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Can the Government 'steal' your KiwiSaver?

This is a question and criticism that we have heard every now and then over the last 6 years since KiwiSaver was lau

nched.  It is important to understand that your KiwiSaver is held in your own name and that there is protection of a Trustee.

This is NOT a Government owned or controlled investment. Your KiwiSaver exists under different legislation to the legislation that the Banks in New Zealand operate under.

I will let David Boyle from OnePath give you more information.  The NZ Herald Question and Answer is short, so I have copied the whole thing into this blog post, but I have also added the article link below.

Helen Twose, NZ Herald Question and Answers

Account in own name is not tied to the fortunes of an employer or at risk should a scheme provider collapse.

While the provider is responsible for administering and managing the funds, KiwiSaver funds are held in a trust by the trustee.

When I lived in the UK my then employer, Woolworths, went bust.

It also meant the Woolworths workplace pension scheme I'd invested in collapsed at a time - late 2008 - when the state of the sharemarket meant the fund was worth less than it needed to pay out.

Fortunately the UK government's Pension Protection Fund was in place and while we didn't get all the money that was owing to employees, we got a fair chunk back.

What, if any, protections are in place for KiwiSavers in the event of a provider or fund collapse?

KiwiSaver is a well-regulated and well-designed savings scheme.

It is not tied to the fortunes of your employer; it is an account in your own name that you can take to the best available provider.

While the provider is responsible for administering and managing the funds, KiwiSaver funds are held in a trust by the trustee.

This gives investors protection in the event of a provider collapse through insolvency.

An investor may suffer losses if the underlying investments in their KiwiSaver fund experience market losses.

But a fund collapse is unlikely given the level of investment diversification you should expect from a properly managed, investment fund.

However, like all investments there are no guarantees.

There is a raft of legislation that helps protect KiwiSaver investors and these regulations are monitored by the Financial Markets Authority with the continuing oversight of government departments.

All providers need to comply with the regulations and the requirements for strong governance.

Licensed trustees are there to provide another layer of day-to-day monitoring, oversight and protection for members.

Some responsibility also rests with individual members to research and review their chosen provider.

New regulations on reporting and disclosure come into effect in July that will make it easier for people to compare and contrast providers.

The stability, strength and track record of any provider are important considerations for members.

The various layers of protection and the commitment of providers to make KiwiSaver more transparent and easy to understand should give investors growing confidence that these sorts of collapse are unlikely, outside a catastrophic market event.

•David Boyle, ANZ Wealth general manager funds.
KiwiSaver funds held in trusts give protection
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