The courts will soon decide wether creditors have a right to the contents of KiwiSaver accounts when a person goes bankrupt.
The Government’s Insolvency & Trustee Service (ITS) has been successful in persuading trustees of many KiwiSaver schemes, to release the personal and employer contributions from the KiwiSaver accounts of bankrupts to pay their creditors.
Since KiwiSaver began, the Official Assignee (part of the ITS) has clawed $440,000 out of KiwiSaver accounts in the cases of 165 bankruptcies. But that has been largely a result of bankrupts aged 65 or over.
Most trustees do not believe that the KiwiSaver Act 2006 empowers them to release KiwiSaver funds to pay creditors of bankrupts, when the Official Assignee applies under the scheme’s hardship provisions.