Plans outlined for bankrupt KiwiSaver members

A long legal fight has been raging over whether bankrupt KiwiSaver members’ money can be used to pay their creditors.

Estimates are that more than 5500 members of KiwiSaver are bankrupt, with accounts worth about $30 million.

The Court of Appeal ruled this year that bankrupts’ KiwiSaver cash did not vest to the Official Assignee, which administers bankruptcies, so could not be used to pay their debt.

It said: “There is nothing in the KiwiSaver Act to suggest that a purpose of the legislation is to accumulate funds for the benefit of creditors in the event of the member’s bankruptcy.  If that were the case, the important social and economic purposes of the Act would be undermined and the burden of providing for the welfare of individuals would fall back on the state.”