More than 10,000 more withdrawals were made from KiwiSaver for hardship reasons last year than in 2024, and providers say there's no sign of the rate slowing.
By Susan Edmunds of RNZ
Inland Revenue data shows there were 58,460 withdrawals for hardship reasons in 2025 – 10,000 more than were made for a first home.
In total, $514.8 million was withdrawn from KiwiSaver because of hardship, and $2.1 billion for a first home.
In 2024, there were 47,390 hardship withdrawals to a total of $403.8m.
Dean Anderson, founder of Kernel, said it showed the two-speed economic recovery that New Zealand was experiencing.
The level of first-home withdrawals were up a third year-on-year for the month in December, while hardship withdrawals were up 12%.
"On one end, sustained economic pressures, both at the household level and business level – such as in the hospitality sector – have forced Kiwis who've exhausted other means to tap their retirement savings just to get by," he said.
"On the other end, three years of falling house prices, plus price stabilisation through 2025, and falling interest rates have opened the door for first-home buyers – many now in their mid-to-late 30s with a decade-plus in the workforce and substantial KiwiSaver balances built up.
"Combined with government first-home support, KiwiSaver is proving a key deposit tool, and we should expect these withdrawals to keep rising as balances grow... The data underlines that KiwiSaver is serving a dual role – supporting home ownership and acting as a financial release valve for those under pressure – but that growth masks a deeper trade-off: Every dollar withdrawn today is a dollar not compounding for retirement."
Pie Funds' chief executive Ana-Marie Lockyer said there had been no meaningful slowdown in hardship withdrawals.
"The number of approved applications has remained relatively static over the past year rather than trending down.
"That suggests financial pressure is still present for a consistent group of members, even as broader economic indicators begin to stabilise. While we're not seeing an acceleration, we also aren't seeing clear signs of easing yet."
'Households are clearly under strain'
Koura founder Rupert Carlyon said he expected the rate of withdrawals to continue.
"I think there's three things. There's clearly the economic climate, which is making life difficult for people. I think you've got larger balances, which mean that people all of a sudden are starting to think about it a whole lot more.
"And then the third thing is there's a greater awareness that you can actually make withdrawals."
He said a big question would be whether, if there was a shift to make KiwiSaver compulsory or add incentives, the rules on withdrawals had to be tightened.
"At the moment it's a voluntary saving scheme without any incentive, so you kind of go 'it's people's money'. It's kind of hard to argue that they can't get it out for all this stuff. If we move into a different type of scheme, which I think is what a lot of people are starting to talk about, then yeah, what happens to all these withdrawals?"
Retirement Commissioner Jane Wrightson said the data showed that more New Zealanders were having to dip into KiwiSaver to deal with immediate financial pressure.
"Households are clearly under strain, but early withdrawals come at a real long-term cost because people lose the compounding investment gains that help fund a decent retirement. KiwiSaver is designed to support people later in life, so accessing it early should remain a last resort.
"Our 2025 Review of Retirement Income Policies highlighted that New Zealand still lacks consistent data on the range of reasons why these withdrawals are happening. Without better information, it's difficult to design targeted solutions to try to reduce hardship withdrawals and improve financial resilience. Better data collection is essential if we're to protect New Zealanders' long-term retirement outcomes."
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