Wife’s savings are a reasonable alternative source of funds

The story

Frank is married to Pauline who has two children from a previous marriage.  Pauline’s son, Timothy, is in his 20s and lives overseas with her family.  Pauline’s daughter, Marie, is at secondary school and lives with Frank and Pauline.


Frank and Pauline worked for the same employer.  When that employer closed down they both lost their jobs.  Frank had to travel to another city to find work, leaving Pauline and Marie in the family home.  Frank travels home at the weekends as often as he can afford to.  Frank, Pauline and Marie are experiencing significant financial hardship.  Frank does not earn enough to support the family and Pauline is unable to find work.


Frank applied to his KiwiSaver provider for money to help his family meet their minimum living expenses.



Frank’s KiwiSaver provider’s trustee declined Frank’s application because Pauline had $30,000 in her savings account.  The trustee considered Frank and Pauline could use Pauline’s savings to meet their minimum living expenses.  The trustee explained that under the KiwiSaver Scheme Rules in Schedule 1 of the KiwiSaver Act 2006 (the Act) it was not satisfied Frank and Pauline had exhausted all reasonable alternative sources of funding.


Frank did not agree that Pauline’s savings should be taken into consideration when assessing their financial situation.  Frank explained that the mortgage and all the utilities bills were in his name.  Frank considered it his responsibility to meet those family expenses.


Frank went on to say Pauline’s money was needed to support her family overseas.  Frank considered the trustee had failed to understand Pauline’s culture and her family obligations.  In addition Timothy had been recently hospitalised and Pauline needed to pay for his treatment.  Pauline gave the trustee receipts for the cost of Timothy’s medical care and it excluded $5,000 from its calculations to cover these costs. 


The trustee was prepared to set aside another sum for ongoing treatment if Timothy’s doctor provided an estimate of the cost.  However the trustee was not prepared to exclude Pauline’s savings entirely from its calculations.


FSCL’s review

We accepted that Frank was experiencing financial hardship, but explained that we cannot disregard the law when reviewing a complaint.  Clause 10(3) of Schedule 1 of the Act requires the trustee to consider whether Frank had exhausted all reasonable alternative sources of funding before releasing money from Frank’s KiwiSaver. 


We explained the trustee did not view Frank as an individual, but as a household, because it was the inability to meet household expenses that had caused Frank’s financial hardship.  We agreed the trustee had to take Pauline’s savings into consideration and was entitled to decline Frank’s application on the grounds that he had not exhausted all available funds.



Frank was disappointed with the outcome, but could see there was little point pursuing his complaint further.