KiwiSaver delays: IRD to compensate

AUCKLAND: The Inland Revenue Department is to pay millions of dollars to compensate more than 640,000 KiwiSaver members whose employer contributions were delayed in getting to their providers.

The problems were caused when the IRD moved KiwiSaver to a new technology platform in April last year and there was a delay in passing on some employer contributions.

It will pay out just more than $6.6 million, an average of about $10 per person.

As part of the changeover on April 17, the IRD decided to hold some contributions for review to ensure the correct amounts were going to member accounts.

By May 31, it had passed on 85% of those it held, but since then it has been working through the remainder, which had taken time due to administration.

More than 3 million people belong to KiwiSaver.

In October last year, The New Zealand Herald began receiving complaints about delays; some people were waiting up to 10 months for their money to go from their employer to their

KiwiSaver provider.

One woman said potentially hundreds of staff at the company she worked for were still waiting for a January employer contribution to be passed on to their KiwiSavers.

She said the company’s human resources department had been chasing up the issue every month since June, but by October it still had not been be resolved.

The woman raised a complaint directly with the IRD in late October. The money was finally sent her provider in November.

Another woman waited six months for her March employer contribution to be passed on.

In November, the IRD admitted there had been ‘‘unacceptable delays’’ in transferring some KiwiSaver employer contributions.

At the time, Revenue Minister David Parker said it was considering compensation by way of ex gratia payment, but Cabinet approval was needed.

An IRD spokeswoman confirmed on Friday that contributions had now been passed on to providers.

‘‘Inland Revenue apologises for the delay.’’

She said IRD was last week making ex gratia payments for missed investment returns; the payment ‘‘assumes contributions were invested in a growth fund which earned the highest investment return’’.