Ex-Files with Jeremy Sutton: Is your KiwiSaver relationship property?

You can withdraw your KiwiSaver to fund a relationship property settlement through the Family Court.

OPINION

My partner and I have been together for five years. While I have put 8% of my salary into KiwiSaver, my partner has also been in a high-income job but has not been contributing to KiwiSaver. I have been contributing to KiwiSaver for 15 years. My partner has been spending money on holidays overseas and an expensive car. That car has reduced its value significantly. My partner is 45, and I am 60.

Is the KiwiSaver/superannuation fund relationship property? Can I withdraw money from my KiwiSaver to pay my partner out a share of her relationship property claim?

Yes , your relationship property is the property owned by you and/or your partner that needs to be divided (generally 50/50) when you separate. What constitutes relationship property is legally determined by the Property (Relationships) Act 1976.

For many couples, KiwiSaver is their biggest asset after their family home.

The proportion of any superannuation scheme entitlement that occurs during the relationship is relationship property. This includes KiwiSaver funds.

Any proportion of your KiwiSaver or superannuation fund acquired before your relationship will remain your separate property.

Can I withdraw money from my KiwiSaver/superannuation?

A KiwiSaver member’s funds are usually locked in until they reach the qualifying age (currently set at 65).

Funds can be withdrawn in certain circumstances, including purchasing a first home, deaths, and significant financial hardship or serious illness.

Yes, funds can also be withdrawn when the court orders their release under Section 31 of the Property (Relationships) Act 1976.

Such an order may be served on the KiwiSaver or superannuation scheme manager, who will be bound to release the funds.

Can we divide our KiwiSaver/superannuation by agreement?

Under Section 21A of the Property (Relationships) Act 1976, you can agree on how to divide your property without going to court.

Several formal requirements exist for entering into such an agreement, and you will each need to see an independent lawyer for advice.

Your KiwiSaver or superannuation forms part of such an agreement. If an adjustment is required, you can agree to make payments for that adjustment out of funds other than those in your KiwiSaver or superannuation funds or by forgoing other items of relationship property.

Applying to the Family Court

If there is not sufficient other property to make an adjustment payment from, you may need to apply for a consent order under Section 31 of the Property (Relationships) Act 1976 so the court can direct your KiwiSaver or superannuation manager to release funds. This will generally include a joint affidavit being made to the family court by you and your ex-partner, a court filing fee, and some extra lawyer costs. The Family Court may take several weeks to consider your application.

What date is the KiwiSaver valued?

Usually, the value is taken at the date of separation. However, if settlement occurs long after this date, alternatives are possible. This is partly because you may contribute to the super scheme after separation and get credit, or there could be significant market fluctuations.

Conclusion

You can withdraw your KiwiSaver to fund a relationship property settlement through the Family Court.

Because of the cost of living crisis, including the high interest rates in New Zealand, clients are increasingly asking for KiwiSaver funds to be released to facilitate a settlement. If you are going through a divorce or relationship property settlement, consider having some of your KiwiSaver released by the Family Court.

Jeremy Sutton is a barrister and family lawyer at Bastion Chambers.