Relationship property and KiwiSaver: what happens if you split?

When relationships end, untangling your finances can feel overwhelming. If you're like most New Zealanders, your KiwiSaver account likely represents one of your largest assets – but what happens to those retirement savings when you separate? Understanding how KiwiSaver is treated in relationship property settlements is crucial for protecting your financial future.

What is relationship property?

In New Zealand law, relationship property refers to all the assets and debts that are shared between partners in a marriage, civil union, or de facto relationship, which may be divided if the relationship ends—either through separation or death.

The laws around relationship property are governed by the Property (Relationships) Act 1976. The main principle is that when a qualifying relationship ends, all relationship property should be divided equally, unless there are exceptional circumstances.

What seems like a simple 50/50 split can involve complex calculations, tax considerations, and strategic decisions that affect your long-term financial security. However, navigating KiwiSaver in relationship property settlements requires a relationship property lawyer who has expertise in both relationship law and financial planning.

Is KiwiSaver relationship property?

Under New Zealand's Property (Relationships) Act 1976, KiwiSaver funds are generally considered relationship property if they were accumulated during your relationship. This means they're subject to equal sharing between partners, regardless of who earned the money or whose name is on the account.

However, there are important exceptions. Any KiwiSaver contributions made before your relationship began remain your separate property. The challenge lies in determining exactly how much was contributed before and during the relationship – particularly if you've been together for many years. 



Can KiwiSaver be split between partners?

Yes, KiwiSaver can be split, but it's not as straightforward as dividing a bank account. The relationship property portion of your KiwiSaver can be shared equally between you and your former partner through several methods:

Direct transfer

In some cases, KiwiSaver providers can transfer funds directly from one partner's account to the other's. This maintains the tax-advantaged status of the funds and keeps them locked until retirement age or qualifying circumstances.

Advantage: Direct transfers preserve the retirement savings purpose of KiwiSaver funds. Both parties retain their retirement nest eggs without compromising long-term financial security or losing valuable tax advantages.

Disadvantage: Direct transfers require formal Family Court orders which incurs legal and court fees. The process is administratively complex to the point some providers don't allow it, and funds remain inaccessible until retirement. This creates immediate financial pressure if either party needs cash now.

Withdrawal of the funds is also an option- it also requires Family Court orders.

Compensation through other assets

More commonly, couples offset the KiwiSaver imbalance against other relationship property. For example, if you have $50,000 more in KiwiSaver than your partner, you might receive $25,000 less from the sale of the family home to balance things out.

Advantage: Offsetting through other assets avoids court applications and legal fees while allowing both parties to keep their KiwiSaver intact. It's flexible, faster to implement, and maintains retirement savings for both partners. This approach preserves long-term financial security without administrative complexity.

Disadvantage: Offsetting requires sufficient other assets to balance the equation. If one partner has significantly more KiwiSaver funds, finding equivalent assets to offset can be impossible. This approach may also force the sale of assets like the family home when keeping it might be preferable in the long term.



Legal considerations and complexities of splitting a KiwiSaver

Splitting a KiwiSaver account during a relationship separation involves several legal complexities that require careful consideration. One of the primary challenges lies in accurately valuing the portion of the KiwiSaver that qualifies as relationship property. This process demands a thorough analysis of each partner’s contribution history, including employer and government contributions, as well as any investment gains or losses that occurred during the relationship.

The potential tax implications also require investigation. Unlike many other types of relationship property, KiwiSaver transfers can carry significant tax consequences if not managed correctly. Engaging legal and financial experts is essential to avoid creating unexpected tax liabilities that could impact both parties. This is when the head needs to rule, rather than the heart – it’s important to recognise the best way to split a Kiwisaver may feel counterintuitive but the best Christchurch lawyers will have crunched the numbers to the nth degree to protect your future position. Seeking professional legal advice can help to structure settlements in a way to minimise disruption of your financial health.

Timing is another critical factor. Processing a KiwiSaver settlement can take several months, especially when providers must forensically calculate intricate apportionments. These delays can have a knock-on effect, slowing down the overall property settlement and potentially increasing legal expenses if not proactively addressed.

Other influences Kiwisaver settlements

First-home buyers: if you've used KiwiSaver funds for a first-home purchase, this can complicate property settlements. The withdrawn amounts may still be considered relationship property that needs to be accounted for in any division.

Property investors: those with investment property portfolios need to consider how KiwiSaver settlements interact with their broader property strategy. It can make more sense to restructure property holdings rather than access KiwiSaver funds directly.

Business owners: if you own a business, KiwiSaver settlements might impact your ability to maintain and support commercial and business operations or funding.

Moving forward with Weston Ward and Lascelles

Whether you're facing an amicable separation or dealing with contested litigation, getting the KiwiSaver component of your property settlement right is essential. The decisions you make now will impact your retirement security for decades to come.

Don't let the complexity of KiwiSaver settlements overwhelm you or derail your property settlement negotiations. With proper legal guidance, you can protect your interests while reaching a fair resolution that allows both parties to move forward.

At Weston Ward and Lascelles, our experienced family law team understands the intricacies of relationship property law in Christchurch and throughout New Zealand. We provide comprehensive legal advice on all aspects of property settlements, from KiwiSaver splitting to complex property conveyancing and trust structures.

Don't navigate this challenging time alone. Contact us today to book a consultation and ensure your property settlement protects your long-term interests. Call 03 379 1740 to book your appointment today.