Almost $173 million was withdrawn from KiwiSaver funds during March, the largest ever monthly early withdrawals from the retirement savings scheme.
Data from Inland Revenue which tracks KiwiSaver statistics shows 7,320 people withdrew a total of $172,967,101 from KiwiSaver during March. That's the most money withdrawn in a single month, topping the $171.4 million in March 2021, which was withdrawn by 7330 people. KiwiSaver was introduced in July 2007.
This year's March figure is a 31% increase from the $132 million withdrawn from KiwiSaver in February 2024, and up 59% from $108.6 million in March 2023.
Breaking down the March 2024 numbers, 3,630 people withdrew $143.7 million in the first home category, while 3,680 people withdrew almost $29.3 million in the financial hardship category.
Compared to February, the number of people who withdrew KiwiSaver money because of financial hardship rose 480 and almost $2.85 million, while first home withdrawals rose by 810 people and $37.5 million.
Compared to March 2023, the number of people making financial hardship withdrawals rose 1,020 and almost $9 million, and for first home withdrawals rose by 890 people and $54.7 million.
'Under duress'
Tom Hartmann, Personal Finance Lead at the Retirement Commission, told interest.co.nz hardship withdrawals seem concerning because "people are taking out money under duress."
From looking at financial hardship withdrawals over the last 12 months, Hartmann said there had been a 90% increase in KiwiSaver withdrawals compared to the same period a year earlier.
Between March 2023 and March 2024, $262.5 million was withdrawn from KiwiSaver because of financial hardship.
In the previous year, between March 2022 and March 2023, financial hardship withdrawals came to $136.9 million.
“If you look at the number of withdrawals over that time, there has been a 68% increase in the number of people withdrawing,” Hartmann said.
In the year to March 2024, 33,130 people withdrew KiwiSaver money because of financial hardship, up from 19,760 in the 12 months to March 2023.
Hartmann said while the statistics showed the KiwiSaver withdrawal numbers were increasing, it was important to note the average amount withdrawn per person had only increased from $6,927 to $7,923, or by 14%.
Hartmann said only 1% of KiwiSaver members had withdrawn funds for financial hardship reasons in the past year, compared to 0.6% of members in the year to March 2023.
“There is a sustained uptick, but that's to be expected with more people in [KiwiSaver] and with the funds under management growing. So it's best to track this by the average amount withdrawn per person,” he told interest.co.nz
This gave a “sense of scale” compared to the total funds under KiwiSaver management and total number of members.
As of March 2023, nearly 3.3 million New Zealanders were members of KiwiSaver, as reported by the Financial Markets Authority's annual KiwiSaver report last September. This means that nearly two-thirds of the country's population have a KiwiSaver account.
Total KiwiSaver funds under management rose $4 billion, or 4.3%, to $93.7 billion in the March 2023 year.
Loss of compound interest
Hartmann said financial hardship withdrawals needed to be a last resort due to the loss of compound interest over time.
“They're really [for], when you're having difficulty putting food on the table, making ends meet in terms of bills that you're paying now, including mortgage repayments,” he told interest.co.nz.
“So we don't want anyone to rush out, do anything hasty, but it can be an appropriate choice to make a hardship withdrawal, obviously to make ends meet. There has been that vision in the scheme since its start.
Hartmann also added that the number of people on a savings suspension continues to trend downwards – meaning less people are suspending their KiwiSaver contributions than previously.
At the end of March 2024, 86,300 people were on a savings suspension compared to 103,955 at the end of March 2023, a decrease of about 17%, he said.
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