Your last pay when you retire
When you leave your job because you’re retiring, check that your final pay is taxed correctly. If it’s not, you could get a bill from Inland Revenue at the end of the tax year.
What’s in your final pay
The process of leaving a job because you’re retiring is generally the same as resigning from a job. What you’re eligible for in your final pay and how it’s calculated depends on such things as:
- how long you have worked for your employer
- any annual holidays or days in lieu you have not used
- the notice period given
- lump sum payments (also called extra pay) in your employment agreement (for example, long service leave, retirement payments negotiated as part of your retirement package, non-taxable allowances).
Unused sick leave or bereavement leave does not legally have to be paid out, but some employers may include it in a final payment.
See more information on the Employment New Zealand and Inland Revenue (IR) websites:
- Final pay — Employment New Zealand
- Giving notice — Employment New Zealand
- Lump sum payments — IR
- Notice component of the final pay — Employment New Zealand
- Payment for leave and holidays in final pay — Employment New Zealand
What’s taken out of your final pay
Your employer takes income tax and other payments, if eligible, off the total amount of your final pay. These can include:
- ACC levies — you do not pay ACC levies on lump sum retirement payments
- child support — you do not pay child support from lump sum retirement payments
- KiwiSaver — retirement payments are liable for KiwiSaver deductions
- student loan repayments — the usual 12% repayment is taken from the total of your final pay before any other deductions or taxes are taken out.
Make sure you pay the correct tax by checking the IR income tax calculator.
- ACC levies — ACC
- Changes to my child support details — IR
- Getting my KiwiSaver funds when I retire — IR
- Income tax for individuals — IR
- Redundancy and retirement allowance — tax and entitlements — IR factsheet (PDF 111KB)
- Work out tax on your yearly income — IR income tax calculator
Unsure about your final pay
If you do not think that your final pay is correct, talk to your employer first.
If you cannot resolve the problem, you can contact: