In December 2023, Keola applied for an early withdrawal from his KiwiSaver due to significant financial hardship. Keola had been working on an investment project converting a commercial office into a residential apartment, but it had taken longer than expected and had used up his funding. Keola needed his KiwiSaver money to finish his project. His KiwiSaver supervisor declined his application.
Keola complained to FSCL.
Dispute
Keola complained that his KiwiSaver supervisor incorrectly assessed his hardship because they didn’t consider his investment property expenses, which made his monthly costs $2,000 more than his monthly income. Keola said that the KiwiSaver regulations were too restrictive, and he asked FSCL to make recommendations to the Government for a process that made it easier to access the money.
Keola’s KiwiSaver supervisor said that Keola was able to meet his minimum expenses, meaning he wasn’t suffering from financial hardship. They didn’t include the costs of his investment project because the property wasn’t Keola’s primary residence.
Review
We explained to Keola that if we found that his supervisor hadn’t correctly assessed his hardship, then we could ask them to reconsider his application, but we couldn’t require them to approve it as approval is at the supervisor’s discretion.
We found that the supervisor’s decision to decline Keola’s application was reasonable. Releasing the funds would help improve Keola’s situation by letting him complete his investment project, but he was still able to meet his minimum expenses (for example food, clothing, rent, and transport) without his KiwiSaver money. This meant that he didn’t meet the significant hardship threshold. Business expenses or expenses relating to his investment property were not ‘minimum’ expenses.
We explained to Keola that we could not change the KiwiSaver rules and regulations. We suggested that if he would like to make recommendations for change, he should contact the policy makers such as MBIE (Ministry of Business, Innovation and Employment) or his local MP.
Resolution
We explained that the KiwiSaver supervisor’s decision was reasonable, and Keola’s complaint was discontinued.
Insights
The KiwiSaver Act 2006 provides limited circumstances where a withdrawal can be made. For significant hardship applications, the supervisor must be satisfied that the applicant will be unable to continue to meet their minimum expenses if their funds aren’t released. The difficulty in accessing funds aligns with the purpose of the KiwiSaver scheme, which is to ensure that Kiwis save for their retirement.
