I am thinking about opting into the KiwiSaver scheme but I am hesitant about locking my money away until I am 65. I have heard that you can withdraw your funds early if you are purchasing your first home – this might be useful to me in the next few years. Are there any other ways in which I can withdraw my funds? What if I am without work and in need of money? Or if I decide to live abroad, what will happen to my savings? Any advice would be much appreciated.

Cheers,
Steve

Hi Steve,
The general rule is that you cannot withdraw your savings from the KiwiSaver scheme until the end payment date. This is usually the superannuation qualification date which is currently 65. However, there are a number of circumstances in which you may be able to withdraw all or some of your savings early.

Most potential first-home owners, like yourself, know they maybe be able to withdraw some of their funds if they are purchasing their first home. KiwiSaver has recently allowed members to withdraw their tax member credits in addition to their contributions and employer contributions, giving first-home buyers even more of a head start. The only catch is that you must live in the home you are purchasing for at least six months.

Given the state of today’s housing prices you might need a little extra help getting on the property ladder. You might be eligible to apply for a KiwiSaver Home Start grant. How much you receive depends on how long you’ve been contributing to KiwiSaver. Your eligibility is also affected by how much you earn and the purchase price of the property. In Auckland the house price currently capped at $550,000.00 which means you might have to look at commuting or settling for a do-er upper.

If you are out of work and in need of money then you might be able to withdraw some of your savings if you can provide evidence that you are suffering significant financial hardship. Financial hardship means situations where you are unable to meet minimum living expenses or you are unable to meet your mortgage repayments and the mortgagor is enforcing the mortgage on your property.

If you make an application for financial hardship you will need to show that reasonable alternative sources of funding have been explored. Then you will need to complete a statutory declaration detailing your assets and liabilities. If you can successfully prove financial hardship then you may be able to withdraw your contributions and your employer’s contributions.

Similarly, you may be able to withdraw some of your savings early if you have an illness, injury or disability that either permanent affects your ability to work or poses a risk to death. If you make a successful application with medical evidence in support then you may be able to withdraw all of your KiwiSaver funds.

You might not know that if you permanently emigrate from New Zealand to a country other than Australia you may be eligible to withdraw all of your KiwiSaver funds, except your tax member credits. You will need to complete a statutory declaration and provide proof of your new address in support. If you have moved to Australia then you can choose to leave your KiwiSaver funds in New Zealand or transfer your funds to an Australian complying superannuation scheme.

My advice is to keep up to date with the scheme in case there are any changes that may affect you and your circumstances.

Best of luck,
Michael