KiwiSaver quake moves spark warning

Government is making it easier for earthquake-affected KiwiSaver members to withdraw their money if they suffer financial hardship – but one adviser is warning it is not a good idea.

Thursday, November 24th 2016, 6:00AM

by Susan Edmunds

Commerce Minister Paul Goldsmith announced this week that he had asked KiwiSaver scheme supervisors to expedite requests for early withdrawals for earthquake-affected people.

“I also emphasised to KiwiSaver supervisors that when assessing financial hardship applications, they should take into account the effects of the earthquake on their member’s assets, ability to work, income and expenses,” he said.

“Supervisors have agreed to this approach. They will work with KiwiSaver providers to ensure affected members can go through the withdrawal process as quickly and flexibly as possible.”

Financial adviser Hannah McQueen said the idea was dangerous.

“The Government needs to support the earthquake victims and regions with some kind of package from the Government,” she said.

“The reality is that a lot of these victims might not even qualify for a pension in the future because there will not be enough money to give a pension.

"I think it would be inappropriate for the Government to say that people can access their KiwiSaver and screw up their retirement, without also saying that the pension entitlement needs to be addressed to reflect the fact we are living longer than ever before, which means that either the entitlement will drop, cease or be delayed. Perhaps this will fast-track a long overdue conversation around our country and where it is going financially. There is not an unlimited source of money."

She said there was a bigger problem to confront, in that many New Zealanders were under-prepared for anything unexpected.

“We get bailed out in the wrong way, time and time again and the lessons that should be learned, don’t get learned and we continue to be allowed to be apathetic around money.”

She said anyone in KiwiSaver could already access their funds in cases of true hardship.

“The definition of hardship is tight, and it needs to be. By default, some of the victims of this earthquake will eventually qualify for this,” she said.

“We are trying to change the way that Kiwis deal with money, see money, plan for life and retirement. Currently there is too little connection between life’s choices and the financial impact. Everyone will get a mack truck event at some point and everyone needs to be prepared for this. And when it hits, work out the best way to move past it, to ensure you can still have the financial future you want.”

Tags: KiwiSaver