KEY POINTS:
A time lag between employers transferring KiwiSaver money and the Inland Revenue Department (IRD) registering it is being blamed for causing confusion for savers and spurring fears that the money is being lost.
Employers and Manufacturers Association (EMA) manager of advisory services David Lowe said he had got
feedback from businesses on several KiwiSaver teething problems including transfer issues and money going to the wrong fund manager.
While some appeared to be unique one-off problems, such as money going to the wrong scheme because of scheme name similarities, other issues were emerging, he said.
"Data which employers are sending to the IRD is in electronic form and does not appear to be being read accurately."
Lowe said several companies had complained of being sent arrears letters which did not state whether it was in arrears for KiwiSaver, child support or PAYE.
"Employers are getting these letters automatically sent out but are not being told the reason why they are in arrears. It appears to be a computer issue."
The other major concern was from employees who had got letters from the tax department confirming their application to join KiwiSaver but stating that no contributions had been received - despite the deductions already coming out of their pay and being passed on by the employer.
"It does raise a certain amount of uncertainty. People want to know that their money is not being lost."
Lowe said it appeared that KiwiSaver had got off to a rocky start and the tax department were struggling to cope.
"It appears that the IRD has got themselves ready to accept employer payments by July 1 and had been working on the systems to organise the payment to the fund manager with a deadline of October 1 but then their timing hit difficulties because a number of new parts to KiwiSaver were then introduced which the IRD also had to get ready for.
"The common query is that the information which is being sent in doesn't quite tally with what is coming out of the IRD."
Business NZ chief executive Phil O'Reilly said he too was getting feedback from businesses indicating early teething issues.
"The IRD is attempting to administer it but are already having problems associated with the rushed policy design - we are seeing some of that play out already.
IRD KiwiSaver spokeswoman Lise Hutcheon said there had been some teething issues but people should not be concerned about the IRD losing their money as the confusion was probably being caused by the time delay which occurs between the money being deducted from salaries and wages and it being registered by the IRD. "The employer monthly schedule [the schedule of all the payments they make to the IRD] is only filed twice a month by large employers and once a month by small employers, which means that if the employer filed the information on July 2 the money would not have registered with the IRD until August 20."
Hutcheon said she could not explain why some employers were getting arrears letters without being told what they were in arrears for. The IRD was coping well with what had been a higher than expected influx of people joining KiwiSaver, she said.
So far more than 250,000 people have joined the scheme since it began in July.
The complaints
* Employees are receiving letters from the IRD confirming sign-up but telling them no money has been received from their employer.
* Employers are receiving letters from the IRD telling them they are in arrears but not what they are in arrears for.
* Some money is being transferred to the wrong scheme providers because of similarities between the names of the schemes.
* Employees cannot nominate their preferred provider through their employer - they have to go to the scheme provider.
