Is My KiwiSaver Relationship Property?

Following a relationship breakdown, the term “relationship property” becomes all important.  But what exactly does relationship property include?  In a series of articles, we will be considering this question in respect of the most common items of property that people hold in their relationships, starting with KiwiSaver.

After the family home, KiwiSaver can be one of the major assets of a relationship.  So, is KiwiSaver relationship property?  As for most property, the answer is going to be “it depends”.

When is KiwiSaver Separate Property?

We will first address when KiwiSaver is not relationship property.  That is, when it is considered to be the separate property of one of the parties.  This will cover before, during and after the relationship.

It is not uncommon for one or both of the parties to enter into a relationship with a significant balance in a KiwiSaver fund.  This is particularly so in subsequent relationships.

The starting point for the KiwiSaver balance that you enter your relationship with is that it is your separate property.  However, if you were to subsequently use your KiwiSaver for the purchase of your first home, which you then live in with your partner, it is most likely that this contribution will become relationship property.  Likewise, if you make a KiwiSaver withdrawal due to hardship and apply it to the relationship, then this too will be considered relationship property.

During your relationship you may make contributions to your KiwiSaver from separate property.  If these contributions are in fact made from separate property (for example if you received an inheritance and invested that in your KiwiSaver fund), then these contributions will remain your separate property, provided your KiwiSaver is not subsequently used as described in the preceding paragraph.

Following separation, any contributions that you make to your KiwiSaver fund from your separate income or from your separate property, will remain your separate property.

When is KiwiSaver Relationship Property?

Any contributions that you make to your KiwiSaver during your relationship, that are not made from separate property, are most likely going to be relationship property.

The majority of KiwiSaver contributions come directly from employment, rather than voluntary contributions from other sources.  Considering the income earned during a relationship is usually relationship property, in most cases, a KiwiSaver balance accumulated during a relationship is considered relationship property.  

If My KiwiSaver is Relationship Property What Happens to it if My Relationship Ends?

The starting point for any part of your KiwiSaver that is relationship property is that it is divided in half, as with all your other relationship property.

Practically speaking however this does not necessarily mean that you must access the funds in your KiwiSaver.

In circumstances where each party has a KiwiSaver fund then they may each keep their respective funds, with an adjustment payment being made from other relationship property to ensure overall equality, if the KiwiSaver balances are not equal.  This approach can also be used where only one party has KiwiSaver.  This is of course dependent on the availability of other relationship property to make an adjustment payment from.

If there is no ability to make an adjustment payment, then the Court can make an order for KiwiSaver funds to be released.

How Can I Protect My KiwiSaver?

One way to protect your KiwiSaver is by entering into a contracting out agreement with your partner pursuant to the Property (Relationships) Act 1976, often referred to as a “pre-nup” or “pre-nuptial agreement”.  This will specify whether any pre-relationship balances remain separate, and how on-going contributions will be treated upon separation.

The experienced team at McCaw Lewis can help you navigate any aspect of your relationship property matters and answer any questions you may have.

Zane is an Associate in our Dispute Resolution Team, specialising in Relationship Property, and can be contacted on 07 958 7431.