Why Hardship Withdrawals Matter

SPEAKER_00 0:10

Kiwi Saver and hardship withdrawals. A lot of people these days don't know that they can actually approach Kiwi Saver for when things get hard. But a lot of people do know. And let's look at the stats today to have a look, what it looks like for a lot of New Zealanders. Hello, David.

SPEAKER_01 0:27

Morning. How are you again?

SPEAKER_00 0:28

I love how you keep saying morning. It's afternoon now.

SPEAKER_01 0:31

I know. I just thought about that the last time, but the listeners don't know.

SPEAKER_00 0:35

No, they might be listening in the morning.

SPEAKER_01 0:36

You've just exposed me.

SPEAKER_00 0:38

I know. That's okay. That's okay.

What Counts As Financial Hardship

SPEAKER_00 0:40

So hardships. Yes. A very tough topic. Because Kitty Saber, when it was first designed, it was designed for first-home buying, retirement, and then they've edited hardships as well.

SPEAKER_01 0:49

Correct.

SPEAKER_00 0:50

So what qualifies hardships? Let's start there.

SPEAKER_01 0:53

So what qualifies hardships? It's you have to show that you are financially going to be worse off and struggle if you're not able to access your QSOVA, which is your money, right? But it's there, it's locked in for a reason. Otherwise everyone will get stepping. So I guess if you think about it that way, it's about improving your life in a way that says, if I don't get this, I am going to be in trouble, or I really am

How The Application Actually Works

SPEAKER_01 1:49

struggling. Now there's a lot of hoops to jump for these. And there's there's a big application form, which is you'll need to get from your provider to have a look at. What my advice around that is, is make sure you do it properly and give everything that's been asked, because that is the best way to get it accepted quickly if you're in a hurry. So don't cut corners with this. This is important. Um it goes to the provider and then it goes to the to your their trustee to make the decision. Um one of the great things now is that they've created a portal, uh, the public trust have, so the public trust or our trustee. They've created a portal where people can go and input the information for themselves and it goes through to their portal for them to then check and they have balances, check balances in there. Sorts of things that you can apply for, payments of loans, but you have to prove that you are financially destitute.

Approved Uses Like Cars And Dental

SPEAKER_00 2:39

Yeah. I had a few clients that lost jobs and they couldn't just find another job quick enough because we're in a down economy and yeah, they managed to get a few few thousand dollars out.

SPEAKER_01 2:50

Yeah, and if it means that they're not going to lose their house or lose a look, we've had people apply for a car, which means they had to get their children to to school or to caregivers or or whatever they needed it for that's broke down, they just didn't have the money for a car, and that car's gone and could put put, and then therefore they'll they've been able to apply for the cost of a car. Obviously, then we pay that money to the provider of the car rather than to the individual. But there's there's different things you can apply for.

SPEAKER_00 3:18

I've seen some for dental work.

SPEAKER_01 3:20

Yep.

SPEAKER_00 3:21

I've seen some for uh yeah, some other medical different medical per purposes as well.

SPEAKER_01 3:26

Again, if it's going to affect your ability to earn money and to earn an income or affects your mental health with regards to then you're off work, then they then they'll look upon it. And it's I don't think people enough people know they can get the help, but don't forget as well, there'll be always people that try and play the system. You they will get found out a little bit because we do ask as well that they have to prove that they've gone to some other places to get the money, like a maybe a bank loan or something like that.

SPEAKER_00 3:55

Yeah.

SPEAKER_01 3:56

Why can't you get a bank loan? You know, so the questions will be asked.

Bankruptcy And Dodging Creditors

SPEAKER_00 3:59

What happens when people go bankrupt? Can is KiwiSever protected?

SPEAKER_01 4:03

That's a great question. Uh it should be, yes. I I'd have to bet you on that, but yes, and in my view it is it because it's your individual asset or investment, it can't be used to pay off debtors in that respect.

SPEAKER_00 4:16

I was in a conference a couple of months ago and there was this question. Yeah. I've just remembered the answer.

SPEAKER_01 4:22

Was I right?

SPEAKER_00 4:23

Yeah, so basically they can't touch it. However, if you literally just dumped 200k into KiwiSaber, trying to avoid it. Whatever.

SPEAKER_01 4:32

Yeah.

SPEAKER_00 4:32

They will look into it and they will get it out.

SPEAKER_01 4:34

And fair enough too, by the way. Yeah. Yeah. Especially if it's affecting creditors and people that are trying to earn a living.

SPEAKER_00 4:40

Yeah, and apparently there were cases like that. So I think the presentation was by FMA. Oh, yeah.

SPEAKER_01 4:45

Yeah, nice. Yeah, I I'd imagine that yeah, there would always be the ability for somebody to overturn a lump sum going in.

SPEAKER_00 4:51

Yeah. Yeah. But in terms of hardships, um I know you've got some stats

The Surge In Hardship Payouts

SPEAKER_00 4:55

there. Yeah. Do you want to share those?

SPEAKER_01 4:57

Interestingly, uh, this is probably a reflection of maybe our economy a little bit, a little bit of a a follow-up or follow-on of COVID from that many years ago. But within the last five years, it's gone up from $104 million in total being paid out in hardships to $471 million a in total. A year. That's per year. So that la in the last year, $470 million was paid out to help people from their Kiwi Saber.

SPEAKER_00 5:26

And hardships.

SPEAKER_01 5:27

Hardships.

SPEAKER_00 5:28

That's a ton lots of money.

SPEAKER_01 5:30

That's a lot of money. It's great to see it being used for the right thing. As I say, there's there's hoops to jump, and we don't make the final decision as a provider. But it's definitely important for your listeners to know that, man, if they're in trouble, there's and they've got some balance in their Kiwi Saber, there's an option available.

SPEAKER_00 5:47

Okay. Wow. That's crazy. Do we know how many people?

SPEAKER_01 5:51

No, I don't couldn't tell you exactly how many people, but I could probably find out for next time.

SPEAKER_00 5:56

All right. Next time it is. Well that thank you so much. I think we shone the light on something that's very important, that's always in the back of people's minds. Yeah. I do see it pop up a lot through, you know, Facebook groups, through social media, where people do ask that question and just they don't know where to turn to. And I hope by providing them with this information, it helps them to go, okay, this is what I need to do, this is where I need to go. But at the same time, as you said, you know, really is for emergencies. Because when you do take that money out, and I don't know if you have those numbers at the back of your head, like it does set you back. Yeah. Right. For your retirement, it may set you back a year, two years, three years. Depends how much money you take out. Yeah. Depends how much money you're losing on making return on.

KiwiSaver In Separation Settlements

SPEAKER_00 6:40

And my other question to you would be around separations.

SPEAKER_01 6:45

Yeah, so superannuation funds, and again, you need to get legal advice. This isn't legal advice, but superannuation funds can come into a separation agreement because the lawyers will look at somebody may have been working and somebody not. Somebody might have looked after the kids or had a part-time job because of the kids. So one of the partners was working full-time and therefore reliant on each other different ways. That's about all I'm going to say on that, but it will be taken it can be taken into account as a partnership agreement where some money from something else might go into their partner's other KiwiSaver to top it up and be equal.

SPEAKER_00 7:23

You know, I always thought that you can't touch the KiwiSaver as such. Like it will have to be funded some other way. However, I had a client recently separating, and apparently there is some sort of ruling you can get to actually dip into your partner's KiwiSaver and take that money out and transfer to that person.

SPEAKER_01 7:41

If if it's if if you're legally told to do it, we have to do it. And it's the same with any not just KiwiSaber, any superannuation fund. If you bought a UK pension over, we get told by court that this is what we have to do, then we do it.

SPEAKER_00 7:53

Then you do it. Wow. Amazing. I thought you could never touch it.

SPEAKER_01 7:57

But it but it's the same situation, isn't it? Where somebody's knows they might want to leave the relationship that they're in and they dump a whole lot of money into KiwiSaber to know that they can't be touched. It's a similar situation, isn't it? Somebody that's maybe with a struggling business, right? I'm gonna chuck this money in the end.

SPEAKER_00 8:13

Yeah.

SPEAKER_01 8:14

So it's it's all about that avert I guess trying to avoid having to pay money out by using the system, and that's what they'll look at.

SPEAKER_00 8:23

Yeah, it will backfire.

SPEAKER_01 8:24

Don't do that. 100%. Don't mess with that stuff. Yeah, love it. Yeah, yeah. Just drip fit it. Yeah.

SPEAKER_00 8:29

I didn't say that. No, awesome, dude. Thank you so much.

Dropping Shame And Asking For Help

SPEAKER_01 8:33

So can I just add one thing on? Yeah, sure. And I think this is important, and I don't I don't mean this in any bad way. But if you are thinking about it and looking at it and going, look, I am struggling, don't be embarrassed. We get a lot of applications and it and it can go through directly to the public trust. It's not something to be ashamed of, it's something that's just going to help. So I would say that if if you think there might be an up an option for you to do it, then have a look into it and see if you are eligible.

SPEAKER_00 9:01

I love that because I think you know we've covered that in many other episodes when it comes to money and shame and how people can feel that shame and guilt around it. Yeah. But at the end of the day, this is your money. Correct. Remember, you're the one that you know earning it. It goes through your salary. So it is your money that you're accessing it back.

SPEAKER_01 9:21

Yep. And and the view is you don't have to pay it back, by the way, you just start again, right? But but the view is, yes, you're right, it's your money, it's there for your retirement, and that's the whole purpose behind it. But it's not there to leave you in destitute either.

SPEAKER_00 9:34

Exactly. I mean, will you even see the retirement if you're struggling so badly? Yeah. So you might as well get the money out, get yourself sorted, and then jump back on

Final Warnings And Next Steps

SPEAKER_00 9:42

that.

SPEAKER_01 9:43

Agreed.

SPEAKER_00 9:43

Yeah. Treadmill. Absolutely. I want to say hamster wheel.

SPEAKER_01 9:46

I'm like, no, that sounds terrible. Treadmill, let's stick with treadmill.

SPEAKER_00 9:49

Highway.

SPEAKER_01 9:50

On the highway. Yeah. Sounds good. Awesome. Thank you so much. Okay, no problem.