What is considered hardship for KiwiSaver?
To make a hardship withdrawal from your KiwiSaver, you must provide evidence that you are suffering from significant financial hardship. The criteria for significant financial hardship typically include the following circumstances:
Inability to Meet Minimum Living Expenses:
This criterion is met when individuals cannot cover their basic living expenses with their current income and available assets. Basic living expenses include essential costs such as housing (rent or mortgage payments), utilities (electricity, water, heating), food, and clothing. The inability to meet these fundamental needs signifies a significant financial struggle, and it is a valid reason to consider a KiwiSaver withdrawal to alleviate financial hardship.
Mortgage Enforcement:
Financial hardship can also be evident when an individual is unable to make mortgage payments on the home they reside in, and their mortgage provider has initiated or is seeking to enforce the mortgage. The risk of losing their primary residence due to mortgage enforcement underscores the severity of the financial situation, making it a qualifying factor for a KiwiSaver withdrawal.
Home Modification for Special Needs:
Sometimes, individuals may need to modify their homes to accommodate special needs, either for themselves or for a dependent family member. These modifications can range from accessibility improvements to medical equipment installations. The associated costs of these alterations can cause financial strain, and if they meet specific criteria, a KiwiSaver withdrawal may be considered to address the financial hardship.
Medical Treatment:
Financial hardship can arise when individuals or their dependent family members require medical treatment that is not adequately covered by health insurance or other means. Medical expenses, including surgeries, medications, therapies, or specialised treatments, can place a significant financial burden on individuals and their families. In such cases, a KiwiSaver withdrawal can provide the necessary funds to access vital medical care.
Serious Illness:
When individuals or their dependent family members are facing a serious illness, the associated costs can lead to financial hardship. Serious illnesses often entail substantial medical expenses, loss of income due to inability to work, and additional costs related to caregiving or lifestyle adjustments. A KiwiSaver withdrawal can help alleviate the financial stress during such challenging times.
Read More: Can I access KiwiSaver money early if I have health issues?
Funeral Costs:
In the unfortunate event of the passing of a dependent family member, the expenses related to funeral and burial arrangements can be substantial. Funeral costs can create a sudden and unexpected financial burden for individuals. A KiwiSaver withdrawal can be considered to cover these expenses, providing financial relief during a difficult period.
Read More: What Reasons Can You Withdraw From KiwiSaver?
It’s important to note that if your application for a hardship withdrawal is accepted, you can only withdraw the contributions made by both you and your employer, not any government contributions or investment returns. Additionally, you should contact your KiwiSaver scheme provider for the correct form to complete to initiate a hardship withdrawal. If you are within the first 2 months of your KiwiSaver membership, you would need to apply to the provider; otherwise, you can apply to the relevant authority for the withdrawal. Keep in mind that the criteria for significant financial hardship may vary, so it’s advisable to consult with your scheme provider or the relevant authority for the most accurate and up-to-date information.