KiwiSaver: Non-residents can't join scheme

Eligibility rules for joining KiwiSaver state individuals must be New Zealand or Australian citizens, or hold either a New Zealand or Australian residence visa. Photo / Mark Mitchell

I came to New Zealand with my family on a three-year essential skills work visa. We hope to become permanent residents in the near future and eventually citizens of New Zealand. Since I started work here I have contributed to KiwiSaver although l later realised that I don't really qualify for this scheme, but I thought it to be a good way to save. Now my car has broken down. Is it possible to get some of my money out of KiwiSaver as I need some cash to repair my car? If I withdraw some money, will I still be able to use the scheme for my savings?

Your immigration status could be the answer to your cashflow problem. As you have realised, you are not in fact eligible to join KiwiSaver.

Eligibility rules for joining KiwiSaver state individuals must be New Zealand or Australian citizens, or hold either a New Zealand or Australian residence visa, and live (or normally live) in New Zealand, and be below the age of eligibility for NZ Super (currently 65).

It is the responsibility of employers to check the status of their employees when they start working for them.

It appears that your employer does not have a good grasp of the KiwiSaver rules.

If a member opts in directly with a scheme provider then it is the scheme provider's responsibility to determine eligibility.

According to an Inland Revenue spokesperson, "If an invalid enrolment is determined then the KiwiSaver membership will be cancelled and any contributions made by the customer will be refunded to them. Employer contributions will be returned to the employer and government contributions will be returned to the Crown."

So to get your money out of KiwiSaver, all you need to do is notify IRD that your enrolment is invalid, and you will be paid out all your contributions.

The downside is that you will lose all employer contributions, and any government top-ups you may have received.

This may amount to more than half of your current balance, but you would probably have enough to fix your car. If you get residency status in the future, you will be able to rejoin KiwiSaver.

How close are you to becoming a permanent resident now? IRD has some leeway when it comes to cancelling KiwiSaver memberships. According to IRD, "If a customer has been enrolled into KiwiSaver while not entitled to live in New Zealand (eg. on a work permit/visa) they may still be eligible to be a member. Section 59 of the KiwiSaver Act states that a person's membership will be deemed valid if they;

• Subsequently met the eligibility criteria when Inland Revenue first becomes aware of their invalid enrolment

• Will meet the eligibility criteria within three months from when Inland Revenue first become aware of their invalid enrolment."

A Serious Financial Hardship (SFH) application is not an option for you.

Firstly, your KiwiSaver account is not currently valid. Secondly, a SFH application is chiefly for circumstances such as an inability to pay for minimum living expenses such as power, water, and food bills, or to meet mortgage or rental payments.

Unless the cost of car repairs leads to other financial difficulties, it is not a primary reason to grant a SFH application.

- Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 06 870 3838 or go to peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz.