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Dividing up the Kiwisaver

October 3, 2016

Ngaire was one unhappy woman. Her friend had warned her that she was about to lose half her carefully squirelled away Kiwisaver and superannuation funds to her husband, Greg. Greg and Ngaire had recently separated, a decision largely driven by Ngaire because she couldn’t carry on living with Greg’s “irresponsibility” any longer.

Ngaire had married Greg 5 years ago after a very whirlwind relationship. It was all quite a rush for Ngaire at the time. She was 45 years old when they met. Long before that she had watched friends marry and have families and had come to a level of acceptance that perhaps this wasn’t going to happen for her. So, meeting Greg was a pleasant and exciting surprise to Ngaire.

Ngaire, being keenly aware of her single status and need to financially provide for herself, was quite the planner and relatively conservative in her spending habits. Greg, on the other hand, was spontaneous and adventurous. Ngaire found his “it’ll be right, live for the day” approach to life intoxicating and exciting at first but, as time wore on, it began to wear thin and became a source of conflict for them. She now regards their early relationship as “a period of temporary insanity” for her.

Ngaire was a great saver. She had a solid sum already saved in her superannuation scheme when she met Greg. As soon as Kiwisaver was introduced, she joined and made the maximum contributions she could so there was a nice amount there too. On the other hand, Greg had little savings and no superannuation or Kiwisaver when they met. After they married, Ngaire managed to get Greg on board with Kiwisaver but he only ever made the minimum contribution from his wages as he felt it important to have money to spend on life’s pleasures as well.

Ultimately, Ngaire found it just too hard “living on the edge” from one adventure to another with Greg and she moved from their home. She thought they had come to relatively amicable agreements over a coffee together about dividing the home, their bank accounts and the chattels and that they were sorted. However, at a BBQ the other night, her friend announced that superannuation and Kiwisaver were also relationship property to be divided. This sent Ngaire scurrying to see me in a panic. All Ngaire could see was her years of careful spending and saving for her retirement (while Greg was “off having fun, being irresponsible”) being all for nothing if Greg could walk off with half of it. She was particularly appalled at the prospect of him “frittering it all away” on travel and mountain biking gear.

I first checked whether Ngaire, being the financially risk averse person she is, had entered into a contracting out (pre nup) agreement with Greg. This may have preserved her retirement savings as her own property should they separate. No such luck – so giddy with the romance of it all, Ngaire really didn’t feel one was needed and besides, getting Greg to a lawyer would have been almost impossible.

So, what was to happen to Ngaire’s superannuation and the Kiwisaver she and Greg had?

Ngaire’s friend was partly right.

Relationship property law treats superannuation and Kiwisaver funds as relationship property that to be divided equally between both spouses. Ngaire was beside herself – she had significantly more in her Kiwisaver and superannuation than Greg did because of the contributions she had made before they met!

However, all was not lost. The law recognises that often superannuation savings may have been in place before the relationship. In such cases, the relationship property amount that is to be divided is limited to the portion of the superannuation’s value that is attributable to the relationship. With an actuary’s help we were able to calculate what portion was attributable to Ngaire’s pre-marriage savings and what portion related to the marriage. It was still a bitter pill for Ngaire to swallow that her higher dedication to saving for retirement during the marriage was going to benefit Greg. After some discussion, she recognised that during the marriage she had benefitted from his income that was spent on their adventures and travel and ultimately she was relieved that her pre marriage retirement savings were to remain hers.

If, like Ngaire, you have a relationship property issue you need help to resolve then give Family Law Results a call on (09) 297 2010.

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