More than 52,000 KiwiSaver members made a hardship withdrawal in the 12 months to June 2026, up from just over 20,000 in 2023, RNZ reports, citing a new report from Victoria University of Wellington.
The report, Sacrificing tomorrow to survive today, was led by senior law lecturer Victoria Stace and commissioned by FinCap, the national body for financial mentors. It was released on 12 November.
Its main finding is that many withdrawals could be avoided if people got expert help to look at other options first. Stace told RNZ that data from organisations working with people in hardship suggested a withdrawal might not be needed in about half of cases once alternatives were explored.
How big is the rise?
Total hardship withdrawals grew from $65 million in 2016 to $443.6 million in 2025, RNZ reports. Stace said the average withdrawal was about $10,000.
FinCap says financial mentors are spending about 40 percent of their time on KiwiSaver hardship applications, and that one in eight of their closed client cases involved someone seeking to take money out early.
Stace said the current rules were working as intended. "It's just there are more people in extreme need which is why there are more withdrawal applications now," she told RNZ.
Who can get a hardship withdrawal?
Inland Revenue says significant financial hardship includes when you:
- cannot meet minimum living expenses
- cannot pay the mortgage on the home you live in, and the lender is moving to enforce the mortgage
- need to modify your home for your own or a dependent family member's special needs
- need to pay for medical treatment for yourself or a dependent family member
- have a serious illness
- need to pay for palliative care
- need to pay funeral costs for a dependent family member.
Under the KiwiSaver scheme rules, the scheme's trustee (called the supervisor) must be reasonably satisfied that you have explored and exhausted other reasonable sources of money. It can also limit the payout to the amount needed to deal with the hardship, rather than release your whole balance.
You can only take out your own contributions and your employer's. The government contribution stays in the account.
How do you apply?
Contact your KiwiSaver provider for its hardship form. You only apply to Inland Revenue if you are within the first two months of joining KiwiSaver.
You will need to give evidence, including a statutory declaration listing what you own and what you owe. Stace told RNZ that providers do not all ask for the same information, which financial mentors find frustrating.
What else could you try first?
FinCap says alternatives to a withdrawal can include:
- restructuring debts so the repayments are manageable
- negotiating with a lender to reduce repayments for a period
- getting support you may be entitled to from government agencies or local charities.
FinCap senior policy adviser Jake Lilley told RNZ that people might be entitled to help from a government agency or local charity they did not know about. "Sometimes people have had their consumer rights breached and actually there's an underlying issue or they have options."
Free help is available from financial mentors through MoneyTalks, on 0800 345 123 or by texting 4029. Mentors can help you work out your budget, talk to lenders on your behalf and, if a withdrawal is still the right step, help with the application.
If English is not your first language, ask whether a mentor or interpreter who speaks your language is available.
What is the report recommending?
The report does not call for making withdrawals harder. Instead it suggests making sure people who apply can get expert help, and properly funding financial mentors to provide it. One option it discusses is a central hub to process hardship applications, with mentoring built in. Stace said six providers already use a similar arrangement through DebtFix.
It also recommends further investigation of "sidecar savings", where part of a member's KiwiSaver could be set aside and easier to access in an emergency. Stace suggested that amount would be more like $3,000 to $5,000.
Why does this matter now?
Rising living costs have squeezed many households this year, as we reported in our look at the latest household living costs figures. KiwiSaver contributions were also an election issue, with National and Labour both proposing changes to contribution rates.
A hardship withdrawal can solve an immediate problem, but money taken out now is money that is not growing for retirement. Stace noted that it could leave people more reliant on NZ Super later.
