Kiwis Withdraw $470 Million from KiwiSaver Amid Rising Hardship

In the past year, economic pressures have driven a significant increase in withdrawals from KiwiSaver, the nation's largest retirement savings scheme. Inland Revenue data shows that over $470 million was withdrawn for hardship reasons in the year ending June 2025 — a 56.6% rise from the previous year.

More than 53,000 New Zealanders accessed their KiwiSaver accounts to cope with financial difficulties, marking a 64.3% increase from the prior financial year. Shamubeel Eaqub, chief economist at Simplicity, highlighted that this trend aligns with prolonged economic hardship, including rising living costs, job losses, and inflation.

Economic Hardship and Rising Withdrawals

Eaqub noted that the most significant factor behind the surge in withdrawals has been the sharp rise in job losses over the past two years. “While inflation has slowed, the cost of living remains high — especially for essentials like food,” he said. Food prices have risen by about 4.5% in the last year, while incomes have not kept pace.

He described the situation as a “double whammy” — when economic conditions worsen, individuals face multiple challenges at once, including higher living costs and reduced income. “People are withdrawing around $9,000 on average to cover debts and ensure they have money left over,” he added.

Implications for Future Retirement

Eaqub warned that drawing from KiwiSaver now could have long-term consequences on retirement savings. “It’s a trade-off between financial hardship today and potentially greater hardship in the future,” he said. “If you’re in hardship now, living in poverty today is not a good way to ensure a better retirement later.”

He emphasized that many of those withdrawing have relatively small KiwiSaver balances, which limits their ability to recover from these withdrawals in the long run.

The Role of Contributions

Those who have been consistently contributing to KiwiSaver are better positioned to weather financial shocks. “People who are not contributing are often on low incomes and miss out on government and employer contributions,” Eaqub explained. “Those who have been contributing have more cushion in times of hardship, even if they end up with less in retirement.”

Despite the increase in withdrawals, Eaqub noted that the number of people accessing KiwiSaver for hardship remains relatively small — about 0.3% of all members — a slight increase from pre-pandemic levels.

A Call for Caution

While the immediate need for financial relief is understandable, Eaqub urged caution. “The long-term implications of these withdrawals should not be overlooked,” he said. “It’s important to find ways to manage current hardships without compromising future financial security.”