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KiwiSaver schemes - Early Withdrawal

Below are listed the conditions under which you may be able to make an early withdrawal prior to retirement age from your KiwiSaver account.


You may be able to withdraw part or all of your savings early:

If you...

you may be able to withdraw...

but not ...

want to buy your first home
(after 3 years' membership)

your contributions, and
your employer contributions

the government kick-start, or
member tax credit.

experience significant financial hardship

your contributions, and
your employer contributions

the government kick-start, or
member tax credit.

suffer serious illness

your contributions
your employer contributions, and
the member tax credit

the government kick-start.

emigrate permanently

your contributions
your employer contributions, and
the government kick-start

the member tax credit
(which is paid back to the Government).


In most cases you apply to your scheme provider if you want to withdraw your savings early. Within the first three months of contributing you apply to Inland Revenue.

On your death, your savings will be paid to your estate.

Below is a table listing the contributions you will receive for any event listed.

Event

Member

Contributions

Government

$1000

kickstart

Government

Tax Credit

up to $20 pw

Employer

Contributions

Purchase 1st home

Yes

No

No

Yes

Significant financial hardship

Yes

No

No

Yes

Serious illness

Yes

Yes

Yes

Yes

Permanent emigration

Yes

Yes

No

Yes

Permanent emigration and transfer to

an authorised foreign superannuation 

Yes

Yes

Yes

Yes

Death

Yes

Yes

Yes

Yes

Retirement age or 5 years

(Whichever is latest)

Yes

Yes

Yes

Yes


Significant Financial Hardship Benefit

You may receive a benefit of an amount no greater than the value of your Member's Accumulation, excluding the $1,000 initial Crown Contribution and any Member tax credits, on the grounds of significant financial hardship as determined by the Trustee in accordance with the KiwiSaver Act. The Trustee must be reasonably satisfied that reasonable alternative sources of funding have been explored and have been exhausted. The Trustee may limit the amount permitted to be withdrawn to a specified amount that, in the Trustee's opinion, is required to alleviate the particular hardship you are suffering.

Under the KiwiSaver Act significant financial hardship includes significant financial difficulties that may arise because:

- you are unable to meet minimum living expenses; or

- you are unable to meet mortgage repayments on your principal family residence, resulting in the mortgagee seeking to enforce the mortgage on the residence; or

- of the cost of modifying a residence to meet your, or a dependant's special needs arising from a disability; or

- of the cost of your, or a dependant's, medical treatment for an illness or injury; or

- of the cost of your, or a dependant's, palliative care; or

- of the cost of a funeral for a dependant; or

- you are suffering from a serious illness.

Benefit in cases of Serious Illness

You may receive a benefit of an amount no greater than the value of your Member's Accumulation, excluding the $1,000 Crown contribution, where the Trustee is reasonably satisfied that you are suffering from a serious illness and are in compliance with the requirements of the KiwiSaver Act. Under the KiwiSaver Act "serious illness" means an injury, illness or disability:

- that results in you being unable to engage in work for which you are suited by reason of experience, education or any combination of those things: or

- that poses a serious and imminent risk of death.

The Government has passed new legislation that changes the requirements for receiving a benefit on the grounds that you are suffering from serious illness. Under this legislation you will be entitled to receive an amount up to the value of your Member's Accumulation (including the $1,000 Crown contribution and any member tax credits) where you suffer from an injury, illness or disability.

If you wish to claim for any of the above, contact your KiwiSaver provider. If you do not know who your provider is, check with your employer or Inland Revenue (with your IRD number).

Benefit or Transfer to Foreign Scheme due to Permanent Emigration

If you emigrate permanently from New Zealand you may, on application to the Trustee, and subject to compliance with the requirements of the KiwiSaver Act, receive a benefit of an amount equal to the value of your Member's Accumulation (excluding the total amount of any Member tax credit), no earlier than one year after your emigration.

Alternatively, you may, on application to the Trustee, at any time after your permanent emigration from New Zealand,and subject to compliance with the requirements of the KiwiSaver Act, have the Trustee transfer an amount equal to the value of your Member's Accumulation to a foreign supparnnuation scheme authorised for that purpose under regulations made under the KiwiSaver Act.

Release of Funds Required Under Other Enactments

The Trustee must comply with any enactment requiring it to release funds from the Scheme, including a requirement to release funds by order of any Court under any enactment (including the Property (Relationships) Act 1976).

2010 Update

A tax bill introduced to Parliament today by Revenue Minister Peter Dunne in late 2009 opens the way for New Zealanders returning home from Australia to bring their retirement savings with them.

The changes are part of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill.

Mr Dunne said portability of retirement savings between New Zealand and Australia has long been a problem for New Zealanders returning home.

Currently, New Zealanders working in Australia make compulsory contributions to an Australian complying fund. The funds are then locked into the scheme until the saver reaches retirement age, posing a problem for New Zealanders who want to return home permanently.

"Under the changes proposed in the bill, New Zealanders with retirement savings from certain Australian superannuation funds can transfer their funds into KiwiSaver when they return home permanently," Mr Dunne said.

"In the same way, KiwiSaver members who are moving to Australia will be able to transfer all of their savings in the scheme, including Crown contributions and any member tax credits to the Australian complying superannuation scheme," he said.

"The changes remove a significant obstacle faced by New Zealanders wanting to return home by allowing them to consolidate their financial affairs where they are choosing to live.

"Overall, it's a positive step towards improving labour mobility between our two countries," Mr Dunne said.

The changes are the result of an agreement with Australia signed in July 2009 and are expected to come into effect in early 2011.