Summary of proposed amendments
The amendments seek to simplify the administration of the KiwiSaver scheme rules under the KiwiSaver Act 2006 by allowing Inland Revenue and KiwiSaver fund providers to share certain information about KiwiSaver members for account maintenance purposes. This information would include:
- the names of members who have transferred out of a scheme and the name of the member’s new provider; and
- member contact details that would not only encompass their email and address but also telephone numbers and any future mode of communication related to the member that emerges as technologies develop.
The first amendment is intended to improve the service provided to KiwiSaver members when transferring from one scheme to another.
The second proposal is intended to help scheme providers engage with, and communicate more efficiently with their members, and reduce the volume of returned correspondence to scheme providers because member contact details are not up-to-date.
The amendments will come into force on the date of enactment.
Sharing information on KiwiSaver fund transfers
The proposed amendment to the KiwiSaver Act 2006 extends section 220B of that Act to allow Inland Revenue and fund providers to share certain information about members who have transferred out of one scheme and into another, including:
- the name of the member;
- their contact details;
- the name of the member’s new provider; and
- the member’s tax credit information.
The amendment is intended to help improve service to KiwiSaver members.
Sharing KiwiSaver member contact details
The proposed amendment expands the current information sharing provision under section 220B of the KiwiSaver Act 2006 to allow a broader range of contact details to be shared between Inland Revenue and KiwiSaver fund providers. The new definition would encompass not just the member’s email and address, as the provision currently does, but also a telephone number and any future mode of communication related to the member that emerges as technologies develop.
Under section 220B of the KiwiSaver Act 2006, information sharing between Inland Revenue and KiwiSaver fund providers for KiwiSaver account maintenance purposes is limited to sharing email and address contact details with scheme providers for account maintenance purposes. An extension to these current rules would allow Inland Revenue to also share a KiwiSaver member’s telephone number with a fund provider, allowing the provider to communicate more effectively with its members.
In addition, Inland Revenue would be able to supply a scheme provider with certain information, including the names of scheme members who have transferred out of their scheme and the name of the member’s new provider and vice versa. This is not possible under the current rules.
Inland Revenue is in the unique position of knowing a member’s contact details and transfer history and also has an on-going relationship with all scheme providers. Where there are differences in account information held by the parties, Inland Revenue can help facilitate reconciliation and resolution of administration issues.
(Clauses 205 to 211)
Summary of proposed amendment
The bill proposes a new provision that would allow minors who have been incorrectly enrolled into KiwiSaver to opt out before their 19th birthday. This would provide some protection to minors who may not know that they have been enrolled and want to exit the scheme.
Members who opt out of KiwiSaver under this new provision would have the contributions they had made returned to them, their Government contributions returned to the Crown and their compulsory employer contributions returned to their employers.
The amendment will come into force on the date of enactment.
- New section 50CD allows members who have incorrectly been enrolled in KiwiSaver when they were minors to opt-out of KiwiSaver up until their 19th birthday if:
- they are aged under 16 and they have the consent of one of their guardians; or
- under their own authority if they are 17–19 years old.
- New section 59D applies the current rules which extend invalid membership for non-residents and over-65s to incorrectly enrolled minors.
KiwiSaver is a workplace savings scheme that is open to all New Zealand residents under the age of 65. People can join KiwiSaver by contracting directly with a KiwiSaver provider, electing to join through their employer, or through automatic enrolment when they start a new job.
Minors (children under the age of 18) can only join KiwiSaver if they have the consent of all of their legal guardians (if under 16) or co-sign with a guardian (if 16 – 17). These restrictions recognise that joining KiwiSaver, which locks in funds until the member is 65, is a serious undertaking and minors should be protected while they are vulnerable and supported as they get older.
For this reason, minors are only able to join KiwiSaver by directly contracting with a KiwiSaver provider. These providers are best equipped to receive and review the necessary parental consent. Minors are not able to elect to join KiwiSaver through their employer and they are not subject to the auto-enrolment rules.
To date Inland Revenue has not received any complaints from minors who have been incorrectly enrolled into KiwiSaver through their employers. However, should a member challenge their enrolment there is no remedy available under the KiwiSaver Act that will allow the member to exit the scheme.
Unlike a person over 65 or a non-resident, a minor is entitled to join KiwiSaver, albeit only by contracting directly with a provider. The current provisions available to reverse an invalid enrolment are only applicable to members who never should have been enrolled at all, not members who were enrolled through the wrong mechanism.