The Star: November 26, 2020

The Star Thursday November 26 2020
16
NEWS
• By Tasmyn Parker
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 if there is to be compensation
for the thousands
of New Zealanders whose
money was left sitting
with the 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 New Zealand
Herald following complaints
from members 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 as part of switching
KiwiSaver to its new system
on April 17, it decided to hold
some KiwiSaver 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 but since then it
had been working through the
remainder, 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. For
that we apologise.”
Perrin said the vast majority
of contributions had now
been passed on but it was still
working through a small number
of contributions to be sure it
passed on the right amounts.
“There is approximately $3m
we have yet to pass on.”
Perrin did not say how many
members 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 their money 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.
Latest Canterbury news at starnews.co.nz
Some KiwiSaver transfers not completed
IRD admits
‘unacceptable delays’
TECHNOLOGY: KiwiSaver
members have been left
frustrated after delays in
their contributions getting to
providers. ​
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 KiwiSaver provider
account in late September.
She said as a business owner if
she had been late paying money
to the IRD she would be charged
a fee.
Perrin said the IRD was currently
considering whether it
should proactively compensate
everyone who had experienced
significant delays in the passing on
of their employer contributions.
“However, no decisions have
yet been made.”
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 at zero per cent.
In a statement 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 currently preparing
some advice on this issue
for him to take to Cabinet for
consideration.
“I regret there were such long
delays. I am advised it was a
one-off and happened when
KiwiSaver moved to new systems
and processes (April 17) as part
of the implementation of Release
4 of Inland Revenue’s transformation
programme.”
He said figures from October
showed that the move to new
systems meant Inland Revenue
was now transferring around 92
per cent of contributions within
two working days.
Over three million people
belong to KiwiSaver with around
$70 billion invested.
In April a new law came in
meaning that employer contributions
can now be passed on
much faster.
Up
until
then it
could
take up
to three
months to pass on contributions.
Perrin said one of the issues
it previously faced with administering
KiwiSaver was that it
could not pass on employer contributions
until it had received
the funds from employers.
“Overall, we are now transferring
contributions far more
quickly than we were able to previously
and we pass on between
$20m to $25m on average per
day to scheme providers.”
He said people could have confidence
that in the vast majority
of cases their contributions and
the contributions their employer
makes were being passed on very
quickly.
“Many of the things that have
caused delays are transitional
and we expect to continue to improve
our average speed to pass
on contributions. Notwithstanding,
there will always be cases
where there are delays, as issues
do occur from time to time.”
But he said there were robust
processes in place between
employers, scheme providers and
Inland Revenue for identifying
and correcting any issues that do
occur. – NZ Herald
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