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How to Make a KiwiSaver Hardship Applications and Balance Withdrawal

Our guide walks you through everything you need to know, step by step, about making a KiwiSaver hardship withdrawal
Updated 1 November 2023

Summary
  • Successfully withdrawing your KiwiSaver balance under a 'hardship' application is not easy. There is a bunch of paperwork to complete, documents to supply, and you will need to prove you have exhausted all other avenues. After that, you will need to prove you are in a state of financial distress. 
  • This RNZ article from May 2023 explains many applications are turned turn, despite the severe financial difficulties many New Zealanders experience every day.
  • The amount of savings you are allowed to withdraw will be based on the supporting information you provide, and it could be less than what you apply for. The severity of your financial situation and the completeness of your financial information that you supply to your KiwiSaver provider are both essential to process an application.
Warning: Be prepared for a not-so-quick processing time
Each KiwiSaver provider assesses financial hardship withdrawal applications as they are received, and this can take between 2 to 5 weeks. The provider's Supervisor needs to be satisfied that you are in 'serious financial hardship' by definition to approve access to some or all of your KiwiSaver balance. If your KiwiSaver provider believes you do meet the criteria of serious financial hardship, payment will usually be made in 1-10 working days from the decision being made. 

Top tip - if you would prefer more cash in your bank account come payday, but don't need a lump sum, you can contact your employer and take a contributions holiday. This means you won't pay the 3% or whatever you choose to contribute, but you'll also lose your employer contributions too.
Our guide covers:
Not in Financial Hardship?
If you are looking for to withdraw your KiwiSaver balance because you have a serious illness, are moving permanently overseas or want to buy a home, this guide is not for you - read the IRD's Serious Illness guidance, moving overseas guide, or our KiwiSaver First-Home Withdrawal Guide and our KiwiSaver HomeStart Grant Guide.

What is 'Significant Financial Hardship'?

Significant Financial Hardship, as outlined by Schedule 1 of the KiwiSaver Act 2006, includes 'significant financial difficulties' that arise because of your inability to meet:
  • Minimum living expenses, or
  • Minimum mortgage repayments on your principal family residence, resulting in the mortgagee seeking to enforce the mortgage on the residence, or
  • The costs of modifying residences to meet special needs arising from your or your dependents’ disability, or
  • The costs of medical treatment for you or your dependents’ illnesses or injuries (excluding, as noted above, serious illness which is a separate criteria for withdrawing funds), or
  • The costs of palliative care for you or your dependents, or
  • The costs of funerals for your dependents

In this guide, we focus on 'minimum living expenses' which can be subjective when compared to the other financial demands such as mortgage repayments and rent.

​What are 'minimum living expenses'?

To be able to access your KiwiSaver money, you will need to prove that you cannot meet your 'minimum living expenses'. These are defined as:
  1. Basic food and grocery items, and
  2. Accommodation (including rent, mortgage repayments, interest, rates and necessary maintenance for the principal family residence), and
  3. Basic clothing, and
  4. Utility services such as power, gas and telecommunications, and
  5. Transportation, and
  6. Fire and general insurances, and
  7. Medical and dental costs necessary for the maintenance of good health, and
  8. School fees (excluding private school fees) and tertiary education costs, and
  9. Expenses in relation to any dependents with special needs, and
  10. Other normal (non-luxury) household items.

Know this: Every situation is different. For example, if you can afford everything on the list above except for food and rent, you can still apply. You will be assessed on everything, not just what you can't afford to buy.

How much can I withdraw from my KiwiSaver fund?

You can apply to withdraw all or some of your KiwiSaver fund balance, specifically:
  • The total contribution made by you and your employer
  • any investment returns
But you won't be able to withdraw:
  • The $1,000 KiwiSaver kickstart bonus
  • Member tax credits (MTC) 

Also, you may not get everything you ask for. Your KiwiSaver provider will assess your application and may pay all or some of your KiwiSaver balance to you, depending on how they assess your circumstances. Whatever balance is not withdrawn will continue to be invested in the fund and will be available for your retirement and/or any subsequent significant financial hardship application.

If you have been successful in your application and received a payment to cover living costs (i.e. 13 weeks of normal expenses), you will have to wait at least 13 weeks before you can apply again.

What information do I need to provide for a Financial Hardship Application?

Applications take considerable amounts of time to complete, given the details and documentation required. You will need to provide:
  1. Evidence of your income for yourself and your partner (i.e. copies of payslips)
  2. Evidence of any benefits you receive (i.e. letters from WINZ detailing payments)
  3. Copies of your bank statements for the last month for all bank accounts
  4. Copies of any outstanding bills/invoices
  5. Copies of statements for credit cards/store cards etc
  6. Copies of correspondence from debt collection agencies
  7. If applicable, a copy of the Separation Agreement.
  8. Verification of Identity (a copy of a form of ID)
  9. A completed hardship application form, which includes your bank account details for any approved payment and confirmation of the exact amount of money you need.

Completing the hardship application form
You can obtain a form from your KiwiSaver provider, which requires a lot of detail about your financial situation. You will need to pick reason(s) as to why you are in financial hardship (e.g. can't meet living expenses, can't pay a mortgage), as well as provide a lot of detailed annual and monthly wages and expenses information. This includes:
  1. A Personal Financial Position - detailing all of your liabilities (home loans, overdrafts/bank personal loans, credit and store cards, hire purchase), assets (property, bank deposits, cash investments, life insurance, superannuation, vehicles)
  2. Personal Income Details, including you and your partner's salary/wages, rental income, business income, child support, working for families, interest, dividends.
  3. A summary of your Fixed Monthly Outgoings (mortgage repayments/rent/board, overdrafts and bank personal loans repayments, credit and store cards repayments, hire purchase repayments, rates and water charges, insurance expenses, superannuation contributions, childcare/support maintenance, education expenses, medical expense and anything else).
  4. A summary of your Variable Monthly Expenses (monthly food, groceries, clothing and footwear, transport costs, car serving costs, electricity/gas/water/telephone/mobile/internet/Sky, home maintenance and anything else).
  5. A summary of your Discretionary Monthly Expenses (holidays, entertainment, takeaways, cafe, bakery, books/newspapers/magazines, videos/DVDs/music, club/gym membership, subscriptions, sports, hobbies, tobacco, alcohol, gambling, vet/pet costs and any other discretionary expenses).

Additional requirements
  • You will also need to explain how the withdrawal of your KiwiSaver money will remedy your situation (i.e. where will the funds be applied), and the implications for you should this application not be approved. 
  • Some KiwiSaver providers require you to answer questions about whether you have considered alternative sources of funding, refinancing or topping-up existing borrowing to resolve the financial hardship situation so be prepared to answer such questions.
  • You will need to specify any overdue payments on your mortgage, credit card bills, etc. and attach evidence of this.
  • You may need to have asked your bank and Work and Income for help, and show evidence of this. 

Know this: There is no point in missing out any details on purpose (i.e. lying) - your KiwiSaver provider will have copies of your bank statements and will see everything. Being truthful in every aspect of your application gives you the best chance of having a withdrawal processed.

10 Essential Must-Knows for any KiwiSaver Financial Hardship Application

Unless you have an overdue mortgage or medical needs, the definition of 'Minimum Living Expenses' will make or break your application

We estimate, based on discussions with KiwiSaver providers, that at least 80% of significant financial hardship applications are based on insufficient money for living costs, i.e. the inability to meet 'minimum living expenses'.

To determine if you qualify for a KiwiSaver withdrawal, your financial records and application form details will be examined in detail. Using the framework provided by Workplace Savings and the IRD, your KiwiSaver provider will assess your circumstances. This means their team will compare your expenses to what it considers to be 'minimum living expenses'. The purpose is to determine whether you cannot meet (or are unlikely to be able to meet) minimum living expenses. If your expenses are seen as 'discretionary', i.e. non-essential, then there is less of a chance your application will be approved. For example, if you have a history of spending at restaurants, then this will count against your application - we outline this in more detail below.

Your assets, debts and bank statement spending will be examined in extreme detail

Your assets are key factors in determining if you are in financial hardship. Significant factors include how many cars and/or homes you own, your mortgage details, what you spend on groceries, whether children attend public or private schools, what you spend on clothing, credit card transactions and medical bills.

If the KiwiSaver provider believes you could cut back on expenditure, such as groceries or general credit card spend on non-essentials, your application is at a higher risk of being refused.
​
We talked to one former KiwiSaver provider team member who has assessed hundreds of hardship applications. The process saw him and his team routinely deny applications where there was a transaction history of luxuries such as restaurants, spa and health treatments, TAB, online Lotto and high supermarket bills. If you share the same expenses, there is a risk that your application may be refused. 

The assessment guidance below indicates what your KiwiSaver provider looks for when determining if you are in a state of financial hardship, with certain facts supporting an application or working against an application.
Financial
Detail
Supports Application
Works against Application
Car
Required for work
No cheaper/public alternative Repair/replace sole car (for work)
Multiple cars owned
Wishes to replace (working) vehicle
​Large/expensive make/model
House or Property
Family home Repairs necessary Upgrade due to changed circumstance (e.g. fitting wheelchair ramp)
​Has investigated refinancing mortgage
Investment property
Holiday home
Mortgage/house value far exceeds member’s income/needs
‘Renovations’ desired (as opposed to repairs)
​No investigation into refinancing mortgage ​
School Expenses
Annual (public) school fees Uniform costs
Stationery costs 
Private school fees
‘Unnecessary’ school trip/camp expenses proposed
Credit Card Debt
Building up from paying essential daily expenses
 Ongoing ‘luxury’ purchases
Food and Groceries
Less than $100 per week, per person in household
More than $100 per week, per person in household 
Landline Broadband Mobile
Reasonable costs
Broadband access (of itself) generally acceptable as a minimum living expense
High costs
Sky TV subscription
Generally does not support application, however may support if applicant is from an area not serviced by digital TV via Freeview.
​Generally does not support Application
​Life insurance
Life insurance is condition of mortgage (with favourable rates) 
Unusually high levels of life insurance disproportionate to obligations
Super-annuation & KiwiSaver
Contributions suspended
​Contributions continuing
​Childcare
Usually taken at face value to support application
Usually taken at face value to support application ​
Gas
Electricity Water
Usually taken at face value to support application ​
Usually taken at face value to support application ​
Bus
Train
Petrol
Usually taken at face value to support application ​
Usually taken at face value to support application
Use of a large vehicle (with no good reason) may mean that petrol costs are inflated ​
Hire Purchase Payments
​Being used to replace broken and necessary item (e.g. washing machine)
Being used to purchase ‘luxury’ item (e.g. plasma TV)
​Being used to replace working and necessary item (e.g. wanting a newer washing machine)
Clothing
Less than $50 per person per month
More than $50 per person per month
Medical Expenses
Usually taken at face value to support application
Usually taken at face value to support application
Bank Account Balances
Balance is less than one month’s expenses
​Balance is more than one month’s expenses (or transaction history shows transfer to other accounts not detailed in SOFP)
Source: Workplace Savings NZ - ​Significant Financial Hardship Processing Guidelines - Published 1 April 2015
​

You will be assessed on many financial choices and constraints, some of which will be outside your control

The guidance outlines that you may be suffering (or likely to suffer) significant financial hardship if:
  • Your 'justifiable' expenses exceed income; or
  • Your liabilities are more than 3 times income; or
  • You spend more than 30% of your income on housing; or 
  • Your justifiable expenses have increased, but your income hasn’t;
  • Your income has decreased, but your (justifiable) expenses have not decreased; or
  • You have incurred (or need to incur) in a large, one-off expense – brought about (in the latter case) by circumstances beyond your control. 

The guidance also states that you will almost certainly be suffering significant financial hardship if your bank has presented you with an arrears notice on a mortgage. Your application will be assessed on everything you submit in your application - the table below indicates what facts are more likely to indicate significant financial hardship, and what facts work against an application.
More likely to be
Significant Financial Hardship
Less likely to be 
Significant Financial Hardship
Burial costs for a dependant
International travel for a relative’s funeral
Bank demanding overdue mortgage payments
Purchasing an investment property 
Repairing the sole family car so that the ‘breadwinner’ can get to work
 Buying a new car
​A new baby and reduced work hours for the breadwinner/s 
Private school fees need to be paid
Essential repairs to the house – e.g. leaking roof, bathroom repairs ​
​Home renovations – i.e. adding on a sundeck, upgrading the kitchen 
Change of job or lowering of hours/overtime leads to a lower income
Big increase in expenses after buying a holiday home ​
​Drives a 20 year old car
Drives a 2 year old car ​
Change of circumstances leads to higher costs – e.g.: divorce/separation
No change in circumstances but more is being spent
Member is off work for six months, recovering from an accident
Member wants (non-essential) cosmetic surgery
The member is made redundant
​The member is changing jobs or leaving a job to study (their choice)
Source: Workplace Savings NZ - ​Significant Financial Hardship Processing Guidelines - Published 1 April 2015​

You will be assessed as to whether alternatives to funding expenses have been 'fully exhausted'

Your KiwiSaver may go into detail with the terms and conditions of your ongoing debts (i.e. credit cards, hire purchase etc) and investigate the contracts and obligations. Secondly, the Workplace Savings guidance states that KiwiSaver providers must not make moral judgments about past wastefulness and use this as a reason to reject an application. This means bad choices can't be held against you. For example:
  1. If you have previously purchased items on hire purchase and now cannot afford the repayments, and
  2. Cannot sell the items as it would breach the agreement with the retailers, then
  3. Your application is still valid despite the past money mistakes and it will be assessed on the usual grounds, but
  4. Continuing ‘luxury/wasteful’ spending is a different matter and affects applications.

In the example above, the Workplace Savings guide suggests an application should only be approved if reasonable alternatives for funding the existing commitments (i.e. hire purchase payments) have been fully explored or exhausted, and there is no way of getting out of the ‘luxury’ financing commitments. But if there is a way to get out of the financing without penalty, the items should be returned. 

Whatever debts you have, it is a good idea to see if they can be reduced by selling whatever the items are that caused them. If you can't sell them, be as detailed as possible as to why. 

High-interest debt and the effects of sudden redundancy are both regular features of hardship applications

We spoke to KiwiSaver providers and many reported that the most common debts causing financial distress (not necessarily 'financial hardship') included:
  • Consumer finance (Hire purchase, Q Card, GEM Visa)
  • Personal loans via bank and P2P lending (i.e. Harmoney)
  • Utility bills, phone bills and SKY TV
  • Credit card bills
  • Mortgage debt
  • Payday loans
  • Car financing
  • School fees (including private school fees)

All of your debts are important
  1. All of the debts you list on your hardship application form are assessed individually; a detailed transactions history is crucial to determine the likelihood of repayment.
  2. KiwiSaver providers reported seeing many hardship applications that have arisen due to a redundancy followed by no adjustment to lifestyle demands. If you have recently lost your job, cutting back on non-essentials and taking on a temporary position will immediately strengthen your financial position and avoid severe financial hardship.​​

Seeing a budget advisor/budget service will help your hardship application and your financial situation in general

We estimate at least 95% of hardship applications are submitted without the help of free budgeting advice services. Given the paperwork involved and process of making a hardship application to the KiwiSaver provider in general, we believe that meeting up with such a service BEFORE submitting a hardship application is essential. This free service is available all over New Zealand, and a budgeting expert can help you complete the hardship application form as well as guide you to get your finances back on track right away. 

Our debt help page has more details about free budget services all over New Zealand.

It doesn't matter if you have applied before and been rejected - your current situation is what is assessed

Each KiwiSaver provider is obliged to assess Significant Financial Hardship at the time of the application; prior applications (whether successful or not) may be considered in the assessment, but are not a defining factor. If you have applied before and been rejected, your current financial situation may now meet the requirements and a part-payment or full payment of your KiwiSaver balance could be available.

Your KiwiSaver scheme's Supervisor makes the final decision

Your KiwiSaver scheme's assessment team will put together a worksheet, notes, and in some cases (but not all), a recommendation to the scheme's Supervisor who then does the analysis and determination against their benchmarks. Even if the assessment team has recommended rejecting the claim based on the information available, the Supervisor has the final say.

KiwiSaver managers cannot decline an application; that is the job of the Supervisor; you will only hear from the KiwiSaver scheme if they need more information to support your application.

The application process is stressful; please remember your KiwiSaver scheme's staff are people too

Applications for significant financial hardship can become emotionally involving for a KiwiSaver scheme. The team responsible for your application will try to find the best solution, both in the short-term and the long-term. We have spoken to employees of KiwiSaver schemes that say the stress caused by reading about sensitive issues when assessing applications can affect their work and general well-being.

Your KiwiSaver scheme is there to help you but you will have to be patient while the application is assessed. We have heard from KiwiSaver providers about staff being threatened with violence - this doesn't help anyone and only adds to the stress levels of everyone involved.

And remember, the Supervisor for each KiwiSaver scheme is the one responsible for making the decision, not the KiwiSaver scheme manager.

If your application is not successful, you have other options (and the right to complain)

If you don't receive the full amount, your KiwiSaver provider will inform you of the specified amount you have been approved for. If this happens, they must provide reasons as to why only a reduced amount will be released.

If your application is declined, the KiwiSaver provider will give reasons why, and provide further options available. 

Possible Alternatives to Help with Financial Hardship
  1. Talk to your lenders, who offer Financial Hardship applications which can stop interest and repayments until you are financially better off.
  2. Contact a Budgeting Service for an appointment.
  3. Talk to Work and Income about your issues as in some cases they may be able to help.
  4. Read our Debt Help guide to see more options available.

You have the right to complain if you're not happy with the process or outcome
Your KiwiSaver Supervisor will be part of a disputes resolution scheme. You can complain if you disagree about the outcome of your application (i.e. it was declined), or you are unhappy with any aspect of the procedure followed by the Supervisor or the Manager. You will need to contact your KiwiSaver provider for the details of their disputes resolution provider. If you are then unsatisfied, you have the right to raise the issue with the Financial Services Council who will assess the claim and make a determination as to whether the Supervisor followed due process. We estimate that this could take up to two months. 

Financial Hardship Frequently Asked Questions

Our list of popular FAQs covers what you need to know before applying for financial hardship. Specific details about your fund and processing times are best answered by your KiwiSaver provider.​

Can I Use My KiwiSaver For Financial Hardship?

Yes - it is your legal right as a KiwiSaver member to apply for a financial hardship withdrawal. You will need to meet the criteria, and this will be assessed by your KiwiSaver.

What Qualifies For A Hardship Withdrawal?

You must meet the definition of 'Significant Financial Hardship', as outlined by Schedule 1 of the KiwiSaver Act 2006, which means you cannot meet your minimum living expenses, minimum mortgage repayments or a number of other health-based financial needs.

Can I Withdraw Money From My KiwiSaver?

Yes - but only for specific purposes, such as significant financial hardship, first-home purchase, permanently moving overseas or for qualifying medical costs. 

What Causes Financial Hardship?

Financial hardship can be caused by many factors and circumstances, including redundancy, high level of debts, poor financial decision making and personal situations such as family breakup and'or illness. 

How Long Does It Take For KiwiSaver To Pay Out?

We estimate around three to five weeks from the date you submit an application form with supporting documents to getting a decision. If your KiwiSaver scheme manager asks for more information, the faster you supply it, the quicker you will have your application processed.

How Much KiwiSaver Can I Withdraw?

You can apply to withdraw as much or as little as you want, depending on your immediate financial needs. Most people apply for 100% of their KiwiSaver fund balance, but the KiwiSaver scheme Supervisor can approve some or all of this depending on their assessment.

Do You Pay Tax On KiwiSaver Withdrawal?

No - the balance you see, less any member tax credits and government kickstart $1,000 is the balance you are entitled to draw down on, should your hardship application be approved.

I Just Transferred My KiwiSaver To A New Provider, Can I Still Make a Hardship Application?

Yes - there is no restriction, so even if you've only been with your new provider for one day, you are still entitled to make an application. 

How Do You Overcome Financial Hardship?

There are many ways - cutting spending, selling assets you don't need, looking for a second job (or any job if you're unemployed) and seeking help from a budgeting service are just some ideas. Read our debt help for more details.

Can You Use Your KiwiSaver To Pay Off Debt?

  1. Generally speaking, a KiwiSaver Supervisor will not approve repayment of an outstanding debt if there is a repayment plan in place and if the debt is not at the point of putting a member into bankruptcy or legal action.
  2. Occasionally the Supervisor will cover things like dental work or surgery that is required for health reasons. Credit Card or consumer finance debt is generally not considered.
  3. MoneyHub is aware of data from 2018 that confirmed that from the 25,000 financial hardship claims lodged over the year in 2018 (approx 480 per week), only 17,000 were approved, and the average payout was less than $6,000.
  4. Every situation is different, and your personal circumstances will be assessed on a case-by-case basis.

Does Hardship Affect Your Credit Score?

No - a hardship application does get logged on your credit history, but the debts you have will most likely affect your credit score if they are overdue. Read our guide to credit scores for more information.

Can I Borrow From My KiwiSaver?

No - once a sum is withdrawn, you can use it as you like and there is no obligation to repay as if it was borrowed. If you wish to voluntarily deposit money into your KiwiSaver fund above the standard contribution level, you can arrange this with your KiwiSaver provider. 

I previously received money with a hardship application - can I apply again?

Yes - there is no limit to how many applications you can make, but you may want to consider opting out of KiwiSaver if you regularly experience financial distress. By stopping voluntary contributions, you will have more money every week.

How to applying for KiwiSaver hardship

Once you've decided you want to withdraw some or all of your KiwiSaver savings, you will need to down the hardship application form from your KiwiSaver scheme's website. These are listed below. The processing time for assessing an application will vary between provider, but allowing 2-5 weeks is a realistic time frame. If you do not submit all the information needed, it will take longer. You'll either be denied, or approved for the amount you applied for, or a lesser amount.

Know this: At the moment, each KiwiSaver provider's Supervisor has the final decision on whether or not you meet the criteria of financial hardship, but you have the right to complain if you believe the outcome to be unfair.

KiwiSaver Financial Hardship Application Forms

Every KiwiSaver provider has their hardship application form and guidance information online, listed below:

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Related Guides
  • Contributions holiday - if you're wanting to take a break from contributing, our guide explains your options
  • KiwiSaver First Home Withdrawal Guide - if you want to use your KiwiSaver balance for a house deposit, our guide explains everything you need to know
  • KiwiSaver HomeStart Guide - get a grant of up to $20,000 and access to your KiwiSaver fund for your first house or apartment deposit
  • Your contributions - You can choose how much to contribute. Find out what happens when you go on leave, receive a benefit or entitlement, or have a tax debt
  • Your employer's contributions - If you're a KiwiSaver member making contributions from your pay, your employer will also contribute to your KiwiSaver savings
  • Government contributions - To help you save, the Government will make an annual contribution towards your KiwiSaver account as long as you meet certain conditions.​
  • Voluntary contributions - make voluntary contributions (or lump sum payments) at any time, either directly to your KiwiSaver provider or through Inland Revenue​
  • ​KiwiSaver and tax - KiwiSaver contributions are deducted from your before-tax pay, and our guide explains everything you need to know.
  • How to check your KiwiSaver contributions - Keeping track of your KiwiSaver contributions is easy with 'My KiwiSaver'
  • KiwiSaver Withdrawal - If you joined KiwiSaver on or after 1 July 2019, you can withdraw your savings when you qualify for NZ Super (currently 65)
  • KiwiSaver Providers - ​You can choose which scheme to join, even if you're provisionally allocated to an employer-chosen/default scheme
  • Opting out of KiwiSaver - If you're a new employee who's been automatically enrolled, you can choose to opt out of KiwiSaver
  • KiwiSaver Fund Selection Guide - ​10 Must-Know Facts Revealing Everything You Need To Know About KiwiSaver
  • KiwiSaver Calculator - our retirement calculator considers KiwiSaver contributions, how much you earn right now, how much you plan to spend during retirement, and how old you are, among other factors