Four in 10 people have had a ‘payment problem’ in the last year, banks say
Wednesday, 27 May 2026
Four in 10 ASB bank customers have less than $1000 in their accounts, and around the same proportion have had a “payment problem” in the last 12 months.
Bankers at the Retirement Commission’s national strategy for financial capability conference in Auckland on Tuesday, were invited to publicise the ways they work with vulnerable people, like prisoners and the homeless, to ensure they can get bank accounts.
But ASB’s general manager for business transformation and customer engagement Roz Clarke took the chance to speak about how badly many New Zealanders’ money lives have worsened.
“One of the things that we've been doing since 2019 is tracking financial well-being,” she said.
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The tracking was showing a deteriorating picture.
“We're seeing that around 40% of New Zealanders have less than $1000 in their bank account to fall back on, and that's quite sobering,” she said.
Clarke said: “We're also seeing, around the same figure around 40% of customers who've had a payment problem in the last 12 months. That could be they've missed a payment, or they've gone into overdraft.”
Fleur Howard, chief executive from Fincap, the umbrella group for financial mentors, said each of the last four full calednar years had seen more financially distressed people seeking help with their finances from budgeting agencies up and down the country.
And the demand for help was still increasing.
“2026 could be off the charts,” Howard said.
Earlier in the day new Retirement Commissioner David Boyle spoke of the need for an increase in household financial resilience.
Much of the conference focused on the future of KiwiSaver, however, speakers repeatedly referred to high levels of KiwiSaver hardship withdrawals that were reflecting the weakness of the economy.
Simon Power, chief executive of Fisher Funds, said KiwiSaver hardship reports were a leading indicator of how the economy was doing.
“Across the whole industry we've seen heightened applications for hardship,” he said.
“I've sat on the phones a couple of times and, and listened to the conversation that was going on, and you're talking about by and large, [people] looking to draw down funds for day to day, month to month, expenses,” Power said.
In April, Inland Revenue figures show $38.5 million was withdrawn from KiwiSaver account by people in financial hardship, an increase from $37.6m in April 2025.
Brooke Roberts from investment platform Sharesies, which has a KiwiSaver scheme, said: “For the first time we are seeing repeat requests.”
These were instances of people coming back time and time again to take money out of KiwiSaver as their money struggles were not going away.
“The thing we are picking up in the data is the expansion of poverty,” said Shamubeel Eaqub, Simplicity KiwiSaver chief economist.
“These people have exhausted every other opportunity before they come to KiwiSaver. It’s not like they are coming to Kiwisaver on a whim,” he said.
KiwiSaver had become a whole-of-life scheme, Eaqub said, and work needed to be done to make hardship withdrawals easier.
“There’s no point in being rich in retirement, if you are suffering through all of your working life,” he said.
Power called for a deeper conversation about “targeted assistance” through KiwiSaver, for example, removing government contributions from high income earners, and using the money to subsidise those who really needed it.
Eaqub said the “natural next step” was to make KiwiSaver employer contributions compulsory, but employee contributions should be voluntary, so people who did not earn enough, could opt out. He would also have government contributions of $10-a-week into KiwiSaver accounts for every child in the country.
Roberts said if KiwiSaver was compulsory, government contributions could be used more intelligently, such as directing it towards people who really needed it.
Power believed the upcoming election would have KiwiSaver front and centre.
“I can't remember a time in the political discourse or the public policy discourse where superannuation, KiwiSaver, and the like were at the forefront of political parties discussions leading into a general election. For me, this is unique,” he said.
Eaqub said political tinkering had weakened KiwiSaver, time after time.
KiwiSaver was Labour’s baby, created in 2006, but successive National governments cut it.
The first cut came in 2009, when a National government cut the minimum contribution from 4% to 2% (which was partially reversed in 2013), abolished the member fee subsidy of $40 per saver and ended the KiwiSaver employer tax credit saying it would make KiwiSaver “more affordable for members, employers and taxpayers”.
However, in an early move, National also created what Labour called “loopholes” that allowed employers to strike individual agreements with employees under which they could deduct their employer contributions from those employees’ salaries.
These were known as “total remuneration” policies, but rather than being applied to highly paid executives, employers have used it to avoid having to make KiwiSaver contributions for lower-paid employees.
The second cut came in 2012, when National halved the government contribution to 50c for every $1 contributed to a maximum of $521 per year, down from $1040 per year.
The third cut came in 2015, when the $1000 kickstarter for people opening accounts was removed.
The fourth came in Budget 2025, when once again a National-led government halved the maximum government contribution from $521 per year to $260.72.
Speaking at the conference, ASB chief executive Vittoria Shortt called for total remuneration contracts to be banned.