Applying for a KiwiSaver hardship withdrawal

Withdrawing your KiwiSaver money has long-term effects

“I’m dealing with redundancy, I’ve got people depending on me, I’m just trying to meet personal expenses – that’s what hardship withdrawals are meant to be for, right?”

Definitely. But you want to make sure you exhaust all your other options first. It needs to be a last resort.

Withdrawing now is a big deal, because you miss out on the money that would be yours if you stayed in KiwiSaver. Tens of thousands of dollars could be at stake. (See below.)

So it’s important to not run and do anything hasty. No fear-based, rushed decisions, please.

These days there are all sorts of help you can look at before you need to apply for a hardship withdrawal. Use your support system first.

Get advice before you withdraw your KiwiSaver

Often there are alternatives out there we don’t even know about, but because our KiwiSaver fund is our money, we turn there naturally. But ideally you want to understand all the options and make a good choice.

The MoneyTalks helpline gives you access to expert financial mentors via live chat, phone, email or text: moneytalks.co.nz, 0800 345 123, help@moneytalks.co.nz or text 4029. You can even speak with them anonymously.

Your lenders and banks will want to help

Remember that banks and other financial service providers are willing to work with customers who are struggling financially. This could be by restructuring loans or giving access to short-term credit, for example.

You have a legal right to ask for changes to your loan repayments when you are experiencing unforeseen hardship.

Another option: no-interest and low-interest loans

Good Loans is run by Good Shepherd, and these types of loans can even be used for bills and debt to get through, and even by migrant workers. They are a great alternative to high-interest payday loans, for instance.

Here are more options for financial help.

Government support is available

The government has a number of relief systems in place to help us through a crisis. If you’ve lost your job, can’t work at the moment or your income has fallen, you may be able to get a benefit or some other financial help from Work and Income.

If you’re struggling to meet living costs or had an unexpected bill, they may be able to help you, even if you’re working. Find more information about financial support from Work and Income or call 0800 779 997 (8am–1am, 7 days a week).

How big a deal is it to withdraw from KiwiSaver?

When you’re looking at how much to withdraw, you can run your numbers using our KiwiSaver calculator to see how it affects your long-term prospects. Enter your current balance, see what you’re on track to achieve, and then reduce your balance by the amount you want to withdraw. Your final figure will reduce significantly.

To give an idea, let’s say you’re 35 years old and have $22,000 in a KiwiSaver growth fund. If you withdrew $20,000 now, by age 65 you would end up having $74,000 less! That’s a lot to walk away from (and even when you adjust for the effects of inflation over that 30 years at 2%, it would still be $41,000 less).

Fraudsters aim to exploit KiwiSaver withdrawals

If you’re aiming to withdraw funds from your KiwiSaver to give to someone else, particularly someone you’ve never met in person, make sure you’re not the target of a scam.

Money brings out the worst in some people, and there are frauds out there exploiting the KiwiSaver hardship process. Keep your funds safe!