What Happens to Your KiwiSaver in a Divorce or Separation?
Our guide explains your rights, obligations and ways to minimise the 'loss' of KiwiSaver during any divorce or separation.
Updated 12 September 2024
Important: We have published this guide from the perspective of anyone with a KiwiSaver balance and going through a divorce or separation. We suggest reading our separation agreement guide for more information to help you with any separation.
Know this first: The law makes it clear- any contributions made to your KiwiSaver during your relationship is, by definition, "relationship property". This means it must be split equally under the Property (Relationships) Act. There are some exceptions, such as contributions made prior to your relationship and assets under a prenup, but generally, it's otherwise a 50:50 split.
Summary
Important: We have published this guide from the perspective of anyone with a KiwiSaver balance and going through a divorce or separation. We suggest reading our separation agreement guide for more information to help you with any separation.
Know this first: The law makes it clear- any contributions made to your KiwiSaver during your relationship is, by definition, "relationship property". This means it must be split equally under the Property (Relationships) Act. There are some exceptions, such as contributions made prior to your relationship and assets under a prenup, but generally, it's otherwise a 50:50 split.
Summary
- Your KiwiSaver is relationship property, but only the amounts you contributed during the time you were together (and any gains made from this money).
- Per the law, specifically the Property (Relationships) Act, relationship assets must be split 50:50. This means your KiwiSaver will be broken up and paid out to your ex in a divorce.
- However, if you wish to protect your KiwiSaver, you can agree to distribute other assets in place of KiwiSaver (but to the same value). Whatever you decide needs to be agreed by both you and your ex.
- If you want to protect yourself upfront rather than share your KiwiSaver during a seperation, you may want to consider a prenup - our prenup guide has more details.
We asked Agreeable about KiwiSaver in Separation and Divorce - here are their thoughts:
"The general rule is this: any contributions that you make to your KiwiSaver during the relationship are likely to be relationship property. Some exceptions exist, such as where your contributions come from clearly separate property. Still, for most people, their income and personal bank accounts will already be considered relationship property anyway.
This means that when you come to get a separation agreement and clarify who keeps what, you may want to keep your KiwiSavers separate, but account for the difference. For example, let's say that two parties accept that their whole KiwiSavers are relationship property. Party A has $50,000 in their account, and Party B has $10,000. If we say that all other assets are accounted for and agreed upon, then Party A and Party B may agree that Party A should pay $20,000 to Party B to even things up. The easiest ways to do this are:
However, not everybody can make this $20,000 difference up with the other assets, so they may need to apply to the Family Court for an "order" that allows for KiwiSaver withdrawal. This typically requires a lawyer - it can be very hard to do the admin without one, and some fund providers actually require a lawyer.
Therefore, some costs are attached - usually around $1,000 for legal fees and a court filing fee of $700. It's a formal process because the KiwiSaver provider must be comfortable releasing the funds. However, if you truly cannot make up the difference with other assets, then it should be straightforward for your lawyer to process it for you, provided your KiwiSaver provider allows withdrawals through the Family Court process.
However, if you truly cannot make up the difference with other assets, your lawyer should be able to handle it straightforwardly, provided that your KiwiSaver provider allows withdrawals through the Family Court process.
We should clarify that KiwiSaver withdrawal via the formal process above doesn't have to be the last resort option. Some New Zealanders choose it despite knowing the cost and lawyer involvement. It is a decision for the two of you, as the KiwiSaver withdrawal may be fairer and, therefore, worth the cost and effort to process".
"The general rule is this: any contributions that you make to your KiwiSaver during the relationship are likely to be relationship property. Some exceptions exist, such as where your contributions come from clearly separate property. Still, for most people, their income and personal bank accounts will already be considered relationship property anyway.
This means that when you come to get a separation agreement and clarify who keeps what, you may want to keep your KiwiSavers separate, but account for the difference. For example, let's say that two parties accept that their whole KiwiSavers are relationship property. Party A has $50,000 in their account, and Party B has $10,000. If we say that all other assets are accounted for and agreed upon, then Party A and Party B may agree that Party A should pay $20,000 to Party B to even things up. The easiest ways to do this are:
- Make Party B $20,000 better off either from the sale of the former family home, from a mortgage buyout or by balancing out the division of other assets; OR
- It is quite standard to include an "adjustment payment" in the agreement, which states that after everything else has been settled, Party A will pay Party B $20,000.
However, not everybody can make this $20,000 difference up with the other assets, so they may need to apply to the Family Court for an "order" that allows for KiwiSaver withdrawal. This typically requires a lawyer - it can be very hard to do the admin without one, and some fund providers actually require a lawyer.
Therefore, some costs are attached - usually around $1,000 for legal fees and a court filing fee of $700. It's a formal process because the KiwiSaver provider must be comfortable releasing the funds. However, if you truly cannot make up the difference with other assets, then it should be straightforward for your lawyer to process it for you, provided your KiwiSaver provider allows withdrawals through the Family Court process.
However, if you truly cannot make up the difference with other assets, your lawyer should be able to handle it straightforwardly, provided that your KiwiSaver provider allows withdrawals through the Family Court process.
We should clarify that KiwiSaver withdrawal via the formal process above doesn't have to be the last resort option. Some New Zealanders choose it despite knowing the cost and lawyer involvement. It is a decision for the two of you, as the KiwiSaver withdrawal may be fairer and, therefore, worth the cost and effort to process".
KiwiSaver, Divorce and Separation - What You Need to Know
To best explain the law, your rights and obligations, we have presented our guidance in a series of common questions. If you have a question that we've not answered, please let our research team know here. However, if it's specific to your divorce, the best person to talk to is your lawyer.
Does KiwiSaver need to be split between my ex and me? And how do I do this in practice?
The Property (Relationships) Act requires equality in the division of assets after a breakup. Relationship property includes any contributions made to your KiwiSaver or any other retirement plan(s) during your relationship and the growth from those contributions, as specifically outlined in this legal article.
To be clear, this includes funds paid in by you, your employer and the government, and any retirement funds held in different countries. If you've made additional contributions or picked a fund that has outperformed the market, everything is to be split.
Be aware: The portion of your KiwiSaver fund held before starting your relationship is classed as separate property. This means it doesn't need to be divided in a divorce, and it also extends to any growth on those balances.
For example, if your KiwiSaver balance was $20,000 when you got together and $50,000 when you divorced, it's not accurate to say each party will be entitled to $15,000 (current balance of $50,000 - initial $20,000 divided by 2). This is because some of the $20,000 may have grown and needs to be properly analysed and valued.
To be clear, this includes funds paid in by you, your employer and the government, and any retirement funds held in different countries. If you've made additional contributions or picked a fund that has outperformed the market, everything is to be split.
Be aware: The portion of your KiwiSaver fund held before starting your relationship is classed as separate property. This means it doesn't need to be divided in a divorce, and it also extends to any growth on those balances.
For example, if your KiwiSaver balance was $20,000 when you got together and $50,000 when you divorced, it's not accurate to say each party will be entitled to $15,000 (current balance of $50,000 - initial $20,000 divided by 2). This is because some of the $20,000 may have grown and needs to be properly analysed and valued.
What date is my KiwiSaver divided from?
The date of separation is most commonly used to calculate the final value of your KiwiSaver account. Alternatively, it may be the date of your final relationship property settlement.
I want to keep my KiwiSaver as it is - what can I do to do this?
It's your divorce, so you can push the terms you want. If they're fair, they should be accepted. To protect your KiwiSaver nest egg, you can suggest offering an equivalent amount of other assets. This may mean you offer an equivalent amount of cash or items like a car or furniture.
Once we agree, how does the money leave KiwiSaver?
You'll sign a separation agreement, which is legally binding and covers all property in your divorce. Your lawyer will then instruct the KiwiSaver manager to deposit a set amount of investment funds to be paid into your ex-partner's KiwiSaver fund or their bank account.
What if we can't agree? What rights do I have?
You can apply for a court order, but this can be expensive - you're looking at around $2,500+ in court costs, plus lawyer fees. These costs can quickly add up and mean it's arguably always best to agree before going down this route.
Can my ex come back for more later?
Yes - unless you sign a separation agreement, you are still subject to claims on your relationship property. This is why it's essential to finalise a divorce, sign off on the terms and move on so both parties can re-start their lives.
Can I hide assets to keep my divorce 'losses' as low as possible?
No - when you agree to the terms of your divorce, your separation agreement always contains a clause stating the parties have made accurate and complete disclosure. By hiding assets, you have failed to disclose and means your ex can come back and demand more money later on. In addition, the courts are experienced in busting open hidden assets.
Important: Should you hide money or shares, the costs of sharing them will be high as more court and lawyer costs are incurred just as they were in your original divorce settlement agreement.
Important: Should you hide money or shares, the costs of sharing them will be high as more court and lawyer costs are incurred just as they were in your original divorce settlement agreement.
How is my KiwiSaver going to be divided?
It's all proportional to the time you were in the relationship. Every relationship will be different. Generally, if you both joined and contributed to KiwiSaver during your relationship, everything is relationship property. However, in many cases there is overlap which means it's not 50:50.
For example, let's take the example of James and Sasha, who lived together between 2017 and 2022 before separating in 2022. James joined KiwiSaver in 2015, while Sasha joined in 2019. All of Sasha's KiwiSaver forms part of the relationship property in such a situation. However, James, who was in KiwiSaver before 2017, will only see the 2017-2022 portion as relationship property.
For example, let's take the example of James and Sasha, who lived together between 2017 and 2022 before separating in 2022. James joined KiwiSaver in 2015, while Sasha joined in 2019. All of Sasha's KiwiSaver forms part of the relationship property in such a situation. However, James, who was in KiwiSaver before 2017, will only see the 2017-2022 portion as relationship property.
KiwiSaver valuation seems complicated - how can it done so it's fair?
The law is clear - the value of contributions added during your relationship is shared 50:50 as part of the relationship property. If you had pre-existing KiwiSaver money before entering your relationship, you would need to supply your lawyer proof of the value of the scheme at the relevant date. This will protect the original investment as it falls outside of relationship property.
Most couples draw a line in the sand regarding the end of their relationship; this date marks when the KiwiSaver balance owed to either partner is crystallised. This will either be your separation date or the resolution date to split your relationship property.
Your lawyer is the best person to ask about the valuation of your KiwiSaver contributions and the effect on relationship property.
Most couples draw a line in the sand regarding the end of their relationship; this date marks when the KiwiSaver balance owed to either partner is crystallised. This will either be your separation date or the resolution date to split your relationship property.
Your lawyer is the best person to ask about the valuation of your KiwiSaver contributions and the effect on relationship property.
I contributed more to KiwiSaver than my partner; why are they getting half of my balance?
This is the design of the law - an equal division of assets obtained or generated during your relationship is the intention. Of course, there are some criticisms of the Property (Relationships) Act which splits everything 50:50. Still, the intention was to protect people leaving relationships with next to nothing when they've contributed in non-financial ways.
Can I get out of splitting KiwiSaver or any other assets upon divorce?
The most popular way to do this is by using a prenuptial agreement that contracts out of the Property (Relationships) Act. Our prenups guide has more details and confirms you can contract out during a relationship and marriage (by way of a post-nuptial agreement).
Related Guides
- Separation Agreements
- Prenuptial Agreements
- Divorce in New Zealand
- Dividing up Relationship Property (New Zealand Law Society)
