A recent law change means KiwiSaver accounts with less than $15,000 can be paid out to the families of deceased members. Photo / Kenny Rodger
Hundreds of families with deceased KiwiSaver members can now access the money without having to go through a complicated legal procedure, more than two years after the scheme was set up.
According to the Government Actuary, 413 people passed away in the year to June 30 leaving $1.06 million sitting
in their KiwiSaver accounts.
Until this month, family members weren't able to access the money unless they gained probate - where a court has to confirm the validity of a deceased person's will, or letters of administration where there is no will, and then allocates the inheritance based on set rules.
Many had to leave the money on ice because the cost of probate was higher than the amount in the accounts.
But a law change this month means accounts with less than $15,000 in them can now be paid out to the family.
David Boyle, NZ head of distribution for the multinational investment giant ING, welcomed the change and said it had begun the process of talking to beneficiaries this week.
"It is tough enough for families dealing with the death of a loved one without having to worry about this sort of thing."
The initial oversight has been blamed on the speed at which KiwiSaver was set up.
Other superannuation schemes are already exempt, as are bank accounts.
But Michael Chamberlain, who lobbied for more than a year to get the change, said the amount should have been set higher and was only going to delay the problem.
"It should have been $40,000. It won't take long for many people to get up to $15,000," said Mr Chamberlain, principal of Aventine, which runs the KiwiSaver provider SuperLife.
"I doubt many will even bother to get a will for investments worth up to $40,000 if they have no other major assets."
Mr Chamberlain said he already had one family who could not claim the money without going through probate because the account held $15,200.
Figures from the Government Actuary also show that in the year to June 30, $1.29 million was withdrawn from KiwiSaver because of serious financial hardship, $286,706 because of serious illness and $115,493 as a result of permanent emigration.
