Covid withdrawals possible 'but not always desirable'

Jane Wrightson

Retirement Commissioner Jane Wrightson said it was understandable that many KiwiSaver members facing financial hardship were turning to their funds as a potential source of short-term income, but there was a range of options they could consider first.

“While your circumstances may qualify for withdrawal under significant financial hardship, taking out money now may severely impact your quality of life in retirement later,” says Wrightson. “There is a lot of other help available you could access before going down that road.”

She said people could check they were getting the full support available from the Government, could ask for support from their bank or advice from helpline MoneyTalks.

“Avoid making a decision based on fear,” says Wrightson. “Emotional situations tend to lead to poor financial choices, so access the help above before turning to the long term savings and investment that is your KiwiSaver. You will not only crystallise the losses your fund has suffered since the effects of Covid-19 began, but also lose out on future returns.”

For example, a 35-year-old earning $80,000 who has contributed 3% to a KiwiSaver balanced fund since KiwiSaver started 13 years ago could have a fund worth $100,000. If they withdrew $30,000 now, they could have $47,000 less by the time they turn 65.

People who wanted to tap into their KiwiSaver account would need to show they were suffering significant financial hardship as a result of Covid-19.