Subpart 3 - Transfers between KiwiSaver schemes
2006 legislation covering subpart 3 of the KiwiSaver Act and voluntary or involuntary transfers between KiwiSaver schemes.
Subpart 3 allows a person to transfer between individual KiwiSaver schemes.
Section 55 allows a KiwiSaver member to transfer to another KiwiSaver scheme at any time by contracting directly with the provider of the new KiwiSaver scheme to become a member of that scheme (provided that person is eligible to be a member of the scheme).
The provider of the new scheme must, as soon as practicable, give notice:
- To the Commissioner:
- that the person has transferred to the new scheme;
- the person's name, address, date of birth and tax file number.
- To the provider of the old scheme:
- that the person has ceased to be a member of the old scheme and the effective date of the transfer;
- the new scheme's name and address; and
- the funds and information that is required to be transferred.
The provider of the new scheme must give notice to the provider of the old scheme that the member wishes to transfer to the new scheme.
The provider of the old scheme must, within 35 days of receiving notice of the transfer (or any longer period agreed between the providers of the old and new schemes):
- transfer the member's accumulated funds to the new scheme;6
- give notice to the member of the amount transferred;
- give notice to the provider of the new scheme:
- of the date on which the member first became a member of a KiwiSaver scheme;
- whether the member has made a withdrawal for the purchase of a first home; and
- of any contributions holidays in force.
In certain circumstances a person may become ineligible to be in a particular scheme, for example:
- if the person ceases to be eligible to be a member of his or her employer's chosen KiwiSaver scheme (for example, if they ceased to be an employee of that employer and the scheme only applies to its employees);
- if the scheme they are in winds up;
- if the scheme is in contravention of certain provisions of securities law.
Under sections 57 to 59, the person must be allocated to another KiwiSaver scheme according to the process outlined above. In this case an employer choice of scheme will not apply. The person can choose their own KiwiSaver scheme, but if they do not choose they will be allocated to a default KiwiSaver scheme.
The Commissioner is required to take whatever steps the Commissioner thinks appropriate to ensure that, so far as practicable, the process for an involuntary transfer follows the process for a voluntary transfer. The provider of the old scheme will, however, have three months from when it received notice of the transfer (instead of 35 days) to meet the requirements outlined above.
The Commissioner must send the following information to people who are subject to an involuntary transfer:
- an information pack;
- advice on the effect of the transfer and the process of allocating the member to another KiwiSaver scheme.
If an employee ceases to be eligible to be a member of the employer's chosen KiwiSaver scheme, the employer must give the employee and the Commissioner notice of that fact.
Peter is a member of his employer's (FashionZ Ltd) KiwiSaver scheme. One of the conditions of being a member of that scheme is that the person remains an employee of FashionZ Ltd. Peter quits his job and therefore ceases to be eligible to be a member of that scheme. The Commissioner is required to provisionally allocate Peter to a default scheme. If Peter does not choose his own scheme within the required time period, Peter is treated as having become a member of the default scheme to which he was provisionally allocated.
- the member's contributions;
- any vested employer contributions in respect of the member;
- any fee subsidies paid in respect of the member; and
- the Crown contribution in respect of the member.