KiwiSaver Financial Hardship Withdrawals

Getting your money can be challenging - MoneyHub walks you through everything you need to know, step by step

Updated 9 December 2018

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.

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.

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 medical treatment and mortgage repayments.

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:

Basic food and grocery items, and
Accommodation (including rent, mortgage repayments, interest, rates and necessary maintenance for the principal family residence), and
Basic clothing, and
Utility services such as power, gas and telecommunications, and
Transportation, and
Fire and general insurances, and
Medical and dental costs necessary for the maintenance of good health, and
School fees (excluding private school fees) and tertiary education costs, and
Expenses in relation to any dependents with special needs, and
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:

Evidence of your income for yourself and your partner (i.e. copies of payslips)
Evidence of any benefits you receive (i.e. letters from WINZ detailing payments)
Copies of your bank statements for the last month for all bank accounts
Copies of any outstanding bills/invoices
Copies of statements for credit cards/store cards etc
Copies of correspondence from debt collection agencies
If applicable, a copy of Separation Agreement.
Verification of Identity (a copy of a form of ID)
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:

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)
Personal Income Details, including you and your partner's salary/wages, rental income, business income, child support, working for families, interest, dividends.
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).
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).
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 WINZ 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:

If you have previously purchased items on hire purchase and now cannot afford the repayments, and
Cannot sell the items as it would breach the agreement with the retailers, then
Your application is still valid despite the past money mistakes and it will be assessed on the usual grounds, but
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

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.
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 the 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

Talk to your lenders, who offer Financial Hardship applications which can stop interest and repayments until you are financially better off.
Contact a Budgeting Service for an appointment.
Talk to WINZ about your issues as in some cases they may be able to help.
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?

Yes - if your application for financial hardship is approved. 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.

KiwiSaver Financial Hardship Application Forms

Every KiwiSaver provider has their hardship application form and guidance information online - Google 'Hardship application + (name of your KiwiSaver scheme). If you cannot find it, contact your scheme's client support team.

How long do I need to wait to get my money?

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.
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.

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