The Court of Appeal has recently confirmed what happens to a Kiwisaver account when a person is made bankrupt. The short answer is the bankrupt gets to keep their money.
Since the introduction of the Kiwisaver legislation there has been confusion and uncertainty around what happens to a person’s Kiwisaver account once they are made bankrupt. This uncertainty is caused by two seemingly incompatible provisions contained within two different Acts. On one hand the Insolvency Act says that all the bankrupt’s property belongs to the Official Assignee (the government employee who manages bankruptcies), Kiwisaver funds are property so those funds would belong to the Official Assignee. However, on the other hand the Kiwisaver Act says that unless a law ‘specifically’ requires the withdrawal of Kiwisaver funds then it is not possible to withdraw the funds unless the person is suffering financial hardship.