In April 2022, Ishaan completed a serious illness withdrawal application form to access the total available funds in his KiwiSaver. The funds were to be used for a bariatric (weight loss) surgery.
The application was made on the ground of serious illness under the KiwiSaver Act 2006. The Act defines “serious illness” as:
“an injury, illness, or disability that results in the member being totally and permanently unable to engage in work for which he or she is suited by reason of experience, education, or training, or any combination of those things; or that poses a serious and imminent risk of death.”
Ishaan’s excess weight meant that he had an increased risk of injuring himself or getting stuck in the tight spaces he needed to access to carry out his usual work occupation. A back injury five years prior continued to prevent Ishaan from losing weight.
In support of his application, Ishaan gave the KiwiSaver supervisor his medical practitioner’s declaration that said that Ishaan’s weight resulted in him being totally and permanently unable to engage in the work for which he was suited. Ishaan’s GP said that weight loss surgery would significantly improve Ishaan’s back pain, mental health, and general wellbeing.
The KiwiSaver supervisor declined Ishaan’s application because Ishaan would likely return to work after the surgery, and therefore the surgery was restorative rather than palliative. The supervisor said that KiwiSaver supervisors had recently concluded that weight loss surgery did not qualify for serious illness withdrawal applications because applicants regained the ability to work after surgery and the threat of death was no longer present. They suggested that Ishaan instead apply to withdraw funds under the significant financial hardship ground.
Ishaan disagreed with the KiwiSaver supervisor’s decision and complained to FSCL.
Ishaan said he had to rearrange his workload and seek help from colleagues due to his weight. The Act did not define “permanently”, but Ishaan believed that something that was permanent at one point in time could become non-permanent in future. Further, Ishaan felt that the KiwiSaver supervisors’ blanket decision to decline all serious illness withdrawal applications for weight loss surgery was unjust, as cases should be considered on their individual merits. Ishaan said that he was particularly disadvantaged by the recent change in the supervisors’ approach because he was delayed in submitting his application due to his daughter contracting COVID-19 and his GP being on leave.
The KiwiSaver supervisor said that as Ishaan’s issue would be resolved after surgery, his excess weight was not permanent, and he did not meet the requirements of serious illness under the Act.
Only the supervisor has the discretion to approve or decline an application to withdraw KiwiSaver funds. As such, we could not uphold the complaint solely on the basis that other serious illness applicants had previously been able to withdraw their KiwiSaver funds for weight loss surgery. We needed to decide whether the decision to decline the application was reasonable based on the facts of this case.
The Workplace Savings NZ Significant Financial Hardship Processing Guidelines did not specify how being totally and permanently unable to engage in work should be assessed. The guidelines did however state that to consider an application on the grounds of imminent death, death must be expected within 12 months. Ishaan’s application did not meet the grounds of serious or imminent death.
We then had to consider whether Ishaan’s weight meant that he was totally and permanently unable to engage in his work. The plain and ordinary meaning of the word “permanent” is something that remains unchanged indefinitely and for all of time. Here, Ishaan’s weight and the resulting issues were not permanent, as they could be resolved by surgery. Further, we found that Ishaan was not totally unable to engage in the work for which he was suited. Although his weight made it difficult or impossible to do some aspects of his job, Ishaan could still do many elements of his work.
The guidelines said that withdrawals for non-palliative medical treatment is generally best considered under the significant financial hardship withdrawal grounds due to the lower threshold.
We suggested that Ishaan discontinue his complaint. We were satisfied that the KiwiSaver supervisor had not made an unreasonable decision to decline the serious illness withdrawal application.
Ishaan discontinued his complaint.
Insights for consumers
Consumers should be aware that KiwiSaver withdrawal applications under the serious illness option are very likely to be declined for weight loss surgery or other non-palliative issues. Instead, consumers may be better to apply under significant financial hardship grounds.