Call us: 0800 347 257

Withdrawal of full amount of KiwiSaver contributions initially declined, and then approved. 

Josephine’s business ran into a difficult period in September 2022. She applied to her KiwiSaver provider to withdraw funds to cover her expenses for the next three months.  Josephine explained she would not be receiving an income over that period. 

Josephine’s withdrawal application was forwarded to the supervisor of her KiwiSaver provider.  At law, it is the KiwiSaver fund supervisor who makes the decisions about withdrawals, including how much can be withdrawn. The provider supplies the information in support of the application. 

The provider supplied the supervisor with Josephine’s budget and bank statements. They also told the supervisor that it appeared that Josephine’s needs exceeded her available KiwiSaver balance of $12,000, and so they recommended full withdrawal. 

The supervisor immediately contacted the provider to say that they could see Josephine was receiving an income from her business into her personal account.  The provider responded with an amended budget, which took into account amounts that had been transferred from Josephine’s business account to her personal account.  The provider also amended their recommendation from a full withdrawal to a partial withdrawal of $7,800. 

The supervisor approved the partial withdrawal, and the provider paid $7,800 to Josephine. 

Josephine was unhappy with the decision, and said the money was not enough to meet all her expenses over the three-month period.  She complained to the supervisor.

The supervisor was willing to review Josephine’s situation if Josephine provided confirmation from an accountant that her projected earnings over the next three months would be nil. Josephine could not afford to engage an accountant. The supervisor then contacted the provider and asked them to clarify the nature of the deposits to her personal account from the business.

The provider then submitted a new application, along with further supporting information, which included bank statements for October 2022, a cashflow forecast for the business, and a revised budget. The October statements showed that Josephine had not received income for the past four weeks. The new information also confirmed that Josephine needed additional funds to cover her expenses. The provider recommended full withdrawal, and the supervisor approved the recommendation, and released the rest of the funds to Josephine.

Josephine remained concerned about the withdrawal process, and complained to FSCL.


Josephine considered that the supervisor should have accepted the provider’s initial recommendation for full withdrawal. She also thought the supervisor should have accepted her word that she would not be receiving an income for three months. Further, Josephine thought it was unreasonable for the supervisor to expect her to spend money on accountant’s fees when she was in financial difficulty.

The supervisor considered they had followed standard industry process in assessing the application.


We agreed that, on the face of things, the information the supervisor had for the first application showed that Josephine was receiving an income. However, once they received evidence from the provider that she was not receiving an income, they were able to approve the full withdrawal.

We found the supervisor’s actions were reasonable, having regard to the KiwiSaver Act 2006 and industry guidelines (the Financial Services Council NZ’s significant financial hardship processing guidelines). A supervisor is required to carefully examine and verify an applicant’s financial situation, including their income, and it was appropriate for the supervisor to have done so in Josephine’s case.

Further, we did not think the supervisor had done anything wrong in asking for Josephine’s projected earnings to be confirmed by an accountant. It is standard industry practice to seek confirmation of future earnings from an accountant when the applicant is self-employed. When Josephine said she could not afford an accountant, the supervisor sought information from the provider, who was able to confirm her income situation. The information allowed the supervisor to be reasonably satisfied that Josephine was not receiving an income.  


We suggested that Josephine discontinue her complaint. Josephine asked us to reconsider our position. We reviewed the complaint, and issued a decision confirming that we considered the supervisor had acted reasonably and in accord with the law and industry practice. 

Insights for consumers

The threshold for a KiwiSaver withdrawal on the grounds of significant financial hardship is very high. A member can only make a withdrawal on these grounds if the supervisor is “reasonably satisfied that a member is suffering or likely to suffer from significant financial hardship”. For this reason, a supervisor will carefully examine an applicant’s financial situation, and verify the information received, before allowing any withdrawal.