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Tina is a solo mum of a teenager and had been using her credit card to pay for their day to day living costs, including food. Although Tina could afford the credit card minimum monthly payments, her debt was increasing, and she felt as though her financial situation was getting out of control.

Tina applied to withdraw funds from her KiwiSaver account on the grounds of significant financial hardship. Although Tina’s weekly budget showed a small surplus, she wanted to use her KiwiSaver to repay her debt. Tina explained that if she could clear her debt, she would be able to use the money she was currently paying towards her minimum monthly repayments to cover her living expenses.

Tina’s KiwiSaver supervisor declined her application explaining that they do not release money to repay debt. However, during their review, the supervisor discovered that a loan in Tina’s brother’s name, secured by her car, was in default. The lender was about to repossess Tina’s car. The supervisor agreed to release money to repay the loan arrears to prevent the repossession. Without a car Tina would not be able to get to work and her financial situation would deteriorate further.

Although Tina appreciated the money to repay the loan arrears, she complained to FSCL that the supervisor had not released money to repay her debt.


In Tina’s mind the refusal to release money to repay debt made no sense. The debt was contributing to Tina’s financial hardship and, if she was able to repay the debt, her financial situation would be more manageable.

The supervisor maintained their position that they were unable to release funds to repay debt and, as Tina’s budget was in surplus, they could not release any more money.


The law that allows the supervisor to release money to Tina is found in Schedule 1 of the KiwiSaver Act 2006 (the Act). To be able to release money to Tina, the supervisor needs to be “reasonably satisfied that a member is suffering or is likely to suffer from significant financial hardship…”. The Act goes on to explain what will be considered significant financial hardship, for example, if you are unable to meet your minimum living expenses.

Because Tina’s budget was in surplus and the Act does not allow the supervisor to release money to repay a debt, we were satisfied the supervisor had not made a mistake when assessing Tina’s application. We advised Tina that we were unable to ask the supervisor to reconsider her application.


Tina was very disappointed with our decision. Tina explained that she could not afford to buy her daughter a school uniform or replace her washing machine that was broken. Tina also said that she had used her credit card to buy a bed because her partner had recently left her, taking the bed with him.

We contacted the supervisor again and the supervisor said they would likely release money to pay for the school uniform, on receipt of a quote, and contribute $600 to a new washing machine. Because Tina had access to an alternative source of funds for the bed, they would be unlikely to retrospectively release money for this purpose.

We passed this information along to Tina who thanked us for our help and discontinued her complaint.

Insights for consumers

KiwiSaver funds are intended to be used for your retirement, so the government has made it difficult to access money early. The Act sets out very limited circumstances where you can access your money before you reach 65 years of age, and one of those is if you are suffering, or likely to suffer, significant financial hardship.

If your budget is in deficit or if you have an unexpected expense that fits within the minimum living expense criteria with no other means to pay for it, your supervisor may release money on significant financial hardship grounds. However, it is very unlikely that your supervisor will release money to repay debt because debt, of itself, is not considered to cause significant financial hardship.