Insights for applicants accessing their KiwiSaver for the division of relationship property
If you need to access your KiwiSaver funds as part of dividing relationship property, it is important to understand what documents the law requires. A KiwiSaver provider cannot approve a withdrawal unless you give them either a court order or a separation or relationship property agreement that meets legal requirements. If you are unsure what is needed, ask for help early, and keep a record of any guidance received. Then provide documents as soon as you can. This can help avoid delays and additional costs.
KiwiSaver provider: is the organisation that manages and invests your KiwiSaver funds (the fund manager). They receive withdrawal applications, but do not make decisions on them.
KiwiSaver supervisor: makes sure the provider follows all the rules. There are only five supervisors in NZ who oversee all the different KiwiSaver funds. They make the decisions on withdrawal applications.
A separation led to Jonas seeking his KiwiSaver funds
Jonas* separated from his wife and wanted to buy her share of the family home. To do this, he needed to access his KiwiSaver funds. He applied for a KiwiSaver hardship withdrawal through his KiwiSaver provider.
KiwiSaver supervisor requires a court order or a separation agreement
The KiwiSaver supervisor declined the application because Jonas had not provided either a court order or a separation or relationship property agreement. These documents show the agreed or ordered division of relationship property. The application could not be approved without the documents.
Jonas engages a lawyer to draft a separation agreement
Jonas decided to engage a lawyer to prepare a separation agreement. Once this agreement was completed, and signed with independent legal advice for both Jonas and his former wife, the KiwiSaver supervisor released the funds. Jonas was able to complete buying out the wife’s share in the home.
Jonas thinks KiwiSaver provider should pay legal fees
Jonas complained that the KiwiSaver provider had taken an unreasonable approach and that their actions had caused him to incur approximately $8,000 in legal fees. He believed the provider should reimburse him because, in his view, the lawyer had only repeated information he had already supplied, but on the lawyer’s letterhead.
Unable to resolve his complaint directly with his KiwiSaver provider, Jonas complained to Financial Services Complaints Ltd (FSCL).
FSCL considers KiwiSaver provider to have acted reasonably
Our view was that the KiwiSaver provider acted reasonably throughout the process. We explained to Jonas that the provider had given him clear and consistent information about the documents required to access KiwiSaver funds for the division of relationship property. This guidance was provided several times, both by phone and by email, and accurately reflected the legal requirements under the KiwiSaver Act 2006 and the Property (Relationships) Act 1976. The KiwiSaver provider had suggested that Jonas seek legal advice about his application and the precise nature of the documents required.
We explained to Jonas that the KiwiSaver supervisor could not approve his application because he had not supplied either a court order or a separation or relationship property agreement. These documents were legally required. The issue was not related to the balance of his bank account or how his statements were understood, which was Jonas’ concern. Until the correct documentation was provided, the application could not be approved.
The legal fees Jonas incurred were for preparing the separation agreement required by law, not because the KiwiSaver provider had acted unreasonably. For this reason, our view was that it would not be fair to require the KiwiSaver provider to reimburse his legal costs.
How FSCL suggested the complaint should be resolved
We suggested to Jonas that he discontinue his complaint, which he accepted, and we closed our file.reasonable under the law and guidelines. The complaint was not upheld.
Other KiwiSaver cases
Financial hardship withdrawal for potential redundancy not allowed
KiwiSaver withdrawals are strictly limited
Probate threshold increase simplifies estate access for bereaved families
