KiwiSaver: When are you eligible to withdraw

Q. I understand that around 20,000 savers have the option to withdraw from KiwiSaver very shortly. I had my first deductions from my pay on January 15 2008 and these were received by my default provider, Mercer, on April 15, 2008. Both Mercer and IRD confirm that I can withdraw on January 15, 2013 as I am over 65. However my wife, who is also over 65, nominated ASB as her provider and has been told that her withdrawal date will be the five-year anniversary of monies received by them. She joined KiwiSaver in July, 2007 and ASB received her first money from IRD in September 2007. Could you please let me know who is right and who is wrong?

A. With so many people eligible to withdraw funds from KiwiSaver starting July 1, consistency around the rules is very important. KiwiSaver is governed by the KiwiSaver Act 2006, so I went to the legislation to see what it said about eligibility for withdrawals at 65. I found the relevant information in Section One. It reads, "A member may not make a withdrawal from the KiwiSaver scheme until the KiwiSaver end payment date." The end payment date is defined as "the later of:

(a) the date on which the member reaches the New Zealand superannuation qualification age;

(b) the date on which the member has been a member of a KiwiSaver scheme for five years;

(c) the date on which the member has been a member of a complying superannuation fund (or a complying superannuation fund and a KiwiSaver scheme) for five years."

So according to the legislation, in your wife's case the key date is when she became a member of a KiwiSaver scheme. Let's look a bit closer.

Inland Revenue is the regulatory overseer for KiwiSaver, so their rulings can generally be relied upon as correct. It is clear that you and your wife have been given conflicting information by IRD and Mercer on the one hand and ASB on the other. ASB is the second-largest provider of KiwiSaver with about 300,000 members. Their default conservative fund is the largest KiwiSaver fund in New Zealand with over $1 billion invested. I rang the 0800 number for ASB's KiwiSaver enquiries. The automated responses gave me a good idea of the traffic they must experience from KiwiSaver callers.

Eventually I reached John Smith, head of managed funds at ASB. He responded:

"Currently, people signing up directly with a KiwiSaver provider are treated differently in terms of their payment date calculation to those who enter into a KiwiSaver scheme by default through their employer. The IRD is aiming to have some legislation passed that will retrospectively clarify this for those who are defaulted into a KiwiSaver scheme. In any event, however, the information given to the customer's wife who joined ASB KiwiSaver Scheme directly appears to be incorrect. Her five-year anniversary should, in fact, be aligned to the date she joined the scheme."

So there you go. It looks like your wife should be able to access her KiwiSaver sooner rather than later.

Shelley Hanna is an Authorised Financial Adviser FSP12241. Her disclosure statement is available free on request by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions they would like answered please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.