Significant Financial Hardship Withdrawal
You may be able to withdraw some or all of your KiwiSaver savings if you're experiencing significant financial hardship. This is designed for genuine emergencies where you have no other reasonable way to meet essential costs — it is not a general "rainy day" fund. Your KiwiSaver provider, not the Government, decides each application.
What Qualifies as Significant Hardship?
Your KiwiSaver provider will consider hardship if you cannot meet:
- Mortgage payments on your home — and you're at risk of losing it
- Rent arrears — you're behind on rent and at risk of eviction
- Medical costs for yourself or a dependent family member
- Funeral costs for a close family member
- Education costs for yourself or a dependent (in limited circumstances)
- Living expenses in extreme cases (e.g. after a natural disaster or family violence)
How Much Can You Withdraw?
You can withdraw enough to cover the specific verified hardship costs. You cannot withdraw more than the amount of the hardship, and you generally must have exhausted other options first (e.g. benefit entitlements, bank loans, family support). Some providers allow partial withdrawals for ongoing hardship situations such as long-term rent shortfalls.
How to Apply
- Contact your KiwiSaver provider and request a hardship withdrawal form
- Provide evidence of the hardship (e.g. overdue notices, medical bills, eviction notice)
- Provide evidence that you have no other means to meet the cost (bank statements, proof of declined loan applications)
- Your provider assesses the application — this can take up to 20 working days
Each provider has slightly different criteria — read their hardship policy carefully before applying.
Serious Illness Withdrawal
If you suffer from a serious illness that permanently or significantly reduces your ability to work, you may be able to withdraw your full KiwiSaver balance, including the $1,000 minimum that normally stays in your account.
What Qualifies?
- Cancer, heart disease, stroke, or any condition that leaves you permanently unable to work
- You must provide medical evidence from your doctor
- The illness must be expected to last at least 6 months
Unlike hardship withdrawals, serious illness withdrawals typically let you take out your entire balance — there's no requirement to leave $1,000 behind.
Tax on Hardship and Illness Withdrawals
Withdrawals for hardship or serious illness are generally tax-free. The funds are treated as a return of your own savings, not as income — so there's no extra tax bill on top of the stress of the situation itself.
Common Mistakes
- Applying for hardship to pay discretionary expenses — bills like holidays, cars, or credit card debt don't qualify.
- Not exhausting other options first — providers expect evidence you've tried Work and Income assistance, bank loans, or family help.
- Withdrawing more than the hardship amount — over-withdrawing is not allowed and slows the application.
- Ignoring the impact on your retirement — every $1,000 withdrawn today is roughly $4,000+ less at 65 (at 5% growth over 30 years); only use hardship withdrawal for genuine emergencies.
Next: Retirement Withdrawal →
Alternatives to Withdrawal
Before dipping into retirement savings, work through these options in order: Work and Income assistance (emergency benefits, accommodation supplements, and advances), a mortgage repayment holiday or restructure with your bank, payment plans with creditors, and help from budgeting services (free through MoneyTalks or Citizens Advice Bureau). Providers expect evidence you've tried these avenues — and exhausting them first means you keep your retirement savings compounding.
What Happens After a Withdrawal
Your KiwiSaver membership continues after a hardship withdrawal — contributions resume automatically from your next pay, and you remain eligible for employer matching and the government contribution. You're also still eligible for a first home withdrawal later, as long as you meet the 3-year membership rule. The key is to treat the withdrawal as a bridge, not a reset: once the crisis passes, consider bumping your rate back up to rebuild the balance.
Provider Policies Differ
Each KiwiSaver provider publishes its own hardship policy, and the practical differences matter: some providers cap withdrawal amounts, some pay creditors directly rather than to you, and some require a budgeting service report before they'll approve living-expense claims. Read your provider's policy before applying, and if your application is declined, you can ask for the decision in writing and apply again with stronger evidence.
Deep dive — 2026 update
How the hardship test actually gets assessed
There are two different gates, and both must open. First, a significant financial hardship test: you cannot meet minimum living expenses, cannot pay a mortgage or rent to keep your home, or cannot pay for medical treatment or funeral costs. Second, a reasonable alternatives test: your provider must be satisfied you have exhausted other options. Supervisors apply the same checklist across providers:
- Have you used any savings, investments or term deposits?
- Have you applied for all Work and Income assistance (Accommodation Supplement, Temporary Additional Support, Advance Payments)?
- Have you asked your bank for a mortgage holiday or to restructure the loan?
- Have you used any credit facility or insurance (including income protection)?
- Is your budget genuinely in deficit after all of the above?
A one-page budget showing income below essential costs — with three months of bank statements as evidence — is the single most useful document you can supply. Applications that fail usually fail on the alternatives test, not the hardship test.
What you can and cannot withdraw
- Hardship: only the amount needed to resolve the hardship, not your whole balance. Your provider decides the figure.
- Serious illness: you may withdraw your full balance, including the government contribution and employer money — but you need a medical certificate confirming you are unlikely to be able to work again, or that you need treatment you cannot otherwise fund.
- Both: you must leave at least $1,000 in the account unless you are withdrawing for serious illness.
What it costs you long-term
Withdrawing $15,000 at age 40 instead of letting it compound at 4.5% net costs roughly $37,000 by age 65. That is the real price of the withdrawal. It is sometimes the right call — a repossessed house or untreated illness costs more — but work the alternatives first: Advance Payment of Benefit (interest-free), Temporary Additional Support (70% of the shortfall for up to 13 weeks), a bank hardship application, and free budgeting services through MoneyTalks.
Realistic timeline
Complete applications typically take 5–10 business days for hardship and 10–15 for serious illness. Incomplete ones run weeks. Call your provider before you fill anything in and ask which documents they want — the list differs by scheme and the phone call saves the delay.