The Insurance Ombudsman has upheld a refusal by a superannuation scheme to transfer funds at the request of its client to a different Kiwisaver scheme.

The client had entered into a locked in superannuation scheme in 1994 which provided that he was unable to withdraw funds until 2018 unless there were exceptional circumstances such as severe financial hardship, permanent immigration from New Zealand or a terminal illness likely to result in death within 12 months. 

In 2014 the client asked to transfer the funds from the superannuation scheme into his Kiwisaver scheme.  This was refused upon the basis that the scheme that he had entered into only allowed the withdrawal of the funds at age 60 or if the exceptional circumstances were met.

The Insurance Ombudsman agreed that, unless the conditions for early withdrawal were met, the Trust Deed of the Superannuation Scheme did not allow members to transfer funds out of the scheme and there is no discretion on the trustee to depart from the rules of the plan.

If you are entering into a superannuation scheme, be sure you understand the basis upon which you can withdraw funds, because, unless you meet the specific rules of the trust deed that you are entering into, you will not be able to withdraw those funds.

Alan Knowsley

Insurance Lawyer