better banking


17 Apr 2014

KiwiSaver is a voluntary retirement savings scheme. If you are over the age of 18 you are automatically enrolled in the KiwiSaver scheme when you start a new job.  If you do not want to be a KiwiSaver member, you need to ‘opt-out’ between the second and eighth week of starting. Comprehensive information about KiwiSaver is on the KiwiSaver website.

This guide covers:

  • which organisation you should direct a KiwiSaver complaint to
  • the main types of KiwiSaver complaints the Banking Ombudsman Scheme receives
  • compensation for KiwiSaver-related complaints considered by the Banking Ombudsman Scheme
  • case notes illustrating our approach to KiwiSaver complaints.


Who to direct a KiwiSaver complaint to

If you have a KiwiSaver complaint, it may not always be clear who you should direct the complaint to.  Your complaint might concern your KiwiSaver scheme provider or a decision made by the KiwiSaver scheme trustees.


Complaints about your KiwiSaver Scheme Provider

Your KiwiSaver scheme provider is responsible for managing your KiwiSaver account. When you enrol in KiwiSaver, you can either select your KiwiSaver scheme provider or one will be allocated to you.

If you have a complaint about KiwiSaver, you should take it to your KiwiSaver scheme provider first. Your KiwiSaver scheme provider’s investment statement will contain details about your KiwiSaver provider’s formal complaint process.

If you are unhappy with the response to your complaint, we may be able to investigate the matter if your KiwiSaver scheme provider is a member of the Banking Ombudsman scheme.


Complaints about a decision made by KiwiSaver scheme trustees

KiwiSaver trustees are responsible for ensuring that KiwiSaver scheme providers are complying with their obligations under the KiwiSaver Act 2006, and appropriately and effectively managing investment risk. Among other things, they make decisions about whether you can withdraw money from the scheme.

If your complaint is about a decision made by the trustees of the KiwiSaver scheme you are currently a member of, it should be directed to the dispute resolution scheme to which the trustees belong. Your KiwiSaver scheme provider’s investment statement will contain these details or you can call your KiwiSaver scheme provider to find out who the trustees are. (A list of all KiwiSaver scheme providers is available on It is unlikely we will be able to investigate such matters as KiwiSaver scheme trustees are not members of our scheme.


Main categories of complaint

KiwiSaver membership

The Banking Ombudsman Scheme does not have the power under the KiwiSaver Act 2006 to cancel a person’s KiwiSaver membership. However, if a bank has not made accurate disclosure about KiwiSaver and an individual subsequently enrols, we can consider compensation for inconvenience as a result of being locked into KiwiSaver.


Inability to withdraw funds

Generally speaking, you can only access funds in your KiwiSaver account when you become eligible for superannuation (NZ Super) at 65 (provided you have been a member of KiwiSaver for five years).  There are limited circumstances in which you can withdraw all or part of your KiwiSaver savings before that time. These include: buying your first home, financial hardship, moving overseas and serious illness.

Our investigations into complaints about withdrawing savings have highlighted the need for people to understand both eligibility and process requirements, including to supply all requested information.


Buying your first home

A feature of KiwiSaver is that people may be able to withdraw some of their savings to buy their first home (provided they have been a member of KiwiSaver for three years). It is extremely important that you contact your KiwiSaver scheme provider before beginning the purchase process to determine eligibility and to ensure you follow the correct process.  If you fail to do so you may find you are unable to access your savings in KiwiSaver.


Financial hardship

You may be able to withdraw savings from your KiwiSaver account if you are suffering significant financial hardship.  However, you have to:

  • show that reasonable alternative sources of funding have been explored
  • complete a statutory declaration about your assets and liabilities
  • provide other documents or information to support your application.

Typically, financial hardship decisions are made by KiwiSaver scheme trustees.


Moving overseas permanently

With the exception of relocating to Australia, you can withdraw your savings from KiwiSaver (except the tax credits) if you have moved overseas permanently and have lived overseas for one year.  You must provide a statutory declaration that you have emigrated from New Zealand permanently, as well as evidence of departure and sufficient proof of your residential address overseas.

If you have moved to Australia permanently, you can choose to keep your KiwiSaver account open or transfer it to an Australian superannuation scheme.


Serious illness

You may be able to withdraw the entirety of your KiwiSaver savings in the event of serious or terminal illness, or permanent disability that affects your ability to work. To support such an application, medical evidence may be required.


Compensation in KiwiSaver cases

Compensation for direct loss in KiwiSaver cases is unlikely. This is because, although a person may not have the immediate benefit of the contributions they have deposited, they have not ‘lost’ that money. Contributions are held for the KiwiSaver member until they can legitimately be withdrawn.

Further ‘losses’ can be prevented because, after 12 months of membership, you can seek contributions holidays for up to five years at a time. However, compensation in recognition of the inconvenience associated with applying for contributions holidays may be considered.

We are unable to compensate a KiwiSaver member for a lost opportunity. For example, we cannot recommend compensation if a member considers they may have earned higher returns on their KiwiSaver savings if they had invested their money elsewhere.


Case note 1

When Mr T visited his bank to open an account, the bank officer suggested he join its KiwiSaver scheme. He completed and signed an enrolment form before he left, but subsequently complained he had been given inadequate information and was pressured into joining.

According to Mr T, the bank officer only told him about the benefits of the scheme. Mr T claimed he had only agreed to sign the enrolment form so he could end the meeting. He wanted his KiwiSaver membership cancelled.

The bank informed Mr T that it was unable to cancel his KiwiSaver membership. However, it offered to pay him the equivalent of the first year of his contributions to KiwiSaver and $250 for inconvenience. Mr T declined the offer and asked us to investigate.

Membership of the KiwiSaver scheme is governed by the KiwiSaver Act 2006 and the Banking Ombudsman Scheme is not able to recommend a person’s KiwiSaver membership be cancelled.  Mr T was now a member of the scheme and could not opt out.

Considering the impact of enrolment on Mr T, we found that although he would ultimately receive the benefit of any contributions made, the requirement to make regular contributions to KiwiSaver, as well as the limited ability to access those contributions, could cause significant disruption to his financial plans.

We also took into consideration the fact that the KiwiSaver Act 2006 allows its members to apply for contributions holidays for up to five years at a time and that the bank had offered to compensate for this inconvenience.

We concluded the bank’s offer was reasonable and Mr T accepted the bank’s offer on this basis.


Case note 2

Ms B owed money to a finance company which threatened to pursue bankruptcy proceedings if she did not settle her debt immediately. Ms B submitted a significant hardship withdrawal application to her scheme’s trustees in an attempt to withdraw her savings.

The scheme trustees approved a partial drawdown of $150 per week for six months to cover a shortfall in paying for her basic expenses. Ms B complained to our office that the partial drawdown was not enough to settle her debt with the finance company. She wanted to withdraw all her KiwiSaver savings.

We explained to Ms B that our office cannot challenge a decision made by her KiwiSaver scheme’s trustees because the scheme trustees are not participants of the Banking Ombudsman Scheme. Additionally, under the KiwiSaver Act 2006, the scheme trustees have sole discretion to determine whether to release contributions from the KiwiSaver scheme, and if so, how much. Ms B withdrew her complaint.


Case note 3

Mrs J and her husband separated and entered into a relationship property settlement agreement in accordance with section 21 of the Property (Relationships) Act 1976 (PRA). In that agreement, Mrs J agreed to transfer savings from her KiwiSaver to her ex-husband’s.

Mrs J’s KiwiSaver provider was a bank which advised her that before it could transfer her savings, it required a certified copy of a court order in addition to a copy of the settlement agreement. Mrs J considered the agreement she entered into with her ex-husband carried the same legally binding conditions as a court order and should be treated as equivalent. She believed the requirement to obtain a court order was unnecessary.  She asked our office to investigate.

Although court orders and contracts between former spouses or partners are legally binding, they are not equivalent. A contract represents a voluntary agreement between at least two parties, while a court order is a proclamation by a judge determining the legal relationship between the parties.

Section 21 of the PRA provides for spouses or partners to make an agreement as they see fit in respect to the status, ownership and division of their property. Once signed, such an agreement represents a legally binding contract between the two parties. However, if the agreement reached between the parties includes the division of superannuation scheme entitlements, section 31 of the PRA applies. Section 31 requires a court to make an order under the Act in relation to property of that kind (eg: KiwiSaver).

We concluded the agreement signed by Mr and Mrs J on its own was not sufficient to enable a transfer of the KiwiSaver savings. The agreement needed to be endorsed by the court. Mrs J accepted this and sought a court order. 


Download a pdf version of this quick guide.