KiwiSaver scheme rules – withdrawal of funds on death

Submission

(63 – Chapman Tripp)

Clause 9 of the KiwiSaver scheme rules should be amended to stipulate that a deceased member’s balance must be paid either in the manner currently prescribed or, where the requisite conditions are met, in accordance with section 65(2) of the Administration Act 1969. Such an amendment should be considered to have taken effect from 1 July 2007.

Comment

Current law requires that probate or letters of administration be presented to trustees of a KiwiSaver scheme before a deceased member’s funds can be withdrawn. This results in additional compliance costs for the member’s personal representative as a result of legal expenses and delays associated with attaining probate or letters of administration.

The accumulated funds in a KiwiSaver scheme should also be able to be paid out in a manner similar to that set out in section 65 of the Administration Act 1969 for certain superannuation funds. That is, trustees of a superannuation fund can pay a prescribed amount (currently not exceeding $11,000) from that fund direct to a named person without awaiting probate or letters of administration. This would be in addition to the current probate or letters of administration procedures.

Recommendation

That the submission be accepted.