Declined KiwiSaver significant financial hardship withdrawal

Richard applied to withdraw $8,000 from his KiwiSaver account, as a significant financial hardship withdrawal, to pay for orthodontic treatment for his teenage daughter. Richard said his daughter needed braces for her crooked teeth. He did not want her to have permanent damage to her teeth or for them to affect her socially.

The scheme supervisor declined Richard’s application because he had not provided information from the orthodontist about the treatment. Richard had not provided a quote to show the treatment would be $8,000 or information to show the treatment was needed for medical reasons, as opposed to being for cosmetic reasons.

Further, if Richard could show the orthodontic treatment was needed for medical reasons, he also needed to show that reasonable alternative ways of paying for the treatment had been explored and exhausted.

This meant Richard needed to show the supervisor that he had applied for a loan to pay for the treatment, with repayments funded from his $215 weekly budget surplus, and that the loan had been declined. 

Richard’s wife had nearly $13,000 in a savings account. The money had been put aside for the family to travel overseas to visit Richard’s ill sister. They wanted to travel but were unable to because of the COVID-19 pandemic.

The supervisor said the savings should be used for essential living costs or the orthodontic treatment before Richard could apply again for a significant financial hardship withdrawal, unless he could show the cost of the overseas travel would qualify under significant financial hardship grounds. Ordinarily, overseas travel does not qualify.

Richard complained to FSCL that the supervisor’s decision to decline his withdrawal was not fair.



Richard believed his withdrawal application fell within the wording on the IRD website for significant financial hardship because it was for medical treatment. He also believed it was not fair that he was expected to spend the family’s savings, set aside to visit his sister, on the treatment.

The supervisor stood by their decision to decline the application because it fell outside the rules of the KiwiSaver Act 2006 (the Act).


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 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. This includes significant financial difficulties that arise because of the cost of medical treatment for an illness or injury.

It seemed reasonable to us that the supervisor wanted information from the orthodontist to show that the treatment was needed for medical reasons, to treat an illness or injury, as opposed to being recommended for cosmetic reasons.

The Act also provides that the supervisor must be reasonably satisfied that reasonable alternative sources of funding have been explored and have been exhausted.

It seemed reasonable to us that the supervisor wanted information from Richard to show that he had explored a loan, with repayments funded from his weekly budget surplus, as an alternative way of paying for the orthodontic treatment.

It also seemed reasonable that the supervisor considered the savings a means to pay for the orthodontic treatment. While we empathised with Richard’s reasons for not wanting to spend the savings on the treatment, the savings could nevertheless have been used to pay for it.



We gave Richard our initial views on his complaint, along with a summary of the relevant provisions of the Act and guidance in 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.

Richard accepted our views and discontinued his complaint. He still believed the supervisor’s decision was not fair, but he was not going to further challenge their decision.


Insights for consumers

The purpose of KiwiSaver is to help New Zealanders save for their retirement. There are some limited circumstances where members can withdraw their savings early, including when the member is suffering significant financial hardship.

A scheme supervisor can request information from the member about the reasons for the withdrawal application, so they can be satisfied the withdrawal falls within the rules of the KiwiSaver Act 2006.

In the case of dental treatment, it is reasonable for a supervisor to ask for information from the dentist or specialist about the planned treatment so the supervisor can be satisfied the treatment is needed for medical reasons, to treat an injury or illness, as set out in the Act.

Some dental treatment is undertaken for cosmetic reasons. The cost of such treatment will not qualify for an early KiwiSaver withdrawal, even if there are understandable reasons for the treatment.