You may think of your investment into your KiwiSaver scheme as your own, however, you may not realise that after divorce or separation, your ex could be entitled to some of your funds.
KiwiSaver schemes are usually relationship property. This means that the value of the fund will be taken into account in the division of the relationship property during divorce proceedings.
Our clients often have the following questions:
- Is the whole KiwiSaver relationship property, or is it only a part of the KiwiSaver that is relationship property?
- How is it divided after divorce or separation?
- What value is used for a KiwiSaver?
Let’s take a look at these issues in more detail.
What part of a KiwiSaver scheme is relationship property?
The key considerations when answering this question are:
- when did the contributions start
- and when did you begin living together in a de facto relationship (or if you didn’t live together before marriage, the marriage date)?
This is because it is only the part of the KiwiSaver where contributions were made to the scheme after the relationship started, that will be relationship property.
Contributions made after the relationship has ended will be considered separate property.
One important factor to keep in mind is that KiwiSaver started on 2 July 2007. So, if the relationship began prior to 2 July 2007, then the whole of the fund will be relationship property.
For example, Sarah and Charlie were together (and living in the same household) between 2016 and 2020, when in 2020 they separated. Sarah joined KiwiSaver in 2010, whilst Charlie joined in 2016. In this scenario, all of Charlie’s KiwiSaver scheme will be considered relationship property. Only the part of Sarah’s scheme from 2016 to 2020 will be relationship property as from 2016-2020 is the period they were in a defacto relationship and living together.
How is your scheme divided?
The amount of a Kiwisaver fund that must be considered relationship property is proportionate to time in the relationship.
In the example of Sarah and Charlie’s separation, Sarah’s KiwiSaver contribution period before the relationship is 6 years and the contribution period during the relationship is 4 years (from 2016-2020), with a total contribution period of 10 years. The part of Sarah’s KiwiSaver that is relationship property is therefore 4/10 or 40% of the scheme.
How is your scheme valued?
It is common practice to use the KiwiSaver value at the separation date and to obtain proof of the KiwiSaver value at that date from the provider. That is easy because it does not take into account contributions made after separation, which are separate property.
It also works fine if the relationship property is divided quite soon after separation because there will most likely be little change in the value of the KiwiSaver after divorce.
However, what if relationship property is only divided 2 years later and the KiwiSaver has gone up considerably or has plunged in value since separation? The answer to that is, it would be fairer to use the current value, not the separation value (despite one partner losing and the other making a gain).
by Clinton Light, Special Counsel, Shine Lawyers, Christchurch.
Separating? Shine Lawyers can help
Shine Lawyers New Zealand has a wealth of experience representing clients going through separation. This ensures we are able to achieve the best result possible for our clients, helping them get the outcome they need so they can move forward with their lives.
Feel free to phone us to discuss, or make an appointment to come in to meet our Relationship Property team, so that we can start helping you to come up with solutions.