KiwiSaver withdrawal rules change: Young farmer eyes first home

Liam Herbert, a 25-year-old farmer on a sheep and beef station in Wairarapa, said the changes would allow him to buy his first home and pursue his career by living on a farm. Photo / RNZ, Anneke Smith

By Anneke Smith of RNZ

A young farmer is looking forward to supercharging his savings towards a first home, now that KiwiSaver withdrawal rules are changing.

The Government is tweaking KiwiSaver laws so workers with “live-in” job residences – such as farmers, rural teachers, country cops, and defence personnel – can use their accounts to buy a first home.

Workers in service tenancies have effectively been locked out of first-home withdrawal because their jobs require them to live in employer-provided housing.

“[That’s] not fair, so we’re making a technical change to the KiwiSaver Act to ensure workers in service tenancies aren’t denied the opportunity to put a foot on the property ladder,” Finance Minister Nicola Willis said.

“The change will allow service tenancy workers to use their KiwiSaver for a first home purchase without having to live in it.”

The coalition is also changing the law to allow first-time farm buyers to put their KiwiSaver balances towards the purchase of a farm through a commercial entity they majority own, where it will be their principal place of residence.

Change will help young farmer achieve ‘dream’

Liam Herbert, a 25-year-old farmer on a sheep and beef station in Wairarapa, said the change would allow him to buy his first home while pursuing his career by living on-farm.

“When you live on-farm, and you want to grow your career, putting money away to buy a townhouse that you have to go and live in will then impact your career, so you’re not going to get where you want to get to as fast as you can.

“I was quite reluctant to put big amounts of money in [my KiwiSaver] just because I didn’t want to live in town, 65 years old is a long way away, and that was not in my five- to 10-year plan.”

Herbert said his approach would change, though, once the law was tweaked.

“I’ll have a go back through and probably put up my percentage going into my KiwiSaver and have a talk to my employers, they choose to match, then that would be fantastic.

“I’ll just try and actually put some money in there because I can see where this is going to end up going and where I want to go.

“By the time I’m 35 or 40 years old, there should be a nice lump in there to actually help me with my dream.”

Legislation giving effect to the changes, fought for by National MP for Rangitīkei Suze Redmayne, will be introduced to Parliament in the middle of the year.

Redmayne, who is also a sheep farmer, said the idea came from her stock manager, who had saved enough to pay for a deposit, but he was not allowed to use it because he lived and worked on the farm.

“I know young people in town who are putting eight or 10% into their KiwiSaver, because they can see that goal on the horizon, whereas young farmers attempt to either not put anything at all, or to just put the 3% minimum, because 65 is a lifetime away,” she said.

“So I think it’s a ... great motivator, and a great incentive.”

Financial Services Council chief executive Kirk Hope has raised concerns that the changes weaken withdrawal rules, risking trust and participation in long-term savings behaviour.

“Anytime you widen the scope for withdrawals, it really undermines the scheme.

“The scheme is a retirement savings scheme, so each time you add additional reasons for people to withdraw, or ability to withdraw, that undermines the integrity of the scheme.”

It is not clear how many people might stand to benefit from the changes – Willis estimates it could be hundreds if not thousands.

- RNZ