NZ Herald 19 November 2011

AIf you’re lucky in love, money and health, and you don’t choose to withdraw money in some other circumstances, it should all be there waiting to finance your cruisy retirement.

However, there are several circumstances in which you or others can take money out of your KiwiSaver account before you reach NZ Super age — which is likely to be older than 65 by the time you get there, but that’s another story.

You can withdraw some or all of the money to buy a first home if you don’t already own one; if you suffer significant financial hardship or serious illness; or if you leave New Zealand permanently.

If your marriage or similar relationship breaks up, your KiwiSaver account is treated like other savings. The money is relationship property to the extent it was contributed during the relationship. A court may order some or possibly all of your KiwiSaver money to be transferred to your former partner, or your partner may get more other assets to offset your KiwiSaver account.

And when you die, at whatever age, your KiwiSaver money goes to your estate. It’s available to your heirs at that time. If you are under NZ Super age when you die, they don’t have to wait until you would have reached that age.

But the issue that’s clearly worrying you is bankruptcy. If you go bankrupt, the Official Assignee (OA) — who administers bankruptcy — will use your KiwiSaver money to repay your creditors, says Robyn Cox of the Ministry of Economic Development’s Insolvency and Trustee Service.

Recently, there’s been disagreement between the Service and some KiwiSaver providers over whether the money is available for creditors right away or if they have to wait until the KiwiSaver member reaches NZ Super age. The issue may be tested in court, says Cox. “We need to clarify it for the sake of bankrupts and creditors.”

But that wouldn’t make a lot of difference to you. The money in your account would be set aside to pay others sooner or later.

However, after you are discharged from bankruptcy — usually three years after you are declared bankrupt — you get a fresh start. You can contribute new money to KiwiSaver that is all yours in retirement — unless, of course, you go bankrupt again.

Note that the OA treats money in KiwiSaver no differently from other savings, whether in shares, property or anywhere else. They’re all fair game to repay creditors. So this is no reason to put you off KiwiSaver.

AA department spokesperson replies, “We can’t comment on the advice your reader says they received from Inland Revenue because we don’t know the particular circumstances that led to that enquiry.

“However, Inland Revenue is of the view that if a person receives money for performing a service — even if the amount to be paid is not agreed between the parties — that is not a donation. That would still be the case even if a payment was voluntarily made. If the payment arises as a consequence of services that have been performed then it will likely be income for the recipient.”

That seems fair to me. Window washers and buskers use the same government services as the rest of us. And I know of at least one busker who made way more than most of us one Christmas season.

If you are relying on advice to the contrary, I hope you have it documented.

AGood idea. And our next letter suggests another way to enter the short-term employment field.

AA great happy ending.

Yours and the previous letter are just two of more than 20 responses to my request last week for advice for the couple. It’s been heart warming. Thanks to everyone who has taken the trouble to write.

Some of the responses are simply too long to publish. One thoughtful letter, from a man in India who reads the column online, would more than fill this column all on its own. But over the next few weeks, we will publish part of his letter, and many others.

There were, however, some responses aimed specifically at the couple — in some cases offering them possible work — that I’ve forwarded directly to them. A taste of what they said:

• “We employ a modest team of people in our hotel and property business in central Auckland. All but one are under 35. Our businesses are doing well but like many businesses today we face many challenges. Mature people (like me) are not always as versatile but offer valuable experience and problem solving skills.”
• “Although I am not hiring right now I may be in a position to hire again in the near future, and considering his qualifications and experience he could be a possible candidate.”
• “I am making no promises, but I have had a reasonable level of success” in human resource management services.
• “I might just have a contract role coming up that might assist this gentleman — integrity, flexibility, an Engineering/HR background and lots of grey hair would be a real plus.”

Fingers crossed that one of these leads, or another idea from a reader, will do the trick.