When money’s tight, it can be tempting to think about withdrawing your KiwiSaver funds. With inflation, rising interest rates, and the onset of winter, many of us feel the pressure of stretching our dollars. Your KiwiSaver balance may be catching your eye, your money sitting there untouched and tempting.
So, can you withdraw your KiwiSaver cash right now? Maybe, but possibly not. There is strict criteria you’ll need to meet - and for good reason.
When you can withdraw your KiwiSaver funds
KiwiSaver is meant to be a long-term investment for retirement. It was designed to be an easy way to get Kiwis to save an income for their retired years. That said, there are specific circumstances under which you can withdraw some or all of your KiwiSaver funds.
You can withdraw funds if:
● You are buying your first home
● You are suffering financial hardship
● You are seriously ill
● You have permanently emigrated and have been living abroad (excluding Australia) for at least a year
● You have reached retirement age (in NZ this is when you are entitled to NZ Superannuation, currently age 65)
Let’s take a closer look at the ins and outs of each of these withdrawal situations.
I’m buying my first home
You can withdraw your KiwiSaver fund for a deposit on your first home if you meet certain qualifications.
If you want to use your KiwiSaver fund for a first home deposit, the first thing to do is make sure you are in the right KiwiSaver fund. When withdrawing your funds soon, it is generally best to be in a lower-risk fund, such as a conservative fund. This is because your balance is likely to remain relatively stable even if the market drops, so you can have more confidence when estimating your deposit.
There are a few things to keep in mind when withdrawing your KiwiSaver fund for a first home deposit:
You’ll need a lawyer. They receive your KiwiSaver fund and transfer it on your behalf. The withdrawal process can take a week or more, so get this underway well before your settlement date. Note that you cannot make the withdrawal after settlement - it has to be arranged before.
You need to notify your provider. They will need proof of identity from you and a copy of the sale and purchase agreement for the home you are buying. They will also need a letter from your lawyer and a deposit slip for your lawyer’s trust account to which the payment will be made.
The BetterSaver team is here to help. Let us know when you are looking to buy your first home so we can ensure you are invested in an appropriate fund. We will also liaise with your provider to help with any required documentation. We like to make things easy!
You can withdraw your entire fund, except you must leave $1,000 in your KiwiSaver account.
I can’t pay my bills
If you are struggling to make ends meet, you might be able to make a financial hardship withdrawal, but the criteria are strict. It should be considered a last resort when you are really desperate. Think of it as borrowing from your future self - you are just pushing the problem to a later date.
You may be eligible if:
● You can’t meet minimum living expenses
● You can’t afford your home loan repayments and your lender is taking action against you
● You have a serious illness causing financial hardship
● You need to pay funeral costs for a close family member
Minimum living expenses mean basic needs such as food, rent, utilities and basic transport costs. It does not include debt payments (no credit card or Buy Now Pay Later schemes), court costs or fines, or any “extras” like your Spotify subscription.
Your provider will require solid proof of your hardship: bank statements, payslips, expenses, and any demands made on you (such as eviction notices). Once you have submitted your request, it takes time for your provider to consider it, and they may ask for further evidence. Plan for weeks, not days. Even then, they may still say no.
If your provider grants your request, they may not give you all your KiwiSaver money, only enough to alleviate the hardship.
I have suffered a serious illness or injury
Emphasis on serious. Your illness or disability needs to be extreme - as in totally and permanently unable to work.
You will have to submit medical proof, including a declaration from your doctor. As long as you have been a KiwiSaver member longer than two months, this goes to your provider (for two months or less, apply through IRD.)
If approved, you may be able to withdraw your entire fund - your contributions, employer contributions, government contributions, and investment returns. Your provider will determine the amount you can withdraw.
I’m leaving on a jet plane
So you have decided NZ isn’t for you and want to take your KiwiSaver fund with you.
You can apply to withdraw your KiwiSaver fund after you have lived overseas for one year - unless by ‘overseas’ you mean Australia. If you move to Australia, you can transfer your funds to an Australian superannuation scheme or leave your funds to continue growing in KiwiSaver.
For anywhere else in the world, you can submit an application for withdrawal including proof such as evidence of permanent residency, letters from employers, rental or sale and purchase of property agreements, and bank statements.
You can withdraw most of your funds - you just won’t be able to take the government contributions you have earned.
I’m finally free
You have made it to the milestone age of 65 - congrats. You can withdraw your entire KiwiSaver fund if you wish!
You have several options once you reach 65:
Take a lump-sum withdrawal of all or some of your funds
Set up a regular withdrawal to keep a steady income flowing
Keep contributing and growing your KiwiSaver fund to use at a later time
When you are ready, submit a withdrawal request to your provider. They will run you through some steps to verify your identity and ownership of the account to protect you from fraud.
If you want to take regular withdrawals, the timing depends on what your provider offers, be it monthly, fortnightly, or weekly. Read our tips for how to make your KiwiSaver last during your retired years.
Know what you’re getting into
There are a couple more things to be aware of when making a KiwiSaver withdrawal.
First, there is a withdrawal process. The investment units you hold in your KiwiSaver account will be cashed up. This may incur a small amount of tax and a transaction fee or buy/sell margin applied to the sale. The cash will be transferred from your KiwiSaver’s bank account to yours (unless you are buying a home, then it goes to your lawyer’s trust account). The withdrawal process will usually take about a week after approval.
Second, KiwiSaver withdrawals are strict. If you don’t meet the eligibility criteria, there is little point in applying. The government makes the rules and your provider legally has to abide by them.
Lastly, don’t stress. Our team is here to help. We can chat about your plans and make sure you have a strategy. We stay in touch with our clients through the withdrawal process.
KiwiSaver can be tough to navigate, but it doesn’t have to be. Let BetterSaver guide you to a better fund and assist you with every step of your KiwiSaver journey.