Lisa Dudson: KiwiSaver hardship withdrawals - impacts and other options

The number of Kiwis making withdrawals from their KiwiSaver due to hardship is on the rise. 

In the year to June, more than 50,000 were made, compared to 18,000 five years ago. 

Early withdrawals can have compounding effects on someone’s financial future – so what other options are there? 

Lisa Dudson joined Jack Tame to delve into the topic and offer up some other ideas. 

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack team podcast
from News Talks.

Speaker 2 (00:11):
A'd be so about five years ago, eighteen thousand New
Zealanders were making key we Saver hardship grant requests. But
in the year to June, fifty thousand New Zealanders have
done it, so two and a half times as many.
And this has massive implications down the line because of
course your key we Saver it tends to compound over time.

(00:33):
Lisa Dudson is here with her thoughts for us this morning.
Hender Lisa, good morning Jack. Do you know in some
respects I'm surprised it's not more than fifty thousand people
because if you look at it as the total number
of key we Saver members, I think it's about one
point six percent of key we Save members are making
hardship grant requests, which is while you know much more
than five years ago that that's still as a total

(00:55):
percentage of key we Saber members, it's not. It's not
massively high, right, It's not fifteen or twenty percent or
something like that. But I suppose this just speaks to
the kind of economic conditions that people are.

Speaker 3 (01:06):
Experien Yeah, yeah, it does.

Speaker 4 (01:08):
And Look, there's no question that it's pretty challenging out there.
I think the other side of it is though, that
there is quite a significant string in the tale of
taking your TV favor funds out. And that recent article
that came out was talking about that. You know, there's
a forty thousand dollar opportunity cost for someone inning seventy
five thousand dollars a year in their mid thirty So,
you know, that's pretty significant, and I don't know where

(01:30):
the people really understand. You know, what takes me someone
of your keep me save money out now might mean
in the future.

Speaker 2 (01:37):
Yeah, right, So talk to us a bit more about
that because obviously it compounds over time, which means that
what ever you take out now is going to be magnified.

Speaker 3 (01:46):
Yeah.

Speaker 4 (01:46):
Yeah, And look at look it is tough because we
set up I've got a clinical national capital that for
QV Save Advice business, and so a couple of years
ago we set up our Facebook page q we Save
Money and the best thing which was to try and
help on the education side of things. Right, So what's
happened with that Facebook page in the last few years
has now we've almost got four thousand members and almost
all the commonversation is around taking your keyvsavor funds out.

(02:09):
So in some ways it's great that there's a resource
out there to give people some guidance on that. But
these are some of the examples that I've seen recently. Right,
you know, people saying, Okay, well I need I need
fifteen thousand dollars out of my kevsaver in order to
buy a new car, right, and I'm like, okay, well,
I'm not sure that you're reading this than fifteen thousand,
or comments around I'd like to send the keysaver out
because I've gotten stuff into a bit of trouble, but

(02:31):
there's a lot of gambling transactions on my account. Or
a recent one that I saw in the last couple
of weeks was saying, you know, like I got declined,
and they took a screenshot of what the leader was
and it was saying, you know, we noticed the high
level of discretionary spending. So on one hand, it's wonderful
that there is this tool that people can access their

(02:52):
KEYVSAB then when they're doing.

Speaker 3 (02:54):
It tough, and quite frankly, there is a lot of
people doing it tough.

Speaker 4 (02:56):
On the other hand, I'm kind of going, is it
too easy, and you know, nice to have the you know,
the safety there. But on the other side of it
is too easy. And I see people in there going, oh, well,
I'm on my third or my fourth round. Yeah, So
you know, I guess there's two sides to it.

Speaker 2 (03:14):
So I went through the id's website and they say
to withdraw savings, you need to provide evidence you are
suffering significant financial hardship. I mean, so do you think
that maybe just the criteria aren't kind of strict enough,
or if the application maybe isn't quite strict enough.

Speaker 4 (03:31):
Well, I mean idis, you know, I mean that's in
some ways it's fairly black and white, but it's always
open to interpretation. And I'm not the person on the
other end, you know, receiving those applications and making.

Speaker 3 (03:42):
Those approvals or declining them.

Speaker 4 (03:44):
But what I am seeing in these forums is I
kind of go I just get the feeling that.

Speaker 3 (03:48):
Some people are using it a little bit too easily
because it is there and.

Speaker 4 (03:52):
Not actually realizing, you know, what the implications are over
the long term, because very few people would have actually
got the calculator out and said, is.

Speaker 3 (04:00):
There a better way of doing this?

Speaker 4 (04:01):
Because there is a significant cost to my financial future.

Speaker 2 (04:05):
Yeah, that's the thing. So they've got a few like
examples that they put in and it's stuff like can't
meet minimum living expenses, you need to modify your homes
to meet your special needs, can't pay the mortgage on
the home you live in, that kind of stuff. But
there's also stuff that applies for family members, which is interesting,
So funeral costs for a dependent family member, palliative care

(04:27):
for a member or members dependent, so you know, the
stuff like that that also applies, which you know you
can imagine there would be an evidential base. But when
you see a surage like that, you do have to wonder,
you know, if it's paying for cars or for for
you know, nice want to haves rather the need to
have you do sort of wonder if people are maybe well,

(04:48):
but also so.

Speaker 4 (04:48):
People might still need that car.

Speaker 2 (04:52):
You need to spend fifteen grand, right.

Speaker 3 (04:54):
Well, that's right.

Speaker 4 (04:55):
And then it's also what is the behavior that's been
going on to get to that point, Like, you know,
have you been super careful with your money, have you
been to see a budget advisor? You know, have you
tried to find some extra try and work of you
you know, I had a bit of a tidy up
of a garage, and you sold a few things on
you know, trade me and Facebook to try and raise
some funds. Have you done all those.

Speaker 3 (05:14):
Things before you got to that point?

Speaker 4 (05:16):
So I don't needsarily know whether I question for most
of it people at that point, but it's just like
what's gone on.

Speaker 3 (05:22):
For them to get to that point? Yeah? And was
that absolutely necessary?

Speaker 2 (05:26):
Yeah, it's interesting. You know, my thoughts on cars, You
never never want to be a dip for a car.
Never never take out a loan for a car.

Speaker 4 (05:34):
Absolutely you can get you could probably get a pretty
good car.

Speaker 2 (05:37):
For five well, yeah, exactly when in the when you're
just you know, my idea of a car upgrade is
going from a Toylet Corolla to a Toyter Corolla.

Speaker 4 (05:46):
So you know, so you're still driving a pretty cheap car.

Speaker 2 (05:48):
Jea're still driving a toy to Corolla. Lisa, you be
pleased that, Yeah, there you go. It's slightly newer than
the last tot of Corolla. You know, so very fantsy
that you go. All right, great to chat as always
appreciate your time, Lisa duds to that personal finance expert
there

Speaker 1 (06:04):
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