KiwiSaver funds can go to creditors
People with a KiwiSaver account who are buying their first home can put some or all of the cash towards it.
I am 28. I have been watching my KiwiSaver fund grow since day one.
I know I cannot access any of the money until I'm 65, but can anyone else? If I become bankrupt, or the like, can the money be taken from me to pay debts? Or is it a fund that will see me through hell and high water and be there in 2048?
If you're lucky in love, money and health, and you don't choose to withdraw money in some other circumstances, it should all be there waiting to finance your cruisy retirement.
However, there are several circumstances in which you or others can take money out of your KiwiSaver account before you reach NZ Super age - which is likely to be older than 65 by the time you get there, but that's another story.
You can withdraw some or all of the money to buy a first home if you don't already own one; if you suffer significant financial hardship or serious illness; or if you leave New Zealand permanently.
If your marriage or similar relationship breaks up, your KiwiSaver account is treated like other savings.
The money is relationship property to the extent it was contributed during the relationship.
A court may order some or possibly all of your KiwiSaver money to be transferred to your former partner, or your partner may get other assets to offset your KiwiSaver account.
And when you die, at whatever age, your KiwiSaver money goes to your estate. It's available to your heirs at that time.
But the issue that's clearly worrying you is bankruptcy. If you go bankrupt, the Official Assignee - who administers bankruptcy - will use your KiwiSaver money to repay your creditors, says Robyn Cox of the Ministry of Economic Development's Insolvency and Trustee Service.
Recently, there's been disagreement between the service and some KiwiSaver providers over whether the money is available for creditors right away or if they have to wait until the KiwiSaver member reaches NZ Super age.
The issue may be tested in court, says Cox.
"We need to clarify it for the sake of bankrupts and creditors."
But that wouldn't make a lot of difference to you. The money in your account would be set aside to pay others sooner or later.
However, after you are discharged from bankruptcy - usually three years after you are declared bankrupt - you get a fresh start. You can contribute new money to KiwiSaver that is all yours in retirement - unless, of course, you go bankrupt again.
Note that the assignee treats money in KiwiSaver no differently from other savings, whether in shares, property or anywhere else. They're all fair game to repay creditors. So this is no reason to put you off KiwiSaver.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10767049
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