Rejection of hardship withdrawal applications and problems with first-home buying generate many complaints to watchdogs.

KiwiSaver is the investment we love to complain about. At least it is for investors who don't know what they've got themselves in for - they complain on forums, they complain to their providers, the trustees, dispute resolutions services, their MPs and whoever will listen.

KiwiSaver is meant to be straightforward, and you'd think that by now most Kiwis would understand the basics. But my colleagues Mary Holm and Helen Twose have been answering readers' queries week in week out for years.

Inevitably there will be complaints by those who feel they have been mistreated by providers, financial advisers and others in the industry and those who simply don't understand KiwiSaver.

A few months ago, I wrote about the number of Kiwis who have no idea who to complain to. But plenty of savers do manage to make formal complaints. So I decided to take a look at some of those complaints.

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The dispute resolution services get many inquiries that don't end up as formal complaints. The biggest single source of inquiries, says Banking Ombudsman Deborah Battell, is significant financial hardship withdrawal applications that have been declined.

It's up to the trustee companies that oversee KiwiSaver providers to approve or decline applications to withdraw for significant financial hardship.

The general manager of corporate trusts at Guardian Trust, Bryan Connor, said his company dealt with about 5,000 hardship withdrawal requests a year on behalf of KiwiSaver providers. About 95 per cent were approved.

KiwiSavers who were turned down could complain to Guardian Trust and their case was reviewed by a second assessor to ensure nothing had been overlooked. Any new information was also considered.

If the withdrawal was declined again, Connor said, the matter could be taken to Financial Services Complaints (FSCL), which is the trustee companies' disputes resolution service.

Of 250 applications declined each year, about six ended up being heard by FSCL.

One case that did reach FSCL was that of Rachael and Jason, who said they needed to withdraw their savings because they wanted to keep their children at private school because of bullying in the state system.

Trustee companies use guidelines from Workplace Savings New Zealand to determine if a saver is in significant financial hardship. They apply a template to work out if the saver's weekly accounts should be in surplus or deficit if they are budgeting correctly.

The guidelines allow sums of money for essential items such as food, housing, clothing, utilities, health care, essential travel and so on.

But they exclude private school fees and other items considered luxuries.

Rachael and Jason were also tithing $150 a week to their church, an amount the trustee company and the FSCL assessor thought too high in their financial circumstances to be classed as an essential. Their complaint was not upheld.

Sometimes people have no idea what basic necessities are and think of themselves as in significant financial hardship when they are not.

FSCL heard from Manoj who complained that the trustee company wouldn't let him withdraw KiwiSaver funds to pay for health and life insurance for himself and his wife, insurance for their pet and to install a heat pump. He was unsuccessful.

In another case, business owner Richard complained when a trustee company turned down his withdrawal application.

He'd had a downturn in business and had decided to sell his house. But he wasn't being forced to sell the house by his bank and had other savings. His complaints to the KiwiSaver provider, trustee company and FSCL all failed.

The trustees closely examine applicants' bank statements. When Adam was declined, the trustee noted that his bank statement showed he was buying Lotto tickets when he claimed he couldn't afford food.

But when he defaulted on loan payments a few months later the trustee accepted a new withdrawal request and let him withdraw his KiwiSaver money.

KiwiSaver is still new and many inquiries come as a result of people not understanding the scheme, says Battell. "People are still learning."

Many people who contact the ombudsman with potential complaints do not know how to get their KiwiSaver money to buy a first home. Or they don't know how to access the money if there is a relationship property split, or they have an issue with their children's KiwiSaver accounts.

"We get inquiries about people not realising they have been signed up or transfers that have not gone through properly," says Battell. Another area of complaint relates to transfers of British pension money to KiwiSaver, which can be nightmare.

Those aged over 65 sometimes approach the ombudsman because they don't know how to withdraw their money or don't understand that their employer no longer contributes after this age - even if they continue to do so themselves.

"As more people want to withdraw their funds after 65, that might be an area of increased confusion and complaints."

Several complaints came from people who had planned to use their KiwiSaver money for a first home and found they couldn't.

It's not unusual for such applications to be declined because they were received after the house purchase was settled. That can be a "gotcha" for the HomeStart grant and first-home withdrawals.

In one instance, a recorded phone call between a KiwiSaver provider and its customer showed the customer had ignored advice to seek information from Housing New Zealand. The customer applied for a first-home withdrawal three days after the house sale was settled.

As well, the Insurance and Savings Ombudsman's case manager believed it was implied in the form sent to the customer by his provider that the application must be made before settlement. In that case the provider payed $500 to the customer as a gesture of goodwill.

The Banking Ombudsman has heard similar cases. Mr and Mrs T complained that their first-home withdrawal had been declined because they misunderstood the information on the application form and did not apply until the day before settlement. The ombudsman agreed with the bank's decision, but did recommend that it improve information customers were getting about first-home buyer withdrawals.

The Banking Ombudsman receives complaints from time to time about the investment returns on KiwiSaver, but this is not something she can consider.

KiwiSaver funds rise and fall according to market conditions and investors who don't like that should choose a conservative fund. But they then might not like the fact that their balance hasn't grown as quickly as it would in a growth fund.

One complainant whose case was considered by the Insurance and Savings Ombudsman found that direct debits to his KiwiSaver provider hadn't been made for three years.

The saver asked the provider to reimburse him the value of what his contributions would have been - even though he hadn't lost this money. The provider reimbursed the equivalent of the growth and tax credits, but not the missed payments.

Some complaints are upheld in full. Mr L was told incorrectly by his bank that he couldn't withdraw KiwiSaver money to settle with his ex-wife. The correct answer was that it's possible to withdraw KiwiSaver money to comply with a court order made under section 31 of the Property (Relationships) Act. The bank paid the man compensation of $1,500 plus legal fees and offered him a preferential home loan interest rate.

Many KiwiSavers fail to understand that what they've got into is a superannuation scheme and the money is tied up long term. One father who enrolled his children in 2008 was unhappy when discovered he couldn't cancel their membership.