KiwiSaver scheme rules
Schedule 1 of the KiwiSaver Act 2006 sets out the KiwiSaver rules for the trust deed of a KiwiSaver scheme.
Schedule 1 sets out the KiwiSaver rules that are to be implied in the trust deed of a KiwiSaver scheme.
Fees must not be unreasonable
The trustees, administration manager, investment manager, promoter or any other person who may charge a fee for providing a KiwiSaver scheme must not charge a fee that is unreasonable. The Court has the power to order that unreasonable fees be annulled or reduced.
If the balance in all of a member's accounts falls to zero the provider may terminate the person's membership of their KiwiSaver scheme by giving them notice that membership has terminated.
Lock-in until age of eligibility for New Zealand Superannuation or five years of membership
Subject to other permitted withdrawals, a KiwiSaver member's funds in the scheme are locked in until the later of the date on which the person reaches New Zealand superannuation qualification age (currently 65 years) or five years' membership in a KiwiSaver scheme. A member is entitled, but not required, to withdraw his or her funds at this date.
Purchase of a first home
The member's accumulated funds and any return on them (but not the Crown contribution) may be withdrawn from a KiwiSaver scheme for the purchase of a first home if the member has been a member of a KiwiSaver scheme for at least three years. The purchase must be for the member's principal place of residence.
If a member dies, on application by the member's personal representative the trustees must pay the representative an amount equal to the funds in the member's KiwiSaver account (including the Crown contribution) on the date on which the application is accepted as part of the member's estate.
Significant financial hardship and serious illness
If the trustees are reasonably satisfied that a member is suffering or is likely to suffer significant financial hardship, the member may make a significant financial hardship withdrawal. The amount withdrawn must be equal to or less than the accumulated funds in the person's KiwiSaver account (excluding the Crown contribution). The trustees must be reasonably satisfied that reasonable alternative sources of funding have been explored and have been exhausted, and may direct that the amount withdrawn be limited to a specified amount that, in the trustees' opinion, is required to alleviate the particular hardship.
"Significant financial hardship" includes significant financial difficulties that arise because of:
- a member's inability to meet minimum living expenses;
- a member's inability to meet mortgage repayments on his or her principal family residence, resulting in the mortgagee seeking to enforce the mortgage on the residence;
- the cost of modifying a residence to meet special needs arising from the disability of a member or a member's dependant;
- the cost of medical treatment for an illness or injury of a member or a member's dependant;
- the cost of palliative care for a member or a member's dependant;
- the cost of a funeral for a member's dependant; or
- the member suffering a serious illness (as defined below).
If the trustees are satisfied that a member is suffering from serious illness, the member may make a serious illness withdrawal. The amount withdrawn must be equal to or less than the accumulated funds in the person's KiwiSaver account, excluding the Crown contribution.
"Serious illness" means an injury, illness or disability that:
- results in the member being unable to engage in work for which he or she is suited by reason of experience, education, or training (or any combination of them); or
- poses a serious and imminent risk of death.
A significant financial hardship or serious illness withdrawal must be in the form required by the trustees and must include a completed statutory declaration covering the member's assets and liabilities. The trustees may require that any medical matter asserted in support of the application for withdrawal is verified by medical evidence. The trustees may also require that any other documents, evidence or information produced in support of the application are verified by oath or statutory declaration.
One year or more after a member's permanent emigration from New Zealand a member may withdraw all of the funds in their KiwiSaver scheme (including the Crown contribution). In addition, a member may at any time after permanently emigrating transfer all of the funds in their KiwiSaver scheme to a foreign superannuation scheme authorised for that purpose by regulations.
A permanent emigration withdrawal application must be in the form required by trustees and must include:
- a statutory declaration completed by the member to the effect that they have permanently emigrated from New Zealand; and
- proof to the satisfaction of the trustees that:
- the member has departed from New Zealand (for example, passport evidence)
- the member has resided at an overseas address at some time during the year following the member's departure from New Zealand.
The trustees may require that any other documents, evidence or information produced in an application are verified by oath or statutory declaration.
Release of funds under other enactments
Trustees must comply with the provisions of any enactment or Court order under any enactment that requires them to release funds from the KiwiSaver scheme, including an order made under section 31 of the Property (Relationships) Act 1976.
Withdrawals may be paid as a lump sum
Upon the request of a member, the trustees must pay a permitted withdrawal as a lump sum. Nothing prevents a member from purchasing annuities or a pension from all or part of the funds withdrawn by the member.
Trustees may require evidence
A trustee may reasonably require evidence of the facts necessary to establish whether a member has a right to make a withdrawal.
Minimum contribution for members who are employees
For each pay period, a member who is an employee must contribute to the KiwiSaver scheme an amount at least equal to the minimum contribution rate, unless that person is taking a contributions holiday. If contributions are made for a purpose other than for the payment of future benefits to the member or to cover a scheme's fees, they do not count towards the contribution rate.
A member who is an employee has a right to take a contributions holiday at any time in accordance with subpart 4 of Part 3.
Transfer of members
A member can, at any time, transfer to another KiwiSaver scheme. On application by a member, trustees must transfer the funds in that person's KiwiSaver scheme to the person's new KiwiSaver scheme according to subpart 3 of Part 2. In addition, a member can be transferred to another KiwiSaver scheme in the circumstances provided for in the Act (for example, if they cease be employed by their employer and only employees of that employer can be members of that scheme).