA states the employer “will pay a matching subsidy up to a maximum of 6% of an employee’s gross taxable salary” towards superannuation.

While the 6 per cent employer contribution is relatively generous in a New Zealand context (most New Zealanders only receive the statutory minimum 3 per cent employer KiwiSaver contribution), it is far less generous than in Australia or the UK.

But recent ASMS data shows many senior medical and dental officers are not receiving full employer superannuation contributions, and some are missing out altogether.

As part of its annual Te Whatu Ora salary survey, ASMS requests information from Te Whatu Ora’s districts on the superannuation schemes currently used by senior medical and dental staff.

ASMS has been conducting the survey for 30 years. For most of that time it only asked DHBs for the total number of contributions the employer was making and did not ask the employer to compare this to the number of employees.

In 2017 this comparison was made for the first time and found the DHBs had 660 more SMOs employed than they were making employer contributions for.

Like much of the payroll information coming from DHBs – and now districts of Te Whatu Ora – there are significant anomalies and gaps in the data.

However, the 2023 survey still showed 9.1 per cent of SMOs employed by Te Whatu Ora were not receiving any contributions towards their superannuation. Equally, 44.4 per cent were receiving an employer contribution of less than 6 per cent.

“The employer contribution is only ‘matching’ any employee contribution, and employees can choose to contribute less than 6 per cent for legitimate reasons. However, having almost half of SMOs not maximising the employer contribution, and 1 in 10 not participating at all, seems particularly high,” says ASMS Industrial Director Steve Hurring.

According to Inland Revenue, in 2023, for the whole New Zealand workforce, there were 193,000 opt outs from KiwiSaver, compared to 2,757,150 members aged 18–65 in the scheme. As some context, 8.3 per cent of all those KiwiSaver opt outs earned $120,000 per annum or more. A large proportion of those members opting out would be opting into a non-KiwiSaver retirement scheme.

Problems with superannuation contributions are a common issue members raise with ASMS industrial officers.

Two common themes relate to staff coming from overseas who are ineligible for KiwiSaver and staff who transfer between districts and are contributing more than 3 per cent to a KiwiSaver scheme.

Non-residence

Under the KiwiSaver legislation it is an employer’s responsibility to ensure all eligible employees are enrolled in the scheme. However, to be eligible for

KiwiSaver you need to be a New Zealand resident. When some international medical graduates arrive in the country, they do so on a work visa that does not immediately confirm their residence.

On that basis some districts have felt they were not obligated to mention other superannuation arrangements that can apply to non-residents. The SECA is intentionally broader and references “approved superannuation scheme”. KiwiSaver schemes are approved, but so are at least five other superannuation schemes that are not KiwiSaver schemes.

While non-KiwiSaver schemes do not attract the $520 annual government contribution, they do have a level of portability and flexibility for employees who may not end up residing in New Zealand long term. Even more importantly, employees can start contributing to approved superannuation schemes from day one of their employment, whether they are New Zealand residents or not.

ASMS has seen letters of offer from some districts that only include KiwiSaver (and only then on page 9 of a 10-page document). This has led to a number of cases where ASMS has reclaimed employer contributions where new employees from overseas were not aware they were entitled to participate in a superannuation scheme let alone receive employer contributions.

Half Kiwi

Another common problem occurs for people who are part of a KiwiSaver scheme – either for part or all of their retirement saving. The SECA allows members to split their employer contribution with a minimum 3 per cent in KiwiSaver and the other 3 per cent in another approved superannuation scheme.

Members who are paying more than 3 per cent into KiwiSaver and move their employment between districts of Te Whatu Ora can find the administrators of the payroll system in their new district do not feel they have appropriate authorisation to deduct more than the statutory minimum 3 per cent for KiwiSaver. When they revert to that lower figure, it then attracts a lower employer contribution as well.

Common complaints

In 2023 ASMS also conducted a specific survey of members who were international medical graduates. Superannuation generated a high number of qualitative responses.

“My employer did not mention KiwiSaver/ superannuation at all. I only found out through a friend. I lost out on about 12 months of possible savings,” said one member.

A second member was able to top that: “I was wrongly advised by payroll in the DHB that I couldn’t do KiwiSaver so missed 5 years of this.”

“I was given KiwiSaver forms and filled them out,” said a third, “assuming it would take some time to get started. When I followed up a number of months later, I was told as a non-resident, I was not eligible for this, although there was another superannuation pathway. It was disappointing to have lost out on that opportunity for employer contributions. Additionally, I was given only a list of providers with no information on their products or how to compare them, which is quite a contrast to the available resources for KiwiSaver accounts.”

Worth checking

Sometimes members are confused when they see their superannuation contribution doesn’t numerically match the amount being contributed by their employer. This can be because the employer contribution to your superannuation gets taxed and they are matched on a before-tax basis. However, this can also be because of an error.

Another thing worth checking is whether contributions are being calculated on the basis of total gross earnings, as set out in the SECA, or as some DHBs did, based on the potentially lower gross taxable salary.

Back in 2019 ASMS identified that over a quarter of SMOs at Waikato DHB were not receiving the full employer superannuation contribution, and an eighth were receiving none at all.

ASMS sought information from other DHBs in the central North Island. There were 18.5 per cent receiving less than 6 per cent at Lakes DHB, 23 per cent at Taranaki DHB, 57.8 per cent at Tairāwhiti DHB, and 62 per cent at Hawke’s Bay DHB.

In Hawke’s Bay, ASMS worked with superannuation fund provider Medical Assurance Society (MAS) to contact members to clarify that they were choosing to contribute less than 6 per cent (and qualify for less than 6 per cent from the employer). It soon became apparent that some of the problem was a standard letter of offer in the district that only discussed KiwiSaver.

The results of the 2023 salary survey show significant variation between districts. While earlier outliers like Tairāwhiti and Hawke’s Bay have improved, Capital, Coast and Hutt Valley district still records 33 per cent of SMOs not receiving any employer contribution.

Employer response

In some instances, local employers have argued they do not have any specific legal responsibility to inform staff of their superannuation eligibility, other than in relation to KiwiSaver.

When asked whether Te Whatu Ora was concerned about employees not taking advantage of the employer superannuation contribution, Te Whatu Ora Chief People Officer Andrew Slater says they make superannuation payments in line with the employment agreements in place, but the payments are reflective of regional practices.

“Circumstances where KiwiSaver or superannuation payments are not made would be due to individual circumstances where the staff member concerned is not signed up to a KiwiSaver or superannuation scheme for payments to be made to.

“Any staff member who has questions or is concerned about their KiwiSaver or superannuation payments is encouraged to contact their local payroll team.”

Like many payroll issues, Te Whatu Ora does not have a nationally standardised approach to explaining and offering participation in a superannuation scheme to newly appointed SMOs.

There are options

Jules Riley, an adviser with MAS, says, “As a doctor employed by Te Whatu Ora, you are most likely eligible for a matching 6 per cent superannuation contribution on top of your regular salary. This matching contribution is a significant benefit and is double the rate received by most employees in New Zealand.

“KiwiSaver is only available to New Zealand residents. However, both New Zealand residents and non-residents are welcome to join a participating superannuation scheme, such as the MAS Retirement Savings Scheme.

“Members who receive their contribution into a participating superannuation scheme (as opposed to a KiwiSaver scheme) can withdraw their entire balance if they depart New Zealand permanently. If members remain in New Zealand, they can also withdraw their savings from the age of 55 as opposed to the age 65 in KiwiSaver.”