KiwiSaver Q&A: I'm quitting New Zealand and I want my money back. How long do I have to wait?

KiwiSaver Q&A: I'm quitting New Zealand and I want my money back. How long do I have to wait?

By Amanda Morrall

Unfortunately getting your money out of KiwiSaver once the eight week-window to get out has closed isn't easy. It's a long-term savings vehicle and as such is meant to protect you from yourself.

There are four circumstances under which you might be able to qualify for early access; buying your first home, moving overseas permanently; significant financial hardship; or serious illness. 

While you rightly qualify for early release on the grounds of a permanent move, Inland Revenue wants to be assured that you are actually leaving forever and not just going on a holiday, hence, the 12 month stand down period.

I would have thought that you might qualify under the hardship clause, but the opinion I received from Inland Revenue was that moving countries didn't constitute a hardship. I guess if they think you can afford to buy a ticket out of New Zealand and afford all the expenses that a long distance move to the U.K. entails,  you are not suffering "significantly financial hardship.''

As the decision about your personal circumstances isn't made by Inland Revenue it's possible you could plead your case  with a more sympathetic audience. That would be the trustee that is overseeing your KiwiSaver provider.

My suggestion would be to check with your provider directly to see what they say. Being separated for a prolonged period of time can cause undue stress, financially and otherwise, particularly if you have better employment prospects than your spouse in the U.K.

I expect you've also thought about this too but could you borrow against that money. The banks or most providers are unwilling to do so but perhaps a sympathetic family member (with written guarantee or else heavy resassurance of being paid back) might be willing to help?

I guess the upside of leaving your funds untouched is that you have a small amount of savings to return to one day in New Zealand?  Or maybe if you're lucky, it'll have made some gains in the next 12 months when it comes time to withdrawing it and transferring it to the U.K.

Here's what the KiwiSaver Act says on both the hardship issue and permanent emigration.:

Good luck.

KiwiSaver Act 2006

Schedule 1

10

Withdrawal in cases of significant financial hardship

(1)

If the trustees are reasonably satisfied that a member is suffering or is likely to suffer from significant financial hardship, the member may, on application to the trustees in accordance with clause 13, make a significant financial hardship withdrawal in accordance with this clause.

(2)

The amount of that significant financial hardship withdrawal may, subject to the trustees' approval under subclause (3), be up to the value of the member's accumulation less the amount of the Crown contribution (disregarding any positive or negative returns for the purpose of calculating the amount of the Crown contribution) on the date of withdrawal.

(3) The trustees—

(a) must be reasonably satisfied that reasonable alternative sources of funding have been explored and have been exhausted; and

(b) may direct that the amount withdrawn be limited to a specified amount that, in the trustees' opinion, is required to alleviate the particular hardship.

 

KiwiSaver Act 2006

Schedule 1

14

Withdrawal or transfer to foreign scheme in cases of permanent emigration

(1) A member may, on application to the trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme), and no earlier than 1 year after the member’s permanent emigration from New Zealand, withdraw an amount equal to the value of the member’s accumulation less the amount of the Crown contribution arising from a tax credit under section MK 1 of the Income Tax Act 2007 (disregarding any positive or negative returns for the purposes of calculating that amount of Crown contribution) on the date of withdrawal.

(2) A member may, on application to the trustees (in the case of a restricted KiwiSaver scheme) or the manager (in the case of any other KiwiSaver scheme), at any time after the member’s permanent emigration from New Zealand, have the trustees or manager (as the case may be) transfer the member’s accumulation less the amount of Crown contribution arising from a tax credit under section MK 1 of the Income Tax Act 2007 (disregarding any positive or negative returns for the purposes of calculating that amount of Crown contribution) to a foreign superannuation scheme authorised for that purpose under regulations made under section 228.

(3) An application under subclause (1) or (2) must be in the form required by the trustees or manager (as the case may be) and must include—

(a) a completed statutory declaration in respect of the member to the effect that the member has permanently emigrated from New Zealand; and

(b) proof to the satisfaction of the trustees or manager (as the case may be)—

(i) of the member’s departure from New Zealand (for example, evidence of confirmed travel arrangements, passport evidence, and evidence of any necessary visas); and

(ii) that the member has resided at an overseas address at some time during the year following the member’s departure from New Zealand.

(4) The trustees or manager (as the case may be) may require that any other documents, things, or information produced in an application under subclause (1) or (2) be verified by oath, statutory declaration, or otherwise.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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7 Comments

Yet another example of losing control of your money with Kiwisaver. With all of the rules some of which are shown above UK bound, you can KiSs your money goodbye.

Interesting stats in M Littlewood article

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10746807

25,000 opt outs, 64,000 on contributions holidays, est 170,000 gone no-address. The KS providers are loving this one, huge fees and reserve funds income for no advertising, wow!

Yep, Kiwisaver was an utter mistake for me. Right now I would much prefer to use the money to pay down debt than have it wiped out in the pending market crash.

 

Are any of the funds long gold/silver?

Grow a spine,

its no different to any of the super schemes in other countries. Try cashing up your super in aussie or the UK before 65 and see how for you get. Here you get a free $1000 starter and a 2% free contribution added to your own, what are you moaning about? 

Difference is Macadder, the schemes in AU and Singapore are vastly different to KS and worthwhile for the individual and their economies. KS in NZ is only good for the fund managers.

Who ever heard of a government borrowing to save for retirement. Whoever heard of an investment scheme that only provides a return because of these subsidies.  Its the ticket clippers in FINSA and the bureaucrats in the IRD that will do well out of this scheme.

So...there are no fund managers or bureaucrats or regulators or adminstrators or trustees charging fees in Aussie and Singapore?   Of course there are.  Moreover, you will find that KiwiSaver fees are low in comparison to the fees charged by the super funds in those countries.

There are those that have a well-thought-out academic dislike of KiwiSaver but have still joined because it delivers an undeniably good return to the individual.

Yet for those that don't want a bar of KiwiSaver, like yourself, membership is not compulsory.   Even after the proposed changes, you can still be totally unaffected, if you want.   I don't get the venom, given that context. 

        

Check out how the AU and Singapore schemes work BC. They do not have the moneys passing merry go round that KS has. The money goes direct from you and your employer into your account at a complying investment. You decide if you have direct investment, shares or managed fund et al. Some even invest in their own business or property etc. The tax caveat being that you can’t withdraw until retirement which is fair enough.

Much different to the KiSs you money goodbye scheme here in NZ.