What happens to KiwiSaver in separation?

QUESTION:  My partner and I have separated after more than three years of living together.  We don’t have any children.  We are dividing our assets between us without involving lawyers.  My husband says that his KiwiSaver can’t be divided as he can’t access it until he’s 65.  Is that correct?

ANSWER:  I am not qualified to give you legal advice, but as far as KiwiSaver is concerned it is an asset like any other savings and should be included in any division of your property.  KiwiSaver Scheme Rule 7 says the courts can make an order to release funds from a KiwiSaver scheme under section 31 of the Property (Relationships) Act 1976.

As the balances in KiwiSaver grow over coming years this will become more of an issue for couples separating, especially if one of them earns significantly more and has built up a larger account balance.

KiwiSaver started more than four years ago, so if your partner joined before you entered the relationship then his contributions from that time may be treated as separate property.  All contributions from the time you became a couple will be considered joint. 

I note that you do not intend to seek legal advice.  I suggest you reconsider.  It is best to get legal advice at the earliest stage of your separation so that you can be clear about what you are entitled to.  You can also have free joint counselling (through the Family Court).  Most people take legal advice and go on to resolve their property issues by negotiation and agreement. Only if agreement cannot be reached will an application be made to the Court. 

Once you have valued all your assets and deducted all your liabilities you can work out how to divide everything equally between you. 

A Court

order would be required to access some of your partner’s KiwiSaver account – you would file a claim with all supporting evidence to the Trustee of the fund.  However, it may be possible to leave your partner’s KiwiSaver scheme intact if you can get other assets of equal value.  

Even if your separation is amicable, independent legal advice will help you to achieve the best outcome.

As published in the Hawkes Bay Today 4 October 2011

Shelley Hanna is an authorised financial adviser FSP12241.  Her disclosure statement is available on request and free of charge by calling 8703838.  The information contained in this article is of a general nature and is not intended to provide specific or personalised advice.  If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.