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KiwiSaver and your financial wellbeing
KiwiSaver is designed to help you save money to live on in retirement. KiwiSaver accounts are usually ‘locked in’. However, you may be able to withdraw some of your KiwiSaver savings if you're in significant financial hardship.
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KiwiSaver is designed to help you save money to live on in retirement. KiwiSaver accounts are usually ‘locked in’, meaning funds can only be withdrawn when you turn 65. However, you may be able to withdraw some of your KiwiSaver savings before retirement if you're in significant financial hardship.
If you're in financial difficulty
There are lots of situations that can leave you needing a little help to get back on track. If you're facing financial troubles or anticipate that you might, it’s important to explore all your options before potentially turning to your KiwiSaver savings. For instance, if you’re a BNZ customer, you can request a Banking Review where we’ll look at what we can do to support you through any financial difficulties you may experience. The same is typically true for many other banks, finance companies, and utility providers that often have support measures in place.
Additionally, there are budgeting services like Money Talks or Sorted that can help you deal with tough financial situations; many of these services are free. In some situations, the Government can provide ongoing or temporary forms of financial assistance, including income support. You could also check your insurance policies to see if you might be eligible to make a claim. You can find more information on how to work through periods of financial difficulty here.
KiwiSaver contributions and suspensions
You could also create some financial breathing room by changing or suspending your KiwiSaver contributions. As an employee you can choose to contribute 3.5%, 4%, 5%, 6%, 8%, or 10% of your before-tax pay. If you’re on one of the higher contribution rates, you could reduce this to a more manageable amount in the short term.
If you've been a KiwiSaver member for at least 12 months, you can apply for a savings suspension with Inland Revenue. You can also do this if you've been a member for less than 12 months, but you'll need to provide evidence of financial hardship in your application.
Remember that these changes could affect employer contributions or government contributions and your long-term account balance. So, try and keep any suspension as short as possible and resume your contributions as soon as you can.
KiwiSaver and significant financial hardship
We understand every situation is different and sometimes, after exploring all your options, a KiwiSaver significant financial hardship withdrawal application is a suitable next step. With KiwiSaver, the meaning of significant financial hardship applies in situations where you cannot provide the basic life needs for you and any dependants you may have. This means you’re not able to pay for your essential living expenses like rent, mortgage repayments, or medical treatments for yourself or dependants under your care.
A KiwiSaver significant financial hardship withdrawal can only be made when you've taken all other reasonable steps, like those outlined above, to help reduce your financial difficulties. This is important because the KiwiSaver Act requires the supervisor who approves any significant hardship withdrawal to be satisfied that all other alternatives have been tried before approving a withdrawal.
Applying for a KiwiSaver significant financial hardship withdrawal
Applying for a significant financial hardship withdrawal can be complex, as you'll need to provide a lot of information and supporting documentation. The information required includes an explanation of the causes of your hardship, information about your household income and expenses, things you own, and amounts you owe to others. It's a principles-based test applied to the household, meaning if you have a partner or spouse, your combined income determines if you qualify for a withdrawal.
If your withdrawal application is approved, the supervisor will decide how much the withdrawal should be. The authorised amount may be less than the total amount available in your KiwiSaver account and there may be conditions applied to a withdrawal that you may need to prove you followed in any future application. You can find more information on KiwiSaver and the significant financial hardship application process here.
We're here to help
Your financial wellbeing is important to us. If you're worried about your financial situation, you can learn more about how BNZ can help here. We're here to help you find a way through uncertain times.
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This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation, or omission, whether negligent or otherwise, contained in this publication.
BNZ Investment Services Limited, a wholly owned subsidiary of Bank of New Zealand (‘BNZ’), is the issuer and manager of the BNZ KiwiSaver Scheme. A copy of the BNZ KiwiSaver Scheme Product Disclosure Statement is available on bnz.co.nz.
Investments made in the BNZ KiwiSaver Scheme do not represent deposits or other liabilities of BNZ or any other member of the National Australia Bank Limited group, and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of BNZ or any other member of the National Australia Bank Limited group, the Supervisor, and any other director of any of them, the Crown or any other person guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or the repayment of capital.
References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.