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MSD tells KiwiSavers to pull funds to survive
Madison Reidy, Business reporter
The number of people looking to dip into their KiwiSaver funds for hardship reasons is rising sharply.
Image: Lyndon Hood / Scoop
One of the scheme's default providers Fisher Funds said how to access the funds because of financial problems is now the most common query received from savers, with some savers being told to withdraw funds by the Ministry of Social Development.
Fisher chief executive Bruce McLachlan said it is an unfortunate state of affairs.
"We do have very established [social welfare] mechanisms in New Zealand already... I would like to think that is dealing with the real hardship cases, rather than people getting access to KiwiSaver."
Official figures showed 17,000 people withdrew $105 million on hardship grounds in the year to June, which is up by nearly half in just two years.
Mr McLachlan said the increase reflected the growing size of the savings and awareness about the option to withdraw, but also pointed to known flaws in the scheme that needed to be fixed.
"There's a whole raft of people whose job it is to advise the government and the public on this. The issues are well known."
Mr McLachlan said officials did not do enough to encourage New Zealanders to invest for their retirement, and small contributions to KiwiSaver would not help them financially down the line.
He said KiwiSaver may have to become compulsory.
"We'd prefer not to go to compulsion, but we're going to end up at compulsion if we cannot convince people of their own accord to start saving more."
A senior researcher at MoneyHub, Christopher Walsh, said some providers have hired extra staff to deal with the rise in hardship applications, which he believed should be handled by a government agency.
"New Zealand is one of the few countries in the world where it is possible to withdraw state pension funds early, and we do not believe it is the responsibility of every provider to invest four to 10 hours to assess one application."
Supervisors of providers currently approve all applications, not providers themselves.
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