Q. I would like to withdraw funds from my ASB KiwiSaver account as I'm now unable to work and soon will not be able to meet my loan repayments. I'm only just going to be able to manage my mortgage but not the loans on top. I had these under control when I was working, but my circumstances have changed. My question: how far in debt do I have to go before I can request a withdrawal? I do not want to end up with a bad credit rating. I cannot add the debt onto my mortgage because the mortgage is a Welcome Home loan.
A. As you probably know, the rules around making withdrawals from KiwiSaver are very strict. Unless you are over 65 or applying to buy your first home, it is not easy to get money out of your KiwiSaver account. This is because the primary purpose of KiwiSaver is to make your retirement more comfortable, rather than provide funds in an emergency.
However, the KiwiSaver Act 2006 does make provision for Significant Financial Hardship. According to the legislation, "significant financial hardship includes significant financial difficulties that arise because of a member's inability to meet minimum living expenses; or a member's inability to meet mortgage repayments on his or her principal family residence resulting in the mortgagee seeking to enforce the mortgage on the residence; or the cost of modifying a residence to meet special needs arising from a disability of a member or a member's dependant; or the cost of medical treatment for an illness or injury of a member or a member's dependant; or the cost of palliative care for a member or a member's dependant; or the cost of a funeral for a member's dependant; or the member suffering from a serious illness.
The trustees must be reasonably satisfied that reasonable alternative sources of funding have been explored and have been exhausted; and may direct that the amount withdrawn be limited to a specified amount that, in the trustees' opinion, is required to alleviate the particular hardship."
It sounds like you will be making a withdrawal on the grounds that you are unable to meet your living expenses. However, it is not your basic living expenses that you cannot afford, it is your loan repayments. It will be up to the trustee of your KiwiSaver scheme to decide whether you meet the criteria for a significant hardship withdrawal. You can only apply to withdraw your own and your employer contributions, not any Government contributions.