Kiwis are struggling to make ends meet as hardship withdrawals from KiwiSaver hit new records. Photo / 123rf
Cost-of-living pressures are driving record numbers of Kiwis to seek financial hardship relief through KiwiSaver, new data show.
The elevated levels of hardship have also brought a rise in fraudulent attempts to access KiwiSaver money.
According to Inland Revenue Department (IRD) data, September was a record month for KiwiSaver hardship withdrawals ($48.9 million) and the number of people dipping into their retirement funds (5530).
Already, in the first quarter of the financial year, $134.6m has been withdrawn from KiwiSaver for hardship reasons, up 22.5% on the same period last year.
David Callanan, the general manager of corporate trustee services at the Public Trust – a KiwiSaver supervisor in charge of approving hardship withdrawals – said the trend of rising hardship was concerning.
“I think it’s concerning because behind every application is a person, a New Zealand family who’s struggling to make ends meet.
“Particularly at this time of year – it’s meant to be a time for celebration and looking forward with positivity and instead, for so many, there’s just hardship and people are struggling.”
Callanan said the Public Trust was seeing a growing number of KiwiSaver members coming back repeatedly for hardship withdrawals.
“That may be as high as 50% of the applications that we’re processing at the moment,” he said.
“That’s definitely contributing to the increase in volumes.”
Cost-of-living pressures continued to be a major driver of the figures, Callanan said.
“The pain is still being experienced out there. Essentials like housing, groceries, utilities, medical expenses, they’re all significantly higher than four or five years ago.
“Then if you couple that with unemployment levels ... and underutilisation data, that signals people aren’t getting the work that they need, aren’t getting the income that they need to make ends meet.”
Callanan said most applications typically involve changes in someone’s life such as employment circumstances or one-off unexpected costs that cause them a setback.
“But now we’re also just seeing people who found themselves in arrears with bills. They’re unable to pay off their credit card, they’ve just run out of that rainy-day savings account.
“For many, KiwiSaver is the last accessible pool of funds when you’re in a crisis.”
Callanan said the Public Trust was also seeing a “significant increase” in the frequency of hardship fraud.
“This is concerning because it’s people who are defrauding themselves. They’re fraudulently preparing documents [to prove hardship].
“Previously, we would go a month or more without seeing one. We’re identifying them on a daily basis now.
“It probably shows there is a degree of desperation and hardship that does exist out there that people would go to that length.”
Callanan said there were strict rules around getting a hardship withdrawal which required multiple layers of review, along with evidence such as bank accounts, bills and debt.
“For hardship, we need to be able to compile a budget and get that sense that you really are going backwards, week in and week out. And that’s when you really do need that help.”
The Public Trust reviews all hardship and serious illness withdrawals and is a supervisor for 14 KiwiSaver schemes, including four of the six default providers.
Callanan said generally it was willing to pay up to 13 weeks of living expenses.
“That’s to try and avoid the situation where we’re inappropriately draining what are meant to be retirement savings,” he said.
The past year has seen a shift in the number of people withdrawing money from their KiwiSaver early for hardship reasons, rather than for a first home.
Between July 2024 and September 2025, KiwiSaver hardship withdrawal cases surpassed those of first home buyers in every month, according to Inland Revenue data.
Only one month previously dating back to August 2016 had there been more Kiwis withdrawing money for hardship instead of a first home.
“That pendulum has shifted now,” Callanan said. “There is far more volume in terms of financial hardship.”
Callanan said he hoped there was some good news on the horizon, particularly with interest rates coming down.
“Those who are paying off their home loans might have some relief coming their way soon,” he said.
“There are hopefully some green shoots in terms of an economic recovery for the country.”
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.