KiwiSaver’s significant financial hardship withdrawal is one of the few ways to access your savings before age 65. The criteria are strict, the process is formal, and not all applications are approved. Here’s exactly how it works.
What Is Significant Financial Hardship?
Significant financial hardship (SFH) is a defined legal category under the KiwiSaver Act. It is not general financial difficulty — it covers specific, serious circumstances where a member is unable to meet minimum living needs.
The KiwiSaver Act defines significant financial hardship to include:
- Inability to meet minimum living expenses — you cannot afford basic food, housing, utilities, or medical care
- Inability to meet mortgage repayments on your principal place of residence, causing the mortgagee to take steps to enforce the mortgage
- Loss of employment or long-term financial hardship due to medical need or a dependant’s medical need
- Modifying a home to accommodate a serious disability suffered by you or a dependant
- Terminal illness — not wanting to die without accessing savings (though terminal illness has its own withdrawal pathway)
The criteria are interpreted strictly. A provider cannot approve a withdrawal simply because someone is in debt or has reduced income — the circumstances must genuinely meet the legal threshold.
What Is NOT Significant Financial Hardship
| Situation | Qualifies? |
|---|---|
| Lost job / made redundant | ❌ No (unless meeting inability to meet basic needs) |
| High credit card or personal debt | ❌ No |
| Medical bills (general) | ⚠️ Only if unable to meet minimum needs |
| Want to pay off student loan | ❌ No |
| Business failure | ⚠️ Only if meeting minimum needs threshold |
| Relationship breakdown costs | ❌ No |
| Want to invest elsewhere | ❌ No |
How Much Can You Withdraw?
Unlike the first home withdrawal (where you can withdraw most of your balance), SFH withdrawals are limited to what is reasonably needed to relieve the hardship. Your provider assesses the appropriate amount.
- You cannot withdraw your full balance “just in case”
- The withdrawal is sized to cover the specific hardship need
- Employer contributions and government contributions are included (unlike the Australian super equivalent)
- A $1,000 minimum residual does not apply (unlike first home withdrawal) — full withdrawal is possible in extreme cases
Who Assesses the Application?
Your KiwiSaver provider (not IRD) assesses SFH applications. Providers are required to act in accordance with the KiwiSaver Act and relevant guidance from the Financial Markets Authority (FMA).
Each provider has its own application form and process, but must apply the same legal criteria. Approval rates and processing times vary by provider.
What Evidence Is Required?
Required evidence varies by provider and specific circumstances, but typically includes:
For inability to meet minimum living expenses:
- Bank statements (3–6 months)
- Income and expenditure statement
- Evidence of all income sources (payslips, WINZ, etc.)
- Explanation of the circumstances
For mortgage hardship:
- Correspondence from the bank/mortgagee confirming enforcement steps
- Current mortgage statement
- Income and expenditure
For medical need:
- Medical certificate or letter from a registered health professional
- Treatment costs / quotes
The standard of evidence is meaningful — a vague letter from a GP is unlikely to suffice. Detailed, specific documentation gives the best chance of approval.
The Application Process
- Contact your provider — request the SFH application form (online or in person)
- Complete the form — describe your circumstances in detail and why they meet the criteria
- Gather supporting documentation — bank statements, letters, medical certificates
- Submit the application — to your provider (not IRD)
- Wait for assessment — typically 10–15 business days
- Receive decision — approved (with withdrawal amount), declined, or a request for more information
If your application is declined, you can:
- Request reasons for the decision in writing
- Provide additional evidence and reapply
- Complain to your provider’s disputes resolution service
- Contact the Financial Services Complaints Ltd (FSCL) or Banking Ombudsman
What Happens After Withdrawal
- The withdrawn amount is not taxed on the way out (KiwiSaver withdrawals are tax-free)
- Your remaining balance continues to be invested
- You can continue making contributions
- You are not removed from KiwiSaver — the scheme membership continues
Alternative Options to Consider First
Before applying for SFH withdrawal, consider:
- Work and Income (WINZ) — hardship assistance, food grants, accommodation supplements
- Budgeting service — FinCap (fincap.org.nz) can help with a financial management plan
- Savings suspension — stopping KiwiSaver contributions if cash flow is the issue
- Negotiating with creditors — many banks and utilities will work with you on payment plans
SFH withdrawal should generally be a last resort — once withdrawn, those funds and their future returns are gone permanently.