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Dude, where’s my money?

Graham had been working for a bank for a number of years and he belonged to the bank’s staff superannuation scheme.


More recently, Graham found himself in some financial difficulties with growing debt. His debts related to school fees, rates, and insurance premiums that he needed to pay. During this time, Graham was also diagnosed with a life-threatening illness which caused him additional financial strain.


Graham was able to get a short-term overdraft to cover some of his debt. However, to relieve some his debt, he decided to make a significant hardship application to his superannuation scheme provider to access funds in his superannuation account. For this, he was required to provide the scheme with evidence of his income and liabilities.


The application stated that the applicant would be assessed as per the Kiwi Saver Significant Financial Hardship Withdrawal Guide.


The trustee for the scheme considered Graham’s application. It approved releasing some funds to pay for Graham’s outstanding insurance premiums. However, it declined to release all of the requested funds. In the trustee’s opinion, Graham had not been suffering from serious financial hardship because he had surplus income. The trustee noted that withdrawals are to be limited and incidental to the primary purpose of the scheme which is to provide benefits on retirement. Withdrawals must be for exceptional circumstances.


The trustee also noted that Graham could only apply for funds in his member account. He was not eligible to apply for funds from his employer’s contributions account.



Graham felt that the trustee’s decision was unfair and complained to FSCL. He wanted the trustee to provide him with the full amount he needed to pay his outstanding debt.



We agreed that the wording in the scheme’s trust deed was clear. Graham was only eligible to access money in his member account for hardship applications. We further agreed that it was solely the trustee’s discretion to approve hardship applications as the superannuation scheme’s primary purpose was to provide members with retirement benefits.


However, we did note the scheme’s trust deed differed from KiwiSaver in some ways. Hardship applications could only be made once a year (not every three months), which posed difficulties for someone like Graham whose health and ability to work is evolving.

We also noted that the trust deed allowed the trustee to release funds if it determined a member was suffering from hardship (as opposed to serious financial hardship).


While we agreed the trustees had full discretion to determine Graham’s eligibility under the hardship provision, it appeared Graham’s debts had not been factored into the assessment of his liabilities. In light of this, we asked whether the trustee would reconsider Graham’s application under hardship. The trustee agreed, and requested further financial information from Graham.



The trustee, in the exercise of its discretion, agreed to release all of the funds in Graham’s member account. Graham accepted the trustee’s decision as a fair outcome.


Insights for the participant and the consumer

The primary purpose of superannuation schemes is to provide members with a retirement benefit. Trustees will have full discretion to decide whether a member is eligible for an early withdrawal in exceptional circumstances. Consumers must be aware that they are not automatically entitled to access these funds as and when financial needs arise.

FSCL cannot interfere with the trustee’s decision-making. However, we were able to assist the parties in ensuring all relevant information had been factored into the trustee’s decision-making.