KiwiSaver is an investment for your financial future, but things happen and sometimes you unexpectedly 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.
Free and confidential budgeting advice is also available at moneytalks.co.nz or by calling 0800 345 123.
1. Mortgage holiday
Paying your mortgage can be one of the biggest concerns when there is economic uncertainty.
If your income has dropped, 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.
2. Temporary overdrafts
Some banks can provide their customers with temporary overdrafts of a few thousand dollars to help them to get through difficult times. Find out if it’s an option for you by contacting your bank for more information.
3. 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. Contact your bank directly to see if this might be an option for you.
4. Debt consolidation
If you have a high interest loan 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.
5. 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.
6. 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 the wage subsidy. Discuss this option with your employer and direct them to the Work and Income website.
7. Leave payment
If you fall sick due to the Covid-19, 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. For more information, please refer to the Work and Income website.
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.