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Worried about money in the short-term?

April 7, 2020




KiwiSaver is an investment for your financial future, but with Covid-19 impacting Kiwis' lives we appreciate you may need the cash to cover day-to-day expenses.

Before you consider an early KiwiSaver withdrawal for financial hardship reasons, here are some options that can help free up cash for you now. The key thing is to weigh up your short-term and long-term goals so you can land on a plan that best meets your needs.

To find out how the changes you make now to your KiwiSaver investment will affect your retirement income, log into our Future You tool. It provides a real-life snapshot of your future retirement income and gives you the power to look at your options and make simple changes.

Remember, we’re here to help and can guide you through your options by email questions@kiwiwealth.co.nz or website live chat.

Free and confidential budgeting advice is also available at moneytalks.co.nz or by calling 0800 345 123.

1. Wage subsidy

If your employer is under financial stress and worried about how they are going to pay your wages, they may be eligible for assistance. Employers can apply for a wage subsidy of $585.80 for those people working 20 or more hours per week. There is also a subsidy of $350.00 for individuals working less than 20 hours per week.

For your employer to be eligible to receive this payment, they must be able to show that their revenue has decreased – or is expected to decrease - by at least 30 per cent as a result of the Covid-19 coronavirus. They will also need to commit to paying you at least 80 percent of your normal wage.

Please discuss this option with your employer and direct them to the Work and Income website.

2. Leave payment

If you fall sick due to the Covid-19 coronavirus, must care for a family member who is sick, or are forced to self-isolate, your employer may be eligible to have your sick leave funded by the Government.

The Government is providing employers with $585.80 for each sick staff member who would normally work 20 or more hours per week, and $350.00 for those working fewer than 20 hours per week. Employers need to pass on all this payment to affected staff and will need to reapply for it every 14 days the employee is unwell. This payment will be available for eight weeks from 17 March 2020.

For more information, please refer to the Work and Income website.

3. Mortgage holiday

Paying your mortgage can be one of the biggest concerns in times like this when there is economic uncertainty. The Government has announced banks will be able to introduce mortgage holidays of

up to 6 months for people who have had their income affected by COVID-19, removing a significant financial commitment for borrowers during a difficult time.

If your income has dropped as a result of the Covid-19 coronavirus, you may be eligible for assistance. Find out more by contacting your mortgage provider.

If you decide to take up this option, bear in mind your mortgage balance will grow, as you won't be paying interest or principal.

4. Temporary overdrafts

Some banks are providing their customers with temporary overdrafts of a few thousand dollars to help them to get through these difficult times. Find out if it’s an option for you by contacting your bank for more information.

5. Early access to term investments

If you have money tied up in a term deposit or other investments with your bank, they may be able to grant you access to it before the term is complete. Please contact your bank directly to see if this might be an option for you.

6. Debt consolidation

If you have a high interest loan and are under financial hardship from the Covid-19 coronavirus, your bank may be able to help you by consolidating your debt to reduce overall payments.

For example, if you have a high-interest credit card or vehicle debt, it might be possible to consolidate these into a loan with a lower interest rate to reduce your regular repayments. Talk to your bank to see if this option is available to you.

7. Payment restructure

Changing the duration of your loan can free up more money for you in the short-term. If you have an existing loan and will struggle to meet your regular payments, contact your bank to see if you can extend the term. This could reduce weekly repayments and make your loan more manageable.

8. Unemployment benefit

If you have recently lost your job, you should be eligible for an unemployment benefit. Work and Income consider a lot of factors when determining how much support you might be able to receive.

In addition to an out-of-work benefit, you might also be eligible for other support including the accommodation supplement. For further information, please visit the Work and Income website.

9. Reducing or suspending contribution levels

You can reduce your contributions to KiwiSaver at any time. You can also take a break from contributing if you’ve been a member for 12 months or more.

This is called a savings suspension. It can be for a minimum of three months, up to a maximum of one year. At any point, you can resume contributions.

Before you decide to reduce or put a temporary hold on your contributions please remember, if you can continue with your current contributions it’s good for your future retirement income. Eventually as markets recover, you should reap the benefits so it’s a case of weighing up your long-term needs with your short-term needs.

If you do decide to suspend your contributions, your employer contributions will also stop. Request a savings suspension on the Inland Revenue website.

The tool below will help you determine your eligibility to withdraw funds from your KiwiSaver early (KiwiSaver Significant Financial Hardship Withdrawal). If you do qualify, you'll need to provide evidence for all the claims you make in the application.

 

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