‘Unacceptable’ Kiwisaver delays
$28.6m in contributions affected in ‘move to new tech system’
The Inland Revenue Department has admitted there were “unacceptable delays” in transferring some Kiwisaver employer contributions to providers after it switched to a new technology system in April.
But it will require Cabinet approval to compensate the thousands of New Zealanders whose money was left sitting with IRD, earning no interest.
The IRD has revealed 274,000 customers had to wait for a collective $28.6 million to be confirmed before the money could be passed on to Kiwisaver providers and some $3m of that is still waiting to be transferred.
The figures have been revealed after an Official Information Act request by the Herald following complaints frommembers of the public who waited up to 10 months for their employer contributions to be passed on to their provider.
In a letter, Meade Perrin, IRD external relationships leader, said in switching Kiwisaver to its new system on April 17, it decided to hold some contributions for review to ensure the correct amounts were going through to member accounts.
By May 31 it had passed on 85 per cent of the Kiwisaver contributions it held and had been working through the rest, which had taken time because of the need to confirm the amounts to be passed on.
“Since go-live [on April 17] we have passed on $5 billion in payments to scheme providers. However, we have held some members’ contributions for a considerable period of time and acknowledge there have been some unacceptable delays. ”
Perrin said the vast majority of contributions had now been passed on but it was still working through a small number to be sure it passed on the right amounts. “There is approximately $3m we have yet to pass on.”
Perrin did not sayhowmanymembers this affected but at an average of $104 per person it would be around 28,000 Kiwisaver accounts.
The delays have left Kiwisaver members feeling frustrated and calling for compensation after potentially missing out on investment returns they would have got had theirmoney been with their Kiwisaver scheme.
Kiwisaver funds have performed strongly since April reflecting strong bounce-backs in the sharemarket after falls driven by Covid-19.
Morningstar figures for the three months to September show fund performance ranged from an average rise of 1.9 per cent for conservative funds to an average of 5.3 per cent for aggressively invested funds.
Last month Auckland businesswoman Molly Callaghan told the Herald she had asked for compensation from the IRD after discovering five months’ worth of her Kiwisaver contributions had not been passed on when she checked her account in late September. She said as a business owner if she had been late paying IRD she would be charged a fee.
Perrin said the IRD was considering whether it should compensate those who had experienced significant delays in the passing on of their employer contributions.
The IRD normally pays interest at a legislatively set rate on contributions held by it but since May 8 the interest rate has been set at0per cent.
Revenue Minister David Parker said IRD had acknowledged there had been some unacceptably long delays and it was considering compensation by way of ex gratia payment. “Compensation in the form of ex gratia payments such as these need Cabinet approval.”
Parker said he understood officials were preparing advice for himto take to Cabinet for consideration. “I am advised it was a one-off and happened when Kiwisaver moved to new systems and processes.”
October figures showed the move to new systems meant Inland Revenue was now transferring around 92 per cent of contributions within two working days.
In April a new law came in meaning that employer contributions can now be passed on much faster. Until then it could take up to threemonths.
His advice to anyone who may have concerns “is to check their Kiwisaver account first. If they still have concerns, the best thing to do is to contact us”.