KiwiSaver transfer traffic jams could be eased under enhanced Inland Revenue Department (IRD) member information-sharing powers proposed in draft tax legislation.
The Taxation (Transformation: First Phase Simplification and Other Measures) Bill, introduced into Parliament at the end of June this year, would enable the IRD to share a wider range of member information with KiwiSaver schemes than is currently allowed.
Under the proposed measures, the IRD would be able to provide KiwiSaver schemes contact information for transferring members beyond the email and physical address permitted by existing law.
According to an IRD note, the extra member contact details it could share with KiwiSaver providers include “a telephone number and any future mode of communication related to the member that emerges as technologies develop”.
“In addition, Inland Revenue would be able to supply a scheme provider with certain information, including the names of scheme members who have transferred out of their scheme and the name of the member’s new provider and vice versa,” the IRD note says. “This is not possible under the current rules.”
The IRD says the amendments were aimed at smoothing the KiwiSaver transfer process and improving providers’ member communication efforts.
Bruce Kerr, Workplace Savings NZ chief, said the IRD information-sharing proposals should give providers some respite from KiwiSaver administrative delays.
KiwiSaver transfers are required to be completed within 35 business days from the date of application.
“Some transfers haven’t gone as smoothly as they should’ve,” Kerr said. “Ideally, you don’t want to have a member holding accounts with two KiwiSaver providers at the same time.”
However, he said the industry would keep pushing for further inter-government agency information-sharing to improve KiwiSaver back-office efficiencies.
For example, he said the IRD could gather contribution data to calculate top-up amounts for member tax credit purposes or work with other departments to measure the exact amount of time KiwiSaver members lived outside of New Zealand.
“Then KiwiSaver providers wouldn’t have to collect statutory declarations from members declaring how often they might’ve lived out of New Zealand in the last 20 years,” Kerr said.
The proposed law also includes a get-out-of-KiwiSaver almost-free card for under-19s who were enrolled in a scheme as a minor.
“This would provide some protection to minors who may not know that they have been enrolled and want to exit the scheme,” the IRD note says.
“Members who opt out of KiwiSaver under this new provision would have the contributions they had made returned to them, their Government contributions returned to the Crown and their compulsory employer contributions returned to their employers.”
The IRD says while it hasn’t received any complaints from ex-minor members there was currently “no remedy available under the KiwiSaver Act that will allow the member to exit the scheme” is such an issue arose.
Kerr said there was “some logic” to the kiddie-exit clause, which has been recognised by the industry as a potential problem.