Emergency moves to make KiwiSaver hardship withdrawals possible under lockdown

Wednesday, 25 March 2020

KiwiSaver providers are in talks with government and regulators to make KiwiSaver hardship withdrawals possible during the coronavirus lockdown.

Under current rules, people forced into financial difficulties by the lockdown will find it impossible to withdraw KiwiSaver money because hardship applications need to be witnessed by a justice of the peace, solicitor, or notary public, which cannot happen during lockdown.

An announcement is expected in the next few days on the issue, after KiwiSaver providers were alerted to the issue by a rising number of calls from desperate account-holders, some of who have become angry on finding they were unable to access their money.

KiwiSaver John O'Donnell called for swift action from the Government, saying: 'I am already in financial lockdown.'

**READ MORE:

* How to make a legally defensible will in lockdown

* Coronavirus update: PM Jacinda Ardern says 'several thousand' more cases are likely

* Coronavirus: Full coverage**

'I need those KiwiSaver funds now, 65 per cent of which is my financial contribution, and hence in effect my money, for fiscal survival now … not for some time in the distant future.'

'Can the Government, please please please, open access to our KiwiSaver accounts to our own money?'

The Financial Services Council, along with KiwiSaver providers like AMP were working to get KiwiSaver hardship application rules relaxed to make them workable during the Covid-19 lockdown.

Meetings were ongoing with Ministry of Business, Innovation and Employment officials, and regulators from the Financial Markets Authority.

'We are working with regulators and government to make it easier for people with genuine hardship to get what they need,' said Richard Klipin, chief executive of the Financial Services Council, an industry body which represents KiwiSaver providers. 

'At the moment we aren't seeing a big increase in hardship withdrawal applications,' said AMP Wealth Management chief executive Blair Vernon.

Instead, the increase in calls was mostly from people seeking to switch funds, although only around 1 per cent of AMP KiwiSavers had done so, and from people aged 65 or older withdrawing money to hold it in cash.

But, Vernon said: 'There are going to be a lot of people in a situation of hardship. The numbers of New Zealanders with three months of cash reserves is pretty limited.'

Significant Financial Hardship is defined in the KiwiSaver Act 2006 requires people to be able to demonstrate they are unable to meet minimum living expenses.

This could include being unable to meet mortgage repayments on the home they lived in, incurring funeral costs because a dependant family member dies, or because they are suffering from a serious illness.

People trying to access their KiwiSaver accounts had to provide a lot of information providing schedules of their assets, their debts, their expenses and their incomes.

Even if people were successful in their hardship applications, they couldn't just take all the money out.

Instead, money could only be withdrawn for  'minimum living expenses', which BNZ's financial hardship form said equated to $380 per adult per week.

'The Government has released packages of credit and funding across the financial sector - particularly for those already in employment,' said O'Donnell, who at age 55 is unemployed despite his management expertise and engineering background.

'But there are other groups who will struggle financially through this lockdown, and I believe a viable case can be made, for emergency funding via our own KiwiSaver accounts.'

The government schemes supporting workers and businesses had application processes that were far simpler than KiwiSaver hardship withdrawals, and did not require documents to be witnessed by the likes of JPs.

'The Government is taking on huge amounts of debt to support people. I'm trying to support myself to save them the trouble,' O'Donnell said.