Insights for consumers
There is a high threshold for KiwiSaver withdrawal applications for serious illness. KiwiSaver supervisors are required by law to take reasonable steps to satisfy themselves the consumer meets the relevant requirements for early withdrawal of their KiwiSaver funds.
What happened?
Tom had been suffering from a serious viral illness and applied to the manager of his KiwiSaver Scheme to withdraw funds on the grounds of serious illness. His GP certified on the application form that he was suffering from a serious illness, and that the illness impacted Tom’s capacity to work fulltime, and therefore his capacity to earn.
The KiwiSaver manager reviewed the application, and told Tom the KiwiSaver supervisor was likely to decline the claim because the information did not confirm that he was totally and permanently unable to engage in work he was suited for by reason of experience, education and training.
Tom asked the KiwiSaver manager to refer his application to the supervisor. The supervisor assessed the application but declined it on the basis that the information did not show that Tom met the serious illness withdrawal criteria.
Tom said the supervisor had not appropriately assessed his application. The supervisor then said they were willing to reassess Tom’s application, and asked him to supply further medical information, as well as confirmation that he had resigned from his job, information about the source of his current income, and written confirmation from his doctor regarding his capacity to work.
Tom emailed the supervisor a letter from his GP containing further information. The GP stated that because of Tom’s health condition, he was not able to work full time or part time in his usual occupation.
The supervisor then approved Tom’s withdrawal application.
Tom complained that the supervisor should have approved the application straight away, and not asked him to supply further information. He complained to FSCL.
Tom’s view was that the supervisor should have immediately approved his application because his GP had certified that he met the serious illness criteria and had provided details of the health condition. He believed the further information the supervisor had asked for was irrelevant.
On the application, the GP had said that Tom’s illness was impacting his capacity for fulltime work. However, in order to approve a withdrawal under the serious illness criteria, the supervisor has to be satisfied that the illness has caused the member to be totally and permanently unable to engage in work for which they are suited. The GP’s information was not sufficient to establish this.
What was FSCL’s view?
We did not accept Tom’s view that the additional information the supervisor had asked for was irrelevant to their assessment. Under the law, a supervisor may ask that any medical matter in an application be verified by medical evidence. The verification the supervisor asked for was relevant to Tom’s application. While Tom said the supervisor did not need this information, the supervisor is entitled to decide what verification is required.
Further, the request for information about Tom’s employment and source of income was directly relevant to the supervisor’s assessment about whether he was totally and permanently unable to engage in work for which he was suited. In any event, the supervisor waived the requirement for this information once they received GP’s further information.
We explained our views to Tom, and he decided not to take the matter further.