KiwiSaver IT project to cost up to NZ$5 million

The Inland Revenue Department (IRD) will spend between NZ$4 and $5 million upfront on the SAP-based project to develop the Central Administrator System (CAS) for the KiwiSaver program.

KiwiSaver is a voluntary superannuation scheme designed to encourage retirement savings. It will be compulsory for employers offer KiwiSaver but participation by employees is voluntary. An initial "kickstart" contribution of NZ$1000 from the government will provide an incentive for people to join along with deposit subsidies for first home buyers.

There have, however, been recent indications the government is considering making the scheme, which requires a minimum 4 percent contribution out of wages and salaries, compulsory as it is in Australia.

A consortium of EDS, SAP and Deloittes won the IRD tender to provide IT for KiwiSaver in April, beating the other shortlist candidate, IBM. The IRD can terminate the contract if for any reason the legislation does not pass.

The consortium is contracted to deliver the CAS to enroll people in the scheme, receive contributions through IRD's existing PAYE system and manage the initial "kickstart" payment among other functions. The system, based on SAP's Public Sector Collection and Disbursement (PS-CD) software, will also process refunds where required, maintain member, provider and employer records and process changes including scheme to scheme transfers and payment holidays.

CAS will be developed and integrated by a team of 18 vendor and department staff to meet IRD's organisational principles, including ensuring simplicity or processes and systems and maximising self service. Preferred contact channels are, in order, electronic, telephone and hardcopy correspondence to be managed as imaged data.

The CAS will be integrated using an EAI hub using standard protocols to other IRD systems including PAYE schedule processing.

The legislation for KiwiSaver is expected to be finalised by the end of October and the CAS system has to be operational for all required processes by 1 April 2007 when the scheme launches. Additional functionality will be added after that date.