Your KiwiSaver fund is designed to provide you with some money to help you financially during your retirement, so accessing your KiwiSaver funds prior to retirement is very limited and defined in Government Legislation. They are:
- First Home Withdrawal
- Permanent Emigration
- Death of Member
- Serious Financial Hardship
This blog will focus on the ability to withdraw your KiwiSaver retirement savings early due to Serious Financial Hardship.
The main message I’m providing is this: the KiwiSaver provider’s trustee needs to be completely satisfied that you have explored and exhausted ALL other reasonable alternative sources of funding.
Even if they approve a KiwiSaver withdrawal under financial hardship, they may only release a portion of your savings to see you through a short term financial problem.
Serious Financial Hardship means:
- You are unable to meet minimum living expenses
- You're unable to meet mortgage repayments on your family residence resulting in the lender enforcing the sale of the property to repay the mortgage
- The cost of modifying a residence arising from a disability or the member or the members dependent
- The cost of medical treatment for an illness or injury of the member or the member’s dependent
- The cost of palliative care
- The cost of a funeral for a dependent
- The member suffers from a serious illness
Before a KiwiSaver withdrawal application for Serious Financial Hardship is considered, there are various forms and documentation you will need to provide to your KiwiSaver scheme provider. Your application will be scrutinised by the KiwiSaver provider’s trustee as they are required to act in the spirit of KiwiSaver being that the funds are earmarked for your retirement.
- Completed Withdrawal form including:
o Your reason for seeking significant hardship withdrawal.
o What alternative sources of funding you have explored and their limits (such as a contributions holiday)
o How much money you need
o Detail about your income and expenses
o Detail about your Assets and Liabilities
o A Statutory declaration
- Proof of Address
- 3 months bank statements – good account conduct is important here!
- Letter from WINZ detailing any benefits paid to you or the letter approving / declining
your request for WINZ financial Assistance
- Letter from any lending institution which have declined a request for finance
- Payslip confirming your income (and your Spouse’s if they are working)
- Redundancy notice if you’ve been made redundant
- All outstanding bills for minimum living expenses (rent, utilities, home loan, dentist, medical)
- Builder’s report (for home modification to meet special needs arising from a disability)
- Medical report (for medical expenses relating to an illness or injury, or cost of palliative care)
If your application does get approved, the money you are waiting for isn’t instant, as gathering all the information takes time. It can also become apparent as you go through the process that you might not meet all the criteria to successfully withdraw your KiwiSaver funds. You would be surprised at what some people consider Serious Financial Hardship: cosmetic surgery, medical insurance, a holiday to Fiji, Sky bills (yes, I’m serious!)
Anyone seriously considering this should speak to us as we may be able to help you with your current financial crisis before going down this tricky road.
Plus the actual seeking of such advice could work in your favour as the KiwiSaver provider’s trustee may see this as a positive step in the right direction.
Members need to remember that KiwiSaver is a long-term scheme – it's actually quite a serious situation we could find ourselves in come retirement if we are not properly prepared. We cannot stress this enough - our kiwi attitude of ‘she’ll be right mate’ could be our downfall.