Exhaust other options first, withdrawing KiwiSavers told

KiwiSaver members continue to turn to their investments to help them out of financial hardship, and one organisation that handles applications says people need to look at other options first.

Inland Revenue data shows that 5090 members withdrew their savings due to financial hardship in May, up from 4940 in May 2025.

They withdrew a total of $43.9 million, down from $44.2m a year earlier.

Public Trust general manager of trustee services David Callanan said there had been a trend of increasing numbers of applications year-on-year but the average withdrawal amount had stayed stable at between $8500 and $9000.

"Hardship application volumes across the industry exceeded 58,000 in 2025 double the number recorded just two years ago. In the five months for 2026 far, IRD data shows approximately 24,500 financial hardship applications, compared to 22,000 for the same period last year."

Simplicity economist Shamubeel Eaqub said the average size of hardship withdrawals had got about as high as it could go. "I think that's the reasonable 13-week amount that people can claim … I think people are maxing out on that."

Financial coach Shula Newland said there was no indication yet that application numbers were easing.

She said the process was onerous for many people.

"There is some providers that go through Debtfix to process the applications and they are pretty strict about making people do hardship application on loans before doing KiwiSaver hardship. But the thing is when you are under lots of stress, doing a whole lot of hardship applications for lenders is pretty overwhelming. I know of someone that changed KiwiSaver providers, so that it was easier to get money."

Christine Liggins, of Debtfix, said she received 456 referrals from KiwiSaver providers in May, up from 400 last year. Of those, 221 turned into withdrawals, up from 123 last year.

She said it was a requirement of the process that people had exhausted all their other options first, including asking lenders for hardship accommodations on loans. Lenders are required to consider options for many people who are in unforeseen hardship.

Eaqub said if the scheme was made compulsory, it would need to become easier to make a hardship withdrawal. "We need to think about KiwiSaver not just as a retirement scheme but as a whole of life saving scheme which it already is. Then we would ensure the access to money for hardship is not nearly as torturous as it is today.

"Why should you suffer today to have a more comfortable retirement much much later?"

He said if people were being placed in to KiwiSaver from birth, questions would be asked about why they couldn't then access the money for education, or to start a business.

"I think we should be looking more towards Singapore in terms of that whole-of-life regimes where they do allow you to kind of borrow money or take money out for health, for education and all those other bits and pieces. It becomes a saving scheme that changes with your life stages."

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