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Significant financial hardship not significant enough

The story 

Manoj submitted an application to his KiwiSaver scheme to withdraw funds on the grounds of significant financial hardship.  Manoj and his wife, Sarita, bought a house in India, intending to use it as their retirement home.  Manoj and Sarita obtained a loan from an Indian bank to buy the house. Unfortunately interest rates in India increased and Manoj and Sarita said they could not afford: 

  • health and life insurance for themselves 
  • insurance for their pet 
  • to install a heat pump and separate water lines. 

Although they had money in a savings account Manoj explained this was needed to pay for their annual visit to India to visit family. 



Manoj did not accept his KiwiSaver scheme trustee’s decision to decline his application to withdraw funds on the grounds of significant financial hardship and asked FSCL to review the decision. 


FSCL’s review 

We explained KiwiSaver was introduced to help people save for their retirement.  In general funds are ‘locked in’ until the member qualifies for NZ Super, currently 65 years of age.  Funds cannot be accessed before that date, unless a member is: 

  • buying their first home 
  • moving permanently overseas 
  • suffering significant financial hardship or 
  • seriously ill. 

Clause 11 of Schedule 1 of the KiwiSaver Act 2006 gives guidance to trustees about what is considered to be significant financial hardship for the purposes of withdrawing funds from the KiwiSaver scheme.  Significant financial hardship includes situations where the member is unable to: 

  • meet minimum living expenses 
  • meet mortgage repayments, resulting in a potential mortgagee sale 
  • pay for medical treatment for the applicant, or a family member dependent on the applicant 
  • funeral costs for a dependent family member 
  • or if the member is suffering from a serious illness. 



We explained, and Manoj accepted, that his situation did not amount to significant financial hardship as contemplated by the KiwiSaver Act 2006.  Manoj withdrew his complaint.