KiwiSaver early withdrawal figures jump to an all-time monthly high of $182 million

Kiwisaver data / news

KiwiSaver early withdrawals for home ownership and financial hardship withdrawals jump as people withdraw over $182 million from their KiwiSaver in May

24th Jun 24, 12:56pm by Ella Somers

KiwiSaver early withdrawal figures reached an all-time high in the month of May, with almost $182.5 million withdrawn in financial hardship and home ownership early withdrawals.

According to Inland Revenue, which tracks monthly KiwiSaver statistics, 7,640 KiwiSaver members withdrew $182,479,449 in May, $23.2 million more than was withdrawn in early KiwiSaver withdrawals during April.

From the May headline figure, 3,730 people withdrew $149.8 million because of home ownership and 3,910 people withdrew $32.7 million because of financial hardship.

Home ownership withdrawals in May were up $20.7 million compared to April and financial hardship withdrawals rose $2.5 million in the same period.

In a recent paper on recommended KiwiSaver improvements, the Retirement Commission said only a “very small portion” of KiwiSaver members were making first home and financial hardship withdrawals.

“The ability to access funds for a first home deposit encourages younger people to participate in the scheme, and homeownership has the potential to contribute to financial wellbeing in retirement,” the report said.

“We believe that the current significant financial hardship withdrawal process is fulfilling the legislative purpose of allowing access to funds in specific circumstances to meet immediate financial needs, but at the same time applying an intentionally high hurdle to ensure that financial wellbeing, particularly in retirement, is maintained where possible.”

The Commission said in the report that only 1% of members on average each year have withdrawn funds for first home deposits.

But it noted that first home withdrawals can reduce the number of years that KiwiSaver final balances are expected to last by about 40%.

“However, it should be noted that those that do withdraw for first home purchase are likely to be in a significantly different financial position in retirement from those who do not,” the Commission said in the report.

The latest Inland Revenue data shows KiwiSaver providers received over $853 million in May which is up only slightly from the $847 million received in April.

As of May 2024, Inland Revenue said there were over 3,355,193 members enrolled in KiwiSaver with 3,686 new members joining that month.

By KiwiSaver scheme entry method, 660,781 members were in default allocated schemes, 214,503 were in employer nominated schemes and 2,469,199 had actively chosen their KiwiSaver scheme.

Across the age bands, the 25-34 category currently has the largest number of members with 743,109, followed by the 35-44 category which has 699,383 members.

The number of non-active members – which Inland Revenue tracks through those who opt out of the scheme as well as those who close their accounts – came to 744,461 in May.

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19 Comments

by HouseMouse | 24th Jun 24, 2:59pm 1719197942

I have a friend who has been in real financial distress. The process of applying for withdrawal on the basis of financial distress was extremely trying and distressful! He actually gave up and is really in a bad place overall, not just financially.

There should be a high bar for withdrawing funds, but is it too high?

by Nifty1 | 24th Jun 24, 3:22pm 1719199352

Sounds like the bar is set higher with some providers than others...

by IT GUY | 24th Jun 24, 3:42pm 1719200568

yes, find out who is easiest and move, you can then withdraw within a month, not all but some

by pacifica | 24th Jun 24, 3:48pm 1719200909

Many do give up, many don't have physical access to branches to be able to. I helped advocate for one fella that needed three specialist reports... it took them over 2 years, in that time they had been made homeless and were very suicidal with multiple attempts. There were no bank branches nearby them that they could access either and yet physical drop off at a specialized branch was mandatory. Yes the bar is set too high and yes many will face deadly medical conditions before they see their funds. At which point their families cannot even use the funds for funeral costs. Be very wary of anyone advertising kiwisaver. Those promoting it are in it to strip money from the accounts in fees, or incredibly ignorant and inept in understanding normal life events and living conditions including what is best for retirement is survival to retirement (first and foremost).

by ChrisOfNoFame | 24th Jun 24, 3:50pm 1719201035

HM, Was it a bank?

by HouseMouse | 24th Jun 24, 4:29pm 1719203373

Yep

by hootenany | 25th Jun 24, 12:55pm 1719276914

Also kiwisaver hardship withdraws only cover arrears and you may be left with debt you still can't pay, while loosing money that is protected from insolvency in kiwi saver, if you can't manage pay after the main benefit is to your creditors.

by Zwifter | 24th Jun 24, 3:56pm 1719201393

Never put my money in KiwiSaver from the get go as I just saw it as bad news and someone else controlling your money. You were better off just putting it in a savings account but you had to have the ability not to spend it, which at the end of the day is most peoples problem. The amount of money pouring out is an exact measure of the state of the economy, things are getting bad out there.

by Nifty1 | 24th Jun 24, 4:37pm 1719203857

Better off? How about that free money from govt + employer contribution (if employee)... how are you getting that with your savings account?

by redcows1 | 24th Jun 24, 6:03pm 1719208981

Annualised the figure is above $2b being pumped back to the economy. Not a good sign at all.

by Small Kev | 24th Jun 24, 11:56pm 1719230165

Once the money is in the kiwisaver it is not really your money anymore…

by ChrisOfNoFame | 25th Jun 24, 8:11am 1719259905

"Never put my money in KiwiSaver from the get go as I just saw it as bad news and someone else controlling your money. "

More fool you.

Have you worked out how much 'free' money you've missed out on each year by not depositing the minimum each year - 1,042.86 - for the free government top-up of $521.43? (Not to mention the $1000 'kick-start' that the National Party, under the Key government, canned to give tax cuts to rich people - while also raising GST when the promised they wouldn't.)

"You were better off just putting it in a savings account ..."

Zwifter, your maths is clearly awful! Back to primary school for you. (Another none too bright kiwi.)

by Zachary Smith | 25th Jun 24, 8:27am 1719260833

Zwifter is not young either so would be able to get his hands on that free money sooner than most.

by jeremyr | 25th Jun 24, 11:01am 1719270061

521 bucks is pathetic. Not even slightly worth it. If there were actual incentives and more ability to manage and control the fund. But to give someone the authority to control your money and take fees from it for 30-40 years for the sake of 521 dollars a year is really a waste of time.

by Zachary Smith | 25th Jun 24, 4:34pm 1719290065

I've been really impressed with my Kiwisaver and glad I am part of it. Surely an investment where you only have to put in $1046 a year for a guaranteed $521 top up plus get the investment gains as well is too good an opportunity to miss. Small money to you, maybe, but something most ordinary people without your skills should do.

by jeremyr | 25th Jun 24, 4:58pm 1719291508

Yes, I am sure it is good for some people. I have not done the calculations, but if one was to put in the minimum then 40 years of 1000 per year plus the 500 does not add up to very much even with compounding interest. There needs to be a proper incentive to use KiwiSaver......and 10 bucks a week and no control ain't it (not for me anyway). People need to see the big picture, and that is on retirement they are going to need (depending on their income level) 50-100% of their final salary in returns per annum on their KiwiSaver balance. So, they are going to need 700K-1M at least. Right now average KS balance is something like 20K per person.

by Zachary Smith | 25th Jun 24, 5:27pm 1719293245

If someone just put in the minimum without employer contributions, so $1046 per year and received an additional $514 from the government and if the investment returned on average 5% there should be 200K there after 40 years.

Of course most will be earning a wage and getting employer contributions as well. A couple both working, even on and off over the years, should have a pretty penny in their KiwiSaver accounts upon retirement. If they have a mortgage free house, both get superannuation and have their KiwiSaver it should be sufficient.

by makechange | 25th Jun 24, 7:13am 1719256436

Had a friend try to access their Kiwisaver whilst under financial hardship recently. They were told that they could access $25 x 13 weeks' = $325, which was less than their weekly shortfall. They had to up their insurance excesses, get rid of income protection insurance, change diet, stop planning for an annual family visit to Hawke's Bay, expand a side hustle into a part time job on top of existing family commitments to even get close to even. Very stressful times for them.

They were also advised to drop Kiwisaver contributions and charitable donations but didn't.

I feel for those who have even less options available than these people.

by Zachary Smith | 25th Jun 24, 8:25am 1719260709

They should drop the charitable donations surely? Sounds like too much being spent on insurance too. Continuing to contribute to Kiwisaver while withdrawing from Kiwisaver goes against the spirit of the whole thing I would have thought.