Source: Radio New Zealand
In March, there was more than $49 million withdrawn from KiwiSaver for financial hardship reasons, by 5610 people. RNZ / Quin Tauetau
People receiving a benefit may not realise the impact a KiwiSaver hardship withdrawal could have on their entitlements, one provider says.
Graham Allpress, group general manager of client service delivery at the Ministry of Social Development, said every situation would be different but anyone who was thinking about making a KiwiSaver withdrawal should check to understand how it could affect their benefit payments.
In March, there was more than $49 million withdrawn from KiwiSaver for financial hardship reasons, by 5610 people.
Both the number of people withdrawing and the total amount were higher than in March 2025.
There were more than 60,000 hardship withdrawals in the year to March, about three times the typical pre-pandemic rates.
Allpress said a one-off KiwiSaver withdrawal would not generally be considered income for benefit purposes.
“However, if a person made periodical withdrawals from their KiwiSaver due to hardship, for example, every three months, such payments could potentially be considered income for benefit purposes.
“Under the Social Security Act 2018, a person’s income includes any periodical payments made to the person from any source and used by them for income-related purposes whether or not the payments are capital.
“The withdrawn amount will also be considered a cash asset, which may affect benefits such as Accommodation Supplement or Temporary Additional Support.
“The amount someone can withdraw before it impacts their payments will depend on any income they are also receiving from other sources and any cash assets they already have.”
Ana-Marie Lockyer said the rules could catch people out because they were not likely to be top of anyone’s mind when they were making a withdrawal decision.
“I looked into it and it isn’t a KiwiSaver-specific rule-it’s how the benefit system works. Once money is withdrawn from KiwiSaver, it’s treated like any other income or asset. The issue is that people don’t naturally think of their KiwiSaver that way, which is where the disconnect happens.
“Where it could become an issue is for people making regular or staged withdrawals, particularly if they’re also receiving accommodation support. What feels like a sensible way to manage their savings could unintentionally affect their entitlements. It’s a good reminder that decisions around KiwiSaver-especially withdrawals-don’t happen in isolation. Understanding the downstream impacts, including on benefits, is really important.”
Allpress said people should also contact MSD to see whether they could access any other help without needing to tap into their KiwiSaver accounts.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
