Jane Wrightson
Retirement Commissioner Jane Wrightson said it was understandable that many KiwiSaver members facing financial hardship were turning to their funds as a potential source of short-term income, but there was a range of options they could consider first.
“While your circumstances may qualify for withdrawal under significant financial hardship, taking out money now may severely impact your quality of life in retirement later,” says Wrightson. “There is a lot of other help available you could access before going down that road.”
She said people could check they were getting the full support available from the Government, could ask for support from their bank or advice from helpline MoneyTalks.
“Avoid making a decision based on fear,” says Wrightson. “Emotional situations tend to lead to poor financial choices, so access the help above before turning to the long term savings and investment that is your KiwiSaver. You will not only crystallise the losses your fund has suffered since the effects of Covid-19 began, but also lose out on future returns.”
For example, a 35-year-old earning $80,000 who has contributed 3% to a KiwiSaver balanced fund since KiwiSaver started 13 years ago could have a fund worth $100,000. If they withdrew $30,000 now, they could have $47,000 less by the time they turn 65.
People who wanted to tap into their KiwiSaver account would need to show they were suffering significant financial hardship as a result of Covid-19.
Some elements of the process may be simplified, such as the requirement to sign a form in front of an authorised witness, to take into account self-isolation and level 4 lockdown requirements.
Liam Mason, the director of regulation at the Financial Markets Authority (FMA), said: “We understand providers are focusing hard on helping their customers through these times of financial uncertainty. We’ve been talking to providers about how they can approach KiwiSaver hardship withdrawals.
“We’ve advised providers and their supervisors to take a sensible and practical approach when they consider these applications. We also want providers to point out there are other forms of assistance available from the Government, that people should look to first. Hardship withdrawals from KiwiSaver should always be a last resort, after other options have been exhausted.”
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From official website:
"The government is allowing individuals affected by COVID-19 to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
Eligible individuals will be able to apply to access up to:
$10,000 of their super before 1 July 2020
a further $10,000 from 1 July 2020 until 24 September 2020.
To apply for early release, you must satisfy one or more of the following requirements:
You are unemployed.
You are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance.
On or after 1 January 2020, either
you were made redundant
your working hours were reduced by 20% or more
if you are a sole trader, your business was suspended or there was a reduction in your turnover of 20% or more.
You will not be required to attach evidence to support your application; however, you should retain records and documents to confirm your eligibility.