What Happens to KiwiSaver When You Die?

One of the most persistent misconceptions in New Zealand estate administration is that KiwiSaver automatically passes to a surviving spouse. It doesn't. KiwiSaver is treated as part of the deceased's estate — and like all estate assets, what happens to it depends on whether there's a will, the balance held, and which scheme provider holds the funds.

Here's what actually happens to KiwiSaver when someone dies in New Zealand.

KiwiSaver Is an Estate Asset

When a KiwiSaver member dies, their balance — including all contributions and investment returns — forms part of their estate. The scheme provider freezes the account until they receive formal notification of the death and appropriate authority to release the funds.

KiwiSaver is not a jointly held asset. Even if a surviving spouse has been married to the deceased for forty years, they have no automatic right to claim the KiwiSaver balance directly. It must flow through the estate and be distributed according to the will, or under the intestacy rules if there is no will.

The same applies to the deceased's employer contributions and the $1,000 government kick-start (for those who received it). These are all locked in the scheme and treated the same way.

The $40,000 Threshold: The Key to How Quickly Funds Are Released

The most important factor determining how quickly KiwiSaver funds are paid out is the balance held with the scheme provider.

Under the Administration Act 1969 (as amended in September 2025), financial institutions — including KiwiSaver providers — can release funds of up to $40,000 to the next of kin without requiring a formal grant of probate or letters of administration from the High Court.

If the KiwiSaver balance is $40,000 or under:

The executor or next of kin can contact the scheme provider directly, present a death certificate and a statutory declaration, and request the funds be paid to the estate account. Most major providers have their own deceased estate claim forms. The provider will typically also ask for the indemnity forms that protect them in releasing funds informally. This process can take a few weeks but avoids the High Court entirely.

If the KiwiSaver balance is over $40,000:

The scheme provider will require a sealed grant of probate or letters of administration before releasing the funds. You cannot bypass this requirement — the provider is legally prohibited from releasing an amount above the threshold without court authority.

The per-institution rule: The $40,000 threshold applies separately to each financial institution. If the estate has $38,000 in KiwiSaver with Fisher Funds and $39,000 in a Westpac bank account, both can potentially be released informally — even though the combined estate total is higher — because neither individual institution holds more than $40,000.

What the Scheme Provider Needs

Every KiwiSaver provider has a slightly different process, but most require similar documents:

• An original or certified copy of the death certificate (from Births, Deaths and Marriages, currently $35.00)
• Proof of the applicant's identity and relationship to the deceased
• A completed deceased estate claim form (the provider supplies this)
• If probate is required: a certified copy of the sealed grant of probate or letters of administration
• If no probate required: a statutory declaration confirming the estate value

Contact the scheme provider as soon as possible after the death to understand their specific requirements. If you don't know which provider the deceased used, check their MyKiwiSaver account, bank statements, or payslips. IRD can also help identify a person's scheme provider — notify IRD through the myTrove portal (mytrove.co.nz) and they will update their records, which helps identify linked accounts.

What If There Is No Will?

If the deceased had no will, KiwiSaver — like all estate assets — is distributed under the intestacy rules in Section 77 of the Administration Act 1969. For a KiwiSaver balance above $40,000 requiring court authority, the next of kin must apply for letters of administration rather than probate.

Under intestacy, if there is a surviving spouse and children:

• The spouse receives all personal chattels
• The spouse receives a statutory legacy of $155,000
• The spouse receives one-third of the remaining residue
• The children divide two-thirds equally

A surviving spouse does not automatically receive the entire KiwiSaver balance if there are also surviving children, unless the balance — after applying the statutory legacy — falls entirely within the spouse's share.

Tax and Student Loan Considerations

Tax: KiwiSaver funds paid out as part of an estate are not subject to a separate tax on the balance itself (New Zealand has no capital gains tax or inheritance tax). However, the executor must still file a final IR3 income tax return for the deceased covering the period from 1 April to the date of death. Any income earned by the estate after the date of death — including interest accumulating in a KiwiSaver account during the settlement period — should technically be accounted for in an estate tax return (IR6), for which the executor needs to obtain a separate IRD number for the estate.

Student loans: IRD writes off any remaining student loan balance on the death of the borrower. This happens automatically once IRD receives notification of the death via myTrove or directly. The estate does not inherit student loan debt.

A Common Scenario: Joint Mortgages and KiwiSaver

Families often face a difficult situation when the deceased had a KiwiSaver balance that the surviving spouse is counting on to cover mortgage payments or living costs during the settlement period. If the balance is over $40,000, it may be frozen for 2 to 3 months while the probate application is processed.

In the interim, banks will sometimes defer mortgage payments while the estate is being settled — contact the bank's deceased estates team directly to ask about temporary arrangements. The bank has an incentive to cooperate because the property securing the mortgage is part of the estate.

Notifying the KiwiSaver Provider: Timing Matters

Notify the KiwiSaver provider early — immediately after the death if possible. The sooner notification is made, the sooner the account is formally frozen under the deceased's name, and the sooner the payout process can begin.

If you use the myTrove portal to notify Inland Revenue of the death, IRD will update their records, but myTrove does not automatically notify the KiwiSaver provider directly. You must contact the scheme provider separately. Check the provider's website for their deceased estates contact number or email — most major providers (Fisher Funds, ANZ Investments, Milford, BNZ, Westpac, etc.) have dedicated deceased estates teams.

The Bigger Picture: KiwiSaver Is One Part of Estate Settlement

Dealing with KiwiSaver is typically one of several concurrent tasks in the first month of estate settlement. Alongside it, the executor is usually notifying banks, securing vacant property, applying for funeral grants, and assessing whether probate is needed.

The New Zealand Estate Settlement Guide includes a complete asset inventory worksheet covering KiwiSaver, bank accounts, life insurance, and property — with step-by-step instructions for each institution and what to do when the $40,000 threshold applies or doesn't.

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