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Business income or benefit?

After leaving her job in January 2021, Samantha fell into financial hardship. In March 2021, she applied to withdraw $7,000 from her KiwiSaver account to help meet her living expenses on the ground of significant financial hardship.

The scheme supervisor approved a partial withdrawal of $1,700 for Samantha, to meet her weekly budget deficit and help her pay for winter bedding. The supervisor said they understood Samantha was under a 13-week stand down period before becoming eligible for a benefit (as is the case when someone leaves a job voluntarily). However, since the stand down period was about to end, the supervisor said they needed more information about Samantha’s benefit entitlement to address any further budget deficit.

Samantha told the supervisor she wasn’t eligible for the jobseekers’ benefit because she couldn’t work due to her family commitments and the need for her to focus on her own business. Samantha said she wanted to use the KiwiSaver funds to help with her living expenses and pay for stock for her business, so she could get it afloat.

Samantha said she also needed funds to help with rent, a bond she had to pay in her new flat, and her insurance arrears.

The supervisor released a further $1,000 for Samantha’s rent, bond and insurance arrears. The supervisor said they couldn’t release any further funds until they had confirmation from WINZ that Samantha was ineligible for a benefit. In any case, the supervisor said they couldn’t release funds for the purpose of meeting Samantha’s business expenses.



Samantha said since she was technically unavailable for work and sometimes received income from her business, she shouldn’t be getting a jobseeker benefit. Samantha thought it would be better for her to work on her business with her KiwiSaver money rather than rely on state support to meet her living expenses.


FSCL’s role

When considering a declined KiwiSaver withdrawal, FSCL’s role is to decide whether we believe the supervisor made a mistake, for example, because they had failed to consider relevant information, or they had misapplied the KiwiSaver Act 2006 (the Act).

If we think the supervisor made a mistake, we may ask them to reconsider the withdrawal application. We cannot require them to approve an application. It is at the supervisor’s discretion to approve or decline an application.



The Act allows for significant financial hardship withdrawals if the scheme supervisor is reasonably satisfied that a member is suffering or is likely to suffer from significant financial hardship, including not being able to meet their minimum living expenses.

The Workplace Savings NZ Significant Financial Hardship Processing Guidelines (the guidelines) were produced to provide consistency between scheme supervisors when assessing significant financial hardship withdrawal applications.

The guidelines define minimum living expenses as things like basic food and groceries, accommodation, clothing, and essential transport. Business expenses are not included in the definition. So, as a starting point, we agreed with the supervisor that Samantha could only apply for KiwiSaver funds to meet her budget deficit rather than costs associated with running her business.

The Act also provides that the supervisor must be reasonably satisfied that reasonable alternative sources of funding have been explored and exhausted before allowing a KiwiSaver withdrawal. We thought it was reasonable for the supervisor to require Samantha to explore and exhaust the option of a benefit before assessing further withdrawals. From the information available on WINZ’s website, we could see that a jobseeker’s benefit was available for sole traders, whose weekly benefit entitlement would be offset by any business income. And, during the course of her complaint, it transpired that Samantha was eligible for this type of benefit and started receiving it.



We were satisfied the supervisor had correctly assessed Samantha’s application and recommended that she discontinue her complaint. Samantha accepted our decision, and we closed our investigation.


Insights for consumers

We acknowledged Samantha was in a difficult position, in wanting to support herself through her own business rather than rely on state support, but not quite having the funds to do so.

The overriding purpose of KiwiSaver is retirement savings. Consumers often feel they should be entitled to their KiwiSaver funds as required, but that is not the case. The circumstances in which funds can be released early are limited, and in the case of hardship, an early release of funds is a last resort.