The Banking Ombudsman has seen a 51 percent increase in complaints about KiwiSaver providers compared with 2013.
The Banking Ombudsman has seen a 51 percent increase in complaints about KiwiSaver providers compared with 2013. The Insurance and Savings Ombudsman has also had a steady stream of complaints. Close to 100 enquiries and complaints were made to the schemes in 2013.
Reasons for the increases in complaints include more people wanting to access their KiwiSaver funds before they retire. Accessing your KiwiSaver funds before retirement is only possible if you’re buying your first home, experiencing significant financial hardship or serious ill-health, or moving overseas permanently.
Deborah Battell, the Banking Ombudsman, said most complaints were about being unable to withdraw funds – especially on hardship grounds. Decisions on financial hardship are not made by your KiwiSaver provider but by the KiwiSaver scheme’s trustees. Under the KiwiSaver Act 2006, the trustees have sole discretion over releasing funds. Any complaints about a decision must be taken to the dispute resolution scheme to which the trustees belong – which may be different from the provider’s dispute resolution scheme.
Complaints about not being able to use KiwiSaver funds for a first-home purchase are also among those received by the schemes. The rules for first-home withdrawals are strict. If you’re banking on your KiwiSaver funds to buy your first home, check with your provider what its process is for withdrawing money and how long it will take before making any offer on a house. You’re also unlikely to be able to access your funds early by claiming you want to withdraw from KiwiSaver because you didn’t understand how it worked. The Banking Ombudsman is not able to recommend a person’s KiwiSaver membership be cancelled.
The Banking Ombudsman website gives an example where a complainant felt he’d been given inadequate information by a bank and pressured into joining KiwiSaver. It found that although he would eventually receive the benefits of his contributions, he was inconvenienced by being locked in to KiwiSaver. It recommended that he accept the compensation offer from his bank of the equivalent of his first-year’s contributions plus $250. He could then apply for a contributions holiday for up to 5 years.