KiwiSaver Hardship Withdrawal: Complete Guide
If you're experiencing significant financial hardship, you may be able to withdraw some or all of your KiwiSaver savings before retirement. This guide explains the eligibility criteria, application process, and what to expect.
Need Urgent Help?
If you're in immediate financial crisis, these organisations can provide free assistance:
- • MoneyTalks: 0800 345 123 (free financial helpline)
- • Citizens Advice Bureau: 0800 367 222
- • Work and Income: 0800 559 009 (emergency benefits)
- • FinCap: fincap.org.nz (find a free financial mentor)
What is a Hardship Withdrawal?
A hardship withdrawal allows you to access your KiwiSaver savings before age 65 if you're experiencing significant financial hardship. This is separate from first home withdrawal or serious illness withdrawal.
Key Points:
- •You must meet the legal definition of "significant financial hardship"
- •Your KiwiSaver provider assesses and decides on applications
- •You can only withdraw the amount needed to alleviate the hardship
- •Government contributions ($1,000 kick-start if received, and member tax credits) may be included
- •This is a last resort—other options should be exhausted first
Eligibility Criteria
Under the KiwiSaver Act 2006, you may qualify for hardship withdrawal if you cannot meet:
1. Minimum Living Expenses
You're unable to pay for essential day-to-day expenses including:
- • Rent or mortgage payments
- • Food and groceries
- • Utilities (power, water, phone)
- • Essential transport costs
- • Basic clothing needs
2. Mortgage Payments (Avoiding Mortgagee Sale)
You're at risk of losing your home due to inability to meet mortgage payments. You may need to provide evidence of arrears and communication from your bank.
3. Medical Treatment Costs
You or a dependent need medical treatment that you cannot afford. This includes:
- • Surgery or hospital costs not covered by public health
- • Specialist consultations
- • Ongoing medication costs
- • Mental health treatment
- • Dental treatment (in some cases)
4. Dependent's Illness, Injury, Disability, or Death
Costs related to caring for a dependent who is ill, injured, or disabled, or funeral/burial costs for a dependent.
5. Home or Vehicle Modification
You need to modify your home or vehicle to accommodate your or a dependent's disability (e.g., wheelchair ramps, accessible bathroom).
What Does NOT Qualify
- • Temporary income reduction that you can manage
- • Credit card or consumer debt repayments
- • Holiday or discretionary expenses
- • Business debts or investment losses
- • Wants rather than essential needs
Application Process: Step by Step
Contact Your KiwiSaver Provider
Call or email your provider's customer service team. Ask specifically about their hardship withdrawal process. Most providers have a dedicated form or online application.
Gather Required Documentation
You'll typically need:
- • Completed application form
- • Bank statements (last 3 months)
- • Income evidence (payslips, benefit statements)
- • Bills and expenses breakdown
- • Evidence specific to your hardship (redundancy letter, medical bills, mortgage arrears notice, etc.)
- • Budget showing income vs. expenses
Complete the Application Form
Be thorough and honest. Explain your situation clearly, specify the amount you need and why, and describe what steps you've taken to address the situation (e.g., sought budgeting advice, applied for benefits).
Submit Your Application
Submit via your provider's preferred method (online portal, email, or post). Keep copies of everything you submit.
Wait for Assessment (5-15 Business Days)
Your provider will review your application. They may contact you for additional information or clarification. Be responsive to any requests.
Receive Decision
If approved, your provider will advise the amount and arrange payment. If declined, you'll receive an explanation and may be able to appeal or provide additional evidence.
How Much Can You Withdraw?
You can only withdraw the amount necessary to address your specific hardship. Your provider determines the appropriate amount based on:
Your Demonstrated Need
The specific costs you need to cover (e.g., 3 months of mortgage arrears, medical bill amount).
Your KiwiSaver Balance
You can't withdraw more than you have. If your balance is small, that limits the maximum withdrawal.
Other Resources Available
If you have other assets or income sources that could cover the expense, your application may be reduced or declined.
Note: You cannot request a "top-up" for general financial improvement. The withdrawal must be tied to a specific, demonstrable hardship need.
Tips for a Successful Application
Be Thorough with Documentation
Provide more evidence than you think is needed. Bank statements, bills, quotes, and official letters strengthen your case.
Show You've Tried Other Options
Demonstrate that you've explored alternatives: applied for benefits, sought budgeting help, contacted creditors for payment plans.
Be Specific About the Amount
Request a specific amount tied to documented expenses. "I need $5,000 to cover 3 months of rent arrears" is better than "I need money for rent."
Explain Your Circumstances Clearly
Write a clear explanation of how you got into this situation and how the withdrawal will help resolve it.
Get Free Help
A free financial mentor from FinCap or MoneyTalks can help you prepare your application and budget.
What Happens After Withdrawal?
Your KiwiSaver Continues
A hardship withdrawal doesn't close your account. If you're employed, contributions continue. Your remaining balance keeps growing.
Tax Implications
Hardship withdrawals are generally not taxed as the money has already been taxed within your KiwiSaver fund. However, consult IRD if you have specific tax questions.
Future Withdrawals
You can apply for hardship withdrawal again in the future if new circumstances arise. Each application is assessed independently.
Impact on Retirement
Every dollar withdrawn now is a dollar (plus decades of compound growth) that won't be there at retirement. Consider the long-term impact and try to rebuild your savings when your situation improves.
Alternatives to Consider First
Before withdrawing KiwiSaver, explore these options:
Work and Income Benefits
Emergency benefits, accommodation supplements, and special needs grants may be available.
Free Financial Mentoring
FinCap provides free budgeting services that may help you manage without withdrawing.
Negotiate with Creditors
Banks, landlords, and utility companies often have hardship arrangements. Ask before assuming you must withdraw.
Community Organisations
Food banks, budget services, and charities can help reduce immediate pressure.
KiwiSaver Contributions Holiday
If you need more take-home pay, you can apply for a contributions holiday to stop deductions temporarily.
Frequently Asked Questions
Can my application be declined?
Yes. Common reasons include: not meeting the legal criteria, having other assets or income that could cover expenses, insufficient evidence, or the amount requested being excessive. You can appeal or provide additional evidence.
Can I withdraw to pay off credit card debt?
Generally no, unless the debt is directly causing you to be unable to meet minimum living expenses. Consumer debt alone doesn't qualify as significant financial hardship.
How quickly will I receive the money?
Once approved, funds are typically paid within 5-10 business days. If you need urgent assistance, explain this to your provider—some have expedited processes.
Will withdrawing affect my benefits?
It may. KiwiSaver withdrawals can be counted as income for benefit purposes. Contact Work and Income before withdrawing to understand the impact on your specific situation.
Can I withdraw for someone else's hardship?
Only if they are your dependent (e.g., child, spouse/partner you support). You cannot withdraw to help a friend or non-dependent family member.
Need More Help?
If you're struggling financially, free help is available. You don't have to navigate this alone.
Related Articles
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KiwiSaver Basics
Complete guide to how KiwiSaver works in New Zealand.
How to Switch Providers
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KiwiSaver vs Mortgage
Should you contribute more to KiwiSaver or pay off your mortgage?