KiwiSaver savings are your money – but not yours to spend yet

Atsushi was going through some difficult times when he came to FSCL. Over the past month, not only had he been made redundant, but he had crashed his car too, completely wrecking it. He was having trouble meeting his mortgage payments and getting to job interviews, so he was looking for ways to make it through this temporary rough patch.

Atsushi had around $40,000 in his KiwiSaver account, so he applied to his bank, the KiwiSaver fund provider, to make a withdrawal. He wanted to withdraw his entire $40,000 balance so he could purchase a new car and pay off a chunk of his mortgage to reduce his minimum payments. Atsushi also said he needed to provide financial assistance to his mother, who was living in Japan.

Atsushi was very surprised when his KiwiSaver trustee only agreed to release $11,000.



The trustee company said that it could release some funds to help Atsushi meet his minimum mortgage payments, but that it could not help him pay down the balance of his mortgage.

The trustee also said it was not satisfied that Atsushi needed a new car. Atsushi said he needed the car to drive to job interviews in the city and to drop his daughter off at kindergarten. However, the trustee thought that there were public transport options available.

Finally, the trustee had looked at the money Atsushi was paying to his mother. Atsushi had been paying for plane tickets each year, so his mother could come and visit Atsushi and his children. The trustee company said this was not a minimum living cost for Atsushi.

Atsushi disagreed with all of the points raised by the trustee. He said he owned the money in his KiwiSaver, and it was ridiculous that he was not able to withdraw funds to help him in such a difficult time.



We reviewed Atsushi’s complaint, and found that the trustee had made a reasonable decision. We explained to Atsushi that the money in his KiwiSaver account did belong to him, but that it was only accessible when he retired or earlier, in very limited, exceptional circumstances.

In this case, Atsushi was entitled to access some funds from his KiwiSaver, as he was suffering significant financial hardship. However, the KiwiSaver trustee could only release the bare minimum necessary to cover Atsushi’s living expenses.


Only minimum mortgage payments can be covered with KiwiSaver funds

When we review a trustee’s decision about a KiwiSaver withdrawal application, we look at Workplace Savings NZ’s significant financial hardship processing guidelines. These guidelines set out best practice guidelines for KiwiSaver trustees when assessing withdrawal applications.

The guidelines state that trustees should only release enough funds to cover the minimum payments on loans. KiwiSaver withdrawals are supposed to cover only the minimum expenses, just until the KiwiSaver member’s circumstances improve. KiwiSaver funds cannot be used to repay the balance of a loan, even if it would improve the KiwiSaver member’s overall financial position.

So, we found that the trustee was acting reasonably when it refused to help pay down the balance of Atsushi’s mortgage.


Atsushi didn’t need a car for interviews or transporting his daughter

We agreed with the trustee’s decision not to release funds for Atsushi’s new car. There were other transport options available, so buying a car was not a minimum living expense for Atsushi.

Atsushi needed to drop off his daughter at kindergarten every morning,  but the kindergarten was only a fifteen minute walk from his home. In our view, it was reasonable for Atsushi to walk his daughter there in the morning.

And there was a bus stop only a five-minute walk from Atsushi’s home. There were regular buses which could take Atsushi into the city for interviews.

We agreed that a car would be useful and convenient for Atsushi, but did not think it was a minimum living expense.


Mother’s trip to New Zealand was not a minimum living expense

We did not think the trustee was required to release funds to cover Atsushi’s mother’s trip to New Zealand. We understood that it would be difficult for Atsushi’s mother to be told she could not visit her grandchildren, but we did not consider the trip a minimum living expense. Atsushi’s mother would need to wait until Atsushi’s financial situation improved before she could travel to New Zealand.



Although he wasn’t pleased, Atsushi accepted our decision. Shortly before we issued our decision, he had been offered a job, so his financial situation had improved enough for him to purchase a car.


Insights for consumers

If you are in a difficult financial situation, it can be hard to see your KiwiSaver balance sitting out of reach. It is useful to know that you can access these funds when it is absolutely necessary, but it is important to know that the funds are not there for you to use freely. Trustees are only able to release the absolute minimum necessary to cover your living expenses until your situation improves.