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What happens when a KiwiSaver scheme retires before you do?


The story

In May Rodney’s KiwiSaver scheme manager, Old Age Savings, wrote to him advising Old Age Savings was being wound up.  The IRD wrote to Rodney telling him his funds would be transferred to a default KiwiSaver provider.  Rodney did not want his funds in a default KiwiSaver provider, and selected another KiwiSaver provider: New Age Savings.  New Age Savings advised Old Age Savings to transfer Rodney’s KiwiSaver funds to it when the wind up was complete.


On 3 July the Old Age Savings investments were realised, and funds deposited into a cash fund.  Old Age Savings then needed to wait for audit clearance before the funds could be paid to the investors.  Old Age Savings acknowledged this process took longer than expected, and the audit was not completed until 22 September.  On 30 October Rodney received a letter from Old Age Savings advising his investment had been transferred to the default provider.  Finally on 8 November Rodney’s funds reached New Age Savings.



Rodney considered Old Age Savings had failed to act as a prudent manager and had delayed the transfer of funds.  Old Age Savings investigated Rodney’s complaint, and discovered some costs incurred in the fund’s wind-up had been passed on to him that should not have been.  Old Age Savings refunded the costs, plus interest, but did not consider it had unreasonably delayed winding up the Old Age Savings fund and had not caused Rodney any loss.


FSCL’s review

It appeared from our review that there may have been some delay in the wind up of the Old Age Savings KiwiSaver scheme.  The funds were realised on 3 July but remained in a cash fund until 30 October.  Given Rodney had his investment in a growth fund which had performed better than a cash fund over the relevant period, it seemed to us that he had lost money.  We also noted that Old Age Savings had failed to follow Rodney’s instructions to send his funds directly to New Age Savings when it deposited the funds into the default scheme.  We asked Old Age Savings whether it would like to make Rodney a settlement offer



Although Old Age Savings did not accept liability for Rodney’s loss it offered him a confidential settlement of several thousand dollars in full and final settlement of his complaint.  Rodney accepted Old Age Saving’s offer and the complaint was resolved.