The Inland Revenue has had system issues since it changed KiwiSaver over to a new system in April. Photo / Janna Dixon
Frustrated Kiwisaver members who have been left waiting up to 10 months for their KiwiSaver employer contributions to be passed on by the Inland Revenue to providers say they should be compensated for missing out on investment returns.
But the Inland Revenue says it is prioritising fixing the issues which were caused by a switch to a new system in April and it has yet to work through any potential compensation.
More than three million people belong to KiwiSaver with over $70 billion invested in the scheme. That means millions of dollars pass through the IRD every year from employers who make a contribution to KiwiSaver, employees themselves as well as self-employed members.
It can typically take up to three months for a contribution to move from the IRD to a KiwiSaver provider. But some are now reporting wait times of five months plus meaning they are missing out on the returns the money could have been getting from being invested through their provider.
One woman who wished to remain anonymous said potentially hundreds of staff at the company she worked for were still waiting for a January employer contribution to be passed on to their KiwiSaver schemes.
She said the company's human resources person had been chasing up the issue every month since June but it had yet to be resolved.
"As of mid-October we were still waiting, and our HR department were still chasing on our behalf, and had not been given any indication by IRD as to when the issue would be resolved."
The woman decided to take the matter into her own hands and raised a complaint directly with the IRD in late October. The money was finally passed on to her provider last week.
The woman said she had now requested compensation for the 10 months of lost gains on her $400 employer contribution.
"I have queried compensation for the loss of 10 months' earnings … and they have apparently passed this on to the appropriate person for review."
She said it appeared from an email from a customer services officer at IRD to the HR person, which was passed on to staff, that there were a number of affected employers.
The woman was spurred to contact the Herald after she read about another case in which a woman called Andrea waited up to six months to have her KiwiSaver employer contribution paid on to her provider.
The Herald was also contacted by a number of others reporting the same issue.
Another woman, Carol, said she was also missing her employer contribution for March.
"IRD have acknowledged there is an issue but cannot give any timeframe when this will be corrected.
"[I] Can only assume it is related to the upgrade they did at Easter. I know of many others in the same situation but only after I have prompted them to check their KiwiSaver account. It is not something many people actually check."
Molly Callaghan said she only realised five months' worth of her KiwiSaver contributions had not been passed on when she checked her KiwiSaver provider account in late September.
"I'm with Generate and they send through monthly updates, which I clicked on thinking I will have a quick look at what is happening, and then thought 'what the hell is going on?' Nothing has been going in there for months."
After calling her provider she was shocked to find they did not know there was anything wrong.
"I think that is the worst part - there does not seem to be any reconciliation between the provider and the IRD so if there is something gone missing, well no one even knows about it. And I'm sure most people don't regularly check their KiwiSaver they just let it plod along."
Callaghan said both she and her provider began contacting IRD to try to find out where the money was but she felt she never received a satisfactory response.
"The only thing they continually said was I don't know."
Finally she received an email on October 13 saying the money had gone to her provider. Callaghan responded with a request for compensation.
She said as a business owner if she had been late paying money to the IRD she would be charged a fee.
Callaghan said the IRD should have told people about the issue back when it first started.
"I think the IRD should be notifying people that something has gone wrong at the time. Not hiding from it."
An Inland Revenue spokeswoman said most of the issues raised were as a result of glitches from the changeover to the new system in April this year.
"Not everyone is affected the same way for the same reasons, and it's taking time to diagnose and resolve. We're working to get the money flowing and we're making good progress."
She said it could not say definitively how far back the issue went or how many employers had been affected.
"The work we're currently doing will determine that."
Last week she said it could not answer the question of how many others might be affected without the query going through an Official Information Act request due to the amount of time and resource it would take to find that out.
That request is still under way.
The spokeswoman said Inland Revenue did pay interest if it held on to contributions, and the amount payable was legislated and was based on the market rates. But the rate went down to zero as of May 8.
"Any potential compensation is something we have yet to work through because we're concentrating on the necessary system fix at the moment."
She said it had been responding to customers who contacted it but as the problems were complicated and affected people in different ways for different reasons there had been no
"blanket" communication.
But she said it regularly communicated with providers on matters affecting KiwiSaver contributions.
She said KiwiSaver members could rest assured their contributions have been, are being or will be, passed on.
"Inland Revenue understands some people may feel frustrated about the time it is taking to resolve this, and a lack of information about it, but we can assure them that when they contact us we will respond with as much explanation as we can depending on their particular circumstance.
"This is a complicated situation affecting people in different ways, for different reasons. We're always working to improve all aspects of our operation and this is no exception."
Jessica Wilson, head of research at Consumer New Zealand, said IRD should look at compensating those affected.
"Given the circumstances if the IRD system has caused significant delay in consumers getting their KiwiSaver contributions passed through we think it does really need to look at compensation."
She said if it was a small number of people affected it would be easier to work out on an individual basis otherwise the IRD would have to look at the number affected, the amount of time it had been holding on to the money and potential interest on what people could have earned.
She said those worried they might also be affected should check their payslip and then check what was going into their KiwiSaver account.
"Most people should be able to do that online or if they can't call their KiwiSaver provider and check. If they think there is a discrepancy get in contact with IRD."
Wilson said she would have expected the IRD to be a bit more proactive and let people know if they are affected and what is going on.
"There might be people waiting for that money to come through so they can put a deposit on a house for example.
"If there is a problem with the system it needs to let people know about that and also let people know when it is going to be fixed."
Wilson said it was concerning that the scale of the problem was unknown at the moment
"Obviously if you haven't checked your KiwiSaver balance you might want to do that see if you are one of those people that is affected."
OPINION: If the $1m estimate were correct, a big proportion of retirees would struggle.