The “Hidden Cost” of Working: Retirement Commission Calls for Ban on Total Remuneration Clauses

By Lions Roar Aotearoa Economic Affairs Desk

AUCKLAND, NEW ZEALAND (Saturday, January 31, 2026) — A controversial clause buried in the employment contracts of approximately 25% of New Zealand’s workforce is under fire, with experts claiming it is stripping thousands of dollars from employees’ retirement savings every year.

The Retirement Commission has officially called for an outright ban on these “Total Remuneration” clauses, arguing they directly undermine the spirit of the KiwiSaver scheme and disadvantage workers who are trying to save for their future.

🔍 What is a “Total Remuneration” Contract?

Most New Zealanders expect their employer to pay a 3% KiwiSaver contribution on top of their agreed salary. However, in a total remuneration contract, that 3% is deducted from the gross salary itself.

• Standard Contract: $100,000 Salary + $3,000 Employer KiwiSaver = $103,000 Total Value.
• Total Remuneration: $100,000 “Total Package” (Includes KiwiSaver) = $97,000 Base Salary + $3,000 KiwiSaver.

Essentially, the worker is paying the employer’s portion of the contribution out of their own pocket, resulting in a lower take-home pay compared to peers on standard contracts.

🛑 Why the Retirement Commission Wants a Ban

Retirement Commissioner Jane Wrightson has highlighted that these clauses create a “non-transparent” environment where workers often don’t realize they are being short-changed until years later.

• Intent of KiwiSaver: The scheme was designed for employers to add to a worker’s savings, not for workers to fund the employer’s legal obligation from their own wages.
• Compounding Losses: Over a 30-year career, this “salary sacrifice” can result in a retirement nest egg that is tens of thousands of dollars smaller due to lost compounding interest and lower base salary growth.
• Inequity: Low-to-middle income earners are often the most affected, as they have less bargaining power to negotiate these clauses out of their contracts.

📊 The Financial Impact Over Time