New Zealanders in financial hardship took $47.9 million out of KiwiSaver in September, and the number of people making a hardship withdrawal bounced back to 5,440 after a dip in August. Monthly figures published by Inland Revenue on 19 October show 9,690 members made an early withdrawal of one kind or another during the month, taking out $243.6 million between them.
First home buyers were the smaller group but took most of the money. Inland Revenue counted 4,250 first home withdrawals worth $195.7 million, an average of just over $46,000 each. The 5,440 hardship withdrawals averaged about $8,800. The monthly dataset covers only hardship and first home withdrawals, because Inland Revenue does not capture money taken out at retirement.
September was the 27th month in a row in which hardship cases outnumbered first home buyers. The last time first home buyers were the larger group was June 2024, and then only by 10 members. Interest.co.nz, which reported the September figures on 20 October, noted that just over half of the 100,000-plus early withdrawals in the year to June were for hardship, while first home purchases made up most of the $2.8 billion value.
The August figures had offered a hint of relief. Hardship withdrawals fell to 4,500 that month, worth $39.7 million, the lowest count since April. September wiped that out, with the number of hardship withdrawals up 21 per cent on August and the amount up by the same proportion. The $47.9 million taken for hardship in September is the fifth largest monthly total in Inland Revenue’s monthly series, which runs from August 2016, behind only December 2025, October 2025, March 2026 and September 2025.
Measured against a year earlier the picture is flat rather than rising. In September 2025 there were 5,530 hardship withdrawals worth $48.9 million, so the latest month is fractionally lower on both counts. Over the 12 months to September, hardship withdrawals totalled $536.2 million, up 8 per cent on the $495.5 million taken in the previous 12 months. First home withdrawals over the same period reached $2.35 billion, up 18 per cent, lifting total early withdrawals for the year to $2.89 billion.
The longer view is what makes the numbers stand out. In September 2021, 1,050 members made a hardship withdrawal and they took out $6.8 million. Five years on the count is more than five times higher and the money is seven times higher. Kiwibank economists Elliott Lowe and Alexandra Turcu traced the trend in a chart of the week published on 31 August. “The number of KiwiSaver hardship withdrawals has increased 346% between August 2016 and June 2026,” they wrote. “Almost all of that increase occurred between 2022 and 2025.”
The Kiwibank economists also noted that the typical withdrawal has grown as well as the number of them. “The average dollar amount of each hardship withdrawal has increased by 69% from ~$5,000 to $8,450,” they wrote. The September average of about $8,800 sits above that figure.
The steady stream of hardship money leaving the scheme has prompted Retirement Commissioner David Boyle to ask whether withdrawals have become too easy to get. Speaking to RNZ on 28 September, Boyle said he was seeking feedback from the scheme supervisors who sign off on applications. “We’re living in a challenging cost-of-living period of time and it’s been exacerbated particularly this year,” he said. He wanted to know whether members were making a single withdrawal or returning repeatedly. “Or are they coming back for more and almost treating KiwiSaver like a bank account, which it’s not designed for?” he told RNZ.
James Douglas, chair of the independent board of supervisor Trustees Executors, told RNZ in the same report that the rules had drifted. “Unfortunately those guidelines have expanded over time. I think we’ve become a little bit more lax,” he said. A hardship withdrawal is meant to be a last resort, available only when a supervisor is satisfied the member is in significant financial hardship and has exhausted other reasonable sources of money. Our guide to who qualifies for a KiwiSaver hardship withdrawal and how to apply sets out the test and the evidence providers ask for.
The withdrawals are happening at the same time as members are being asked to put more in. The default contribution rate for employees and employers rose from 3 per cent to 3.5 per cent on 1 April this year, with a further step to 4 per cent due in April 2028, while the Government’s annual top-up was halved to a maximum of $260.72 from 1 July 2025. Inland Revenue passed $995.6 million to scheme providers in September, including $628.4 million of employee deductions and $361.8 million of employer contributions, so money flowing in still outweighs early withdrawals by roughly four to one.
Membership keeps growing. There were 3,486,707 active or provisional members at the end of September, up about 71,000 on a year earlier, and the 35 to 44 age group is now the largest at 778,038 members. Another 84,089 members had their contributions on hold under a savings suspension, 1,142 of them on hardship grounds. Over the life of the scheme 662,819 accounts have been closed and 190,076 people have opted out after being automatically enrolled.
KiwiSaver has become an election issue in its own right ahead of the 7 November vote, with ACT promising to scrap tax on KiwiSaver earnings and Labour promising to lift employer contributions to 6 per cent. The hardship rules themselves remain the Retirement Commissioner’s territory for now. The October figures are due from Inland Revenue in November, around the time the final vote count is declared on 27 November.
Have you applied for a KiwiSaver hardship withdrawal this year, or been turned down for one? Tell us how the process went in the comments.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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