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KiwiSaver financial hardship withdrawals rise yet again
A record number of people are making withdrawals from their KiwiSaver funds due to financial difficulties.
Of the 6400 withdrawals made throughout December, more than half of them were for hardship.
Withdrawals for anything other than retirement or a first home are only available in certain cases like after a medical emergency or sudden expense.
But the number of early withdrawals has jumped significantly in the past year from 17,900 in 2022 to 29,530 in 2023.
Kiwibank chief economist Jarrod Kerr said it was concerning but unsurprising given the circumstances.
“It reflects what we’re hearing from customers, we’re seeing the rapid rise in interest rates affecting households and we’re also seeing the cost of living crisis continue to bite,” he said.
“[It is] forcing households to reconsider their budgets.”
The number of financial hardship withdrawals was trending upwards month-on-month.
The 3450 financial hardship withdrawals in December broke November’s record of 3270, which broke October’s record of 2800.
Retirement Commissioner Jane Wrightson told Midday Report the trend was worrying.
“I think it’s a really disturbing set of data… It’s the first time, I think, that the hardship withdrawals have exceeded the home ownership withdrawals,” she said.
“The home ownership withdrawals are a good thing, the hardship withdrawals are a bad thing.”
Māngere Budgeting Services Trust chief executive Lara Dolan said more and more clients were asking for help withdrawing from their KiwiSavers.
“People’s incomes are quite low and they’re unable to save for rainy day events,” Dolan said.
“Medical events, a death in the family, they have to travel overseas for a funeral and they’re just unable to borrow anymore so they use their KiwiSaver.”
Retirement Commissioner Jane Wrightson says hardship withdrawals exceeded the home ownership withdrawals. (file image) Photo: RNZ / Marika Khabazi
Auckland Central Budgeting senior financial mentor Teresa White said the extreme storms earlier in the year caught people off guard too.
“Particularly people whose cars have been flooded, people who didn’t have insurance for their vehicle, or people who didn’t have contents insurance so they had to replace household items,” White said.
“A lot of the grants that were available to them weren’t enough to cover all the expenses.”
But by withdrawing from their KiwiSavers early, Dolan worried her clients were sacrificing their futures for the present.
A financial hardship withdrawal should only be taken as an absolute last resort, she said.
“It’s absolutely a huge concern, our financial mentors work with families to find other solutions. We can look at consolidating their debt, creating a household budget to fix that gap… [using KiwiSaver] is a last resort.”
White agreed.
“You might get a bit of money and it might help you out for a short period, but after a while you’re back at the same place again,” she said.
“In my mind that’s a waste of your future savings.”
But Kiwibank’s Jarrod Kerr said people should have the option to dip into their KiwiSavers when times were tough.
“In periods of high stress like this, I think it’s helpful for people to be able to dip into it,” he said.
“So long as when they get back to full health they start saving again.”
The high number of KiwiSaver withdrawals was a sign the Reserve Bank should lower interest rates, Kerr said.
“They’ve raised interest rates too high and it’s having a severe impact on too many households.”
rnz
The chief executive of the Parliamentary Service is confident there will be enough room to accommodate the increased number of MPs and their staff coming into Parliament.
On current numbers, up to 131 MPs could be sitting in the Chamber following the election, brought on by a record overhang result.
Clerk of the House of Representatives Dr David Wilson told the Spinoff that currently the debating chamber had enough chairs to seat 124 MPs – including the Speaker of the House – and work was being done to accommodate more by altering the seating arrangement.
In a statement, Parliamentary Service chief executive Rafael Gonzalez-Montero said planning for a larger Parliament had been going for “some time”.
“Now that the election results have confirmed an increase to the number of members we are looking at several options.
“We are confident we will be able to accommodate all members within the Chamber.”
VNP / Phil Smith
Gonzalez-Montero said office accommodation for members and their staff would be “stretched” for a short time, but the new Members’ Building was only a few months away from “practical completion”.
That building – located behind Parliament – was due to be ready to occupy in April next year and had capacity to accommodate around 30 backbench MPs.
“All members should be in fit-for-purpose accommodation from that point,” Gonzalez-Montero said.
Following the 2023 election, 123 MPs sat in the Chamber – a record number at the time. That decreased to 122 following the resignation of National MP Judith Collins.
Collins held the seat of Papakura and stepped down in May and Parliament voted against holding a by-election because it was too close to the election.
The election result also meant high-ranking National Party MPs like Chris Bishop, Paul Goldsmith, Nicola Willis and Gerry Brownlee – Speaker of the House and an MP for 30 years – would likely not make it back into Parliament.
Only resigning or retiring MPs were permitted to give a valedictory speech meaning none of them would get the chance to give a valedictory statement.
Asked if their would be special allowances for valedictories, Wilson said in a statement that normally only MPs were allowed to speak in the House but the House could suspend its own rules or temporarily alter them.
“It could do so to allow former members to address the House.”
Wilson said no such arrangements could be made until the next Parliament opened and members sworn in.
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