Shelley Hanna: Withdrawing cash from KiwiSaver

Q My husband has given up his job to take care of our young child for a year. Can he cash up his KiwiSaver to help meet our living costs?

A. KiwiSaver is locked in to age 65 except under very limited and strict conditions.



If a person is suffering significant financial hardship, they can apply to withdraw some of their KiwiSaver funds. If they meet the criteria they may be able to withdraw some or all of their own and their employer contributions.

All government contributions including the $1000 kickstart and annual tax credits have to stay in the KiwiSaver account until age 65.

Only if you can prove "significant" financial hardship should you attempt to put in a claim. This includes if you are unable to meet minimum living expenses or if you cannot meet your mortgage repayments on your home and a mortgagee sale is likely.

Applying for a withdrawal on the grounds of significant financial hardship is not a simple process.

If you have been a member for less than three months you will need to apply to IRD, otherwise you should contact your KiwiSaver provider. They will have a standard form for you to fill out.

The form will go to the Trustee of your fund for their consideration along with considerable supporting evidence to prove your case.

The form is several pages long and requires detailed information.

They will need to know why you are struggling to make ends meet.

They will also want you to provide information on what alternative sources of funding you have applied for such as Winz, banks or other lenders, and proof that you have sought budgetary assistance or help from non-profit organisations.

You will need to provide evidence of hardship such as bank statements going back three months and overdue utility bills.

On top of this they also ask that you complete a full statement of your assets and liabilities as well as a breakdown of your monthly income and expenses.

Once the form has been filled out and all the evidence has been collected you will need to declare and sign that the form is true and correct in front of a Justice of the Peace (or other person authorised to take statutory declarations).

The trustee will approve or decline it.

They decide the amount that can be paid out. It will not necessarily be the full amount available, if they believe that a lesser amount will be sufficient.

If you have made a claim before, they will ask whether you actually applied the funds to alleviate the hardship you were experiencing.

There has been some debate around the consistency of decision-making in the claims process.

Because there are several trustee companies managing KiwiSaver schemes, someone might apply to one and be turned down while another member in a similar situation might have their claim accepted.

Workplace Savings is trying to establish clearer guidelines for trustees and providers around the claim process.

KiwiSaver is designed for long-term retirement saving, so the bar has been set very high to discourage investors from applying for early withdrawal.

Shelley Hanna is an authorised financial adviser FSP12241. Her disclosure statement is available on request and free of charge by calling 8703838. The information contained in this article is of a general nature and is not intended to provide specific or personalised advice. If readers have any KiwiSaver questions please go to www.peak.net.nz or email shelley.hanna@peak.net.nz.