by Rob Hosking
The way the change is worded means defined benefit schemes do not qualify for the tax break.
As the bulk of money in existing schemes are for defined benefit plans, this is not an insignificant error.
The Association of Superannuation Funds was the main advocate for that tax break and is now acting as a sort of point man for any problems with the rules.
“If anyone comes across anything, in the course of implementing KiwiSaver, which looks like problem, they should get in touch,” says ASFONZ executive director Bruce Kerr.
Some of the tax problems are not likely to be remedied until near of the end of the year as they would be included in the annual tax bill, yet KiwiSaver begins on July 1.
One of the two ASFONZ lawyers working on the issue, Chapman Tripp principal Mike Woodbury, says the tax difficulty is only the most glaring oversight. Others have been identified, including one which would, if not changed, prevent people with terminal illnesses from withdrawing their funds from KiwiSaver.
Woodbury notes that there is a willingness to work with the industry.
“Despite technical deficiencies emerging - again - due to haste and lack of consultation, officials and the ministers are approaching the necessary error correction with goodwill and ASFONZ will do the same.”
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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