Insights for consumers
The KiwiSaver Act 2006 provides limited circumstances for a withdrawal on financial hardship grounds. The KiwiSaver supervisor must be reasonably satisfied that the applicant is suffering, or is likely to suffer from, significant financial hardship. This is a high threshold, which a possibility of redundancy does not meet. This may change once redundancy has occurred.
KiwiSaver provider: is the organisation that manages and invests your KiwiSaver funds (the fund manager). They receive withdrawal applications, but do not make decisions on them.
KiwiSaver supervisor: makes sure the provider follows all the rules. There are only five supervisors in NZ who oversee all the different KiwiSaver funds. They make the decisions on withdrawal applications.
Ronald is notified of a possible redundancy
In November 2025, Ronald’s employer advised him of a proposed organisational change that could result in the disestablishment of certain roles within the company. Ronald was invited to attend a consultation meeting and provide feedback on the proposal.
Ronald applies to withdraw KiwiSaver funds
Citing the stress and financial uncertainty arising from his potential redundancy, Ronald applied to withdraw $8,000 from his KiwiSaver account on financial hardship grounds. The supervisor declined the application, saying that Ronald was not currently experiencing financial hardship. It was also not clear whether he would do so in the future. The supervisor indicated they would reconsider the application if Ronald was made redundant.
Can you withdraw KiwiSaver for possible redundancy?
Ronald complained to FSCL, saying it was unreasonable for the supervisor to prevent him from withdrawing funds to plan for the financial consequences of his possible redundancy. He considered it unfair that he would need to wait until hardship had materialised before becoming eligible to withdraw funds.
What was FSCL’s view?
While we understood Ronald’s point of view, we could not say the supervisor’s decision was wrong or unreasonable. We explained to Ronald that the test for a financial hardship withdrawal is very high. Under the KiwiSaver Act, the supervisor has to be reasonably satisfied that an applicant is suffering from, or likely to suffer from, significant financial hardship.
In this case, the employer had not made a final decision regarding Ronald’s job, and there was no certainty that Ronald would be made redundant. As a result, the supervisor could not reasonably conclude that Ronald was likely to experience significant financial hardship.
How did FSCL suggest that the complaint should be resolved?
We suggested to Ronald that he discontinue his complaint, which he did.
Robert was later made redundant. He made a further hardship application, and the supervisor approved a release of KiwiSaver funds under the serious financial hardship grounds.
