KiwiSaver hardship withdrawals boom
More than 50,000 people made withdrawals from their KiwiSaver accounts on the basis of hardship in the year to June - compared to about 18,000 five years ago.
KiwiSaver provider Simplicity chief economist Shamubeel Eaqub said the increase started in 2023 and the reasons were easy to understand - the recession and cost-of-living crisis were putting ongoing pressure on people's budgets.
"But some context - the number of hardship withdrawals were 1.6 percent members, and 0.3 percent of savings. The hardship, as is true for the wider society, is concentrated pain among a few."
Sorted's personal finance lead Tom Hartmann told RNZ's Nine to Noon programme today it was likely the ability to withdraw from KiwiSaver was giving people "peace of mind" that if their situation worsened they could draw on their savings.
The average withdrawal was $8800, he said.
For someone in their 30s earning $75,000 a year, a withdrawal of that size in a year could reduce their not-inflation-adjusted final balance by about $40,000.
Hartmann said there had not been an increase in savings suspensions, which indicated that the withdrawal was a temporary stop gap for people who would get back to making contributions.
People can opt to stop contributing to KiwiSaver for a year at a time, and can renew the suspension at the end of the 12 months.
The number of people on a savings suspension had dropped from 89,000 a year ago to 85,000.
Hartmann said the key thing for people considering a withdrawal was to make it a last resort.
"Typically, there are other sources of support that need to be explored first."
Financial helpline MoneyTalks was one option, he said.
"The team there have reporting seeing an increase in even middle-income people exploring their options."
Eaqub said for people making a withdrawal, it was often a choice between "certain hardship today versus more savings later in life".
But he said the situation was worse for those without KiwiSaver.
"Many low-income people do not contribute to KiwiSaver because the employee contribution lowers their take home pay.
"But they also miss out on the employer contribution and government subsidies. It means when non-contributors face hardship, they do not have this fallback."
But Rupert Carlyon, founder of Koura KiwiSaver, said people on lower incomes could build up good balances.
"Someone earning $60,000 contributing 3 percent will end be putting in [about] $3500 per year, so over 10 years plus returns that really adds up.
"You can easily see a $60,000 salary becoming a $45,000 balance over 10 years. That is the power of KiwiSaver, we are often encouraging people to save that would not otherwise do it."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Otago Daily Times
2 hours ago
- Otago Daily Times
'I'm so very sorry this cost has been put upon you'
By Monique Steele of RNZ The agriculture minister has apologised to New Zealand's top beef exporters for extra costs they will likely face due to new anti-deforestation rules for European Union imports. Those sending agricultural products - like beef, leather or logs in New Zealand's case - will have to prove that their products have not come from land that was recently deforested. Despite fierce opposition from New Zealand industry groups and government officials, the European Union Deforestation Regulation (EUDR) appeared to be going ahead. From the end of the year, all exporters to the EU will be required to prove land used for forests has not been cut down for animals to graze on since 2020. The regulation was amended to exclude sheep products in 2022 and its implementation was delayed last year. But the beef, meat and wood processing sectors were preparing for the new incoming requirements. It was announced this week that the Meat Industry Association, Beef and Lamb New Zealand and an analytics firm were developing aerial and satellite-generated farm maps, in addition to compiling the movement of livestock. The New Zealand Deforestation Map initiative was to help the sector prepare the documents and data needed with each shipment of their products going to the EU from 31 December. The regulation was expected to affect $213 million in beef and leather exports to the EU and $100m of New Zealand wood products. Minister 'banging on the table' for exemption Minister for Agriculture, Forestry and Trade and Investment Todd McClay told the red meat sector conference in Ōtautahi/Christchurch on Tuesday that companies should get prepared for the incoming new rules. "Well done for preparing. I'm so very sorry this cost has been put upon you, because in my view it is unnecessary," he said. "Since we came to government, I have consistently said to the European Union we have standards, the equivalent to yours if not higher, so you should not be putting costs upon every single producer in New Zealand, and we have been looking for ways to find exemptions or to changes, or to get the cost down." McClay wrote to the European Commission last year, and said he met the European Commissioner in Brussels last month who suggested other countries were also trying for exemptions, like France. "You'd figure when the EU member states don't like something, perhaps there's a change coming," he said. But he said New Zealand already had native forest protection rules that resulted in penalties or prosecutions for offending. "They have nothing to worry about in New Zealand. You're not allowed to deforest native forests in New Zealand. "Ultimately I as the government can give an absolute assurance that it doesn't happen because we prosecute, we go and find these things." He said it will likely impose "unreasonable" costs on producers, making it a barrier to trade, even while there was a free trade agreement with the EU now in force. "So you need to keep preparing in case they don't get there, but we're gonna keep banging the table." Mapping farms and tracking livestock Industry analytics firm Prism Earth was a partnership between Silver Fern Farms and Lynker Analytics launched to meet the increased demand for carbon traceability, its website said. Prism Earth was now using satellite imagery, aerial photography, LiDAR and artificial intelligence to map farms and identify grazing areas, forests and track animals via the National Animal Identification and Tracing (NAIT) programme. Also speaking at the red meat industry event, managing director Matt Lythe said the challenge was to accurately understand the conversion of land and animal movements. "Every consignment will need to have a due diligence statement that essentially monitors every NAIT tag, every animal and its passage through the New Zealand landscape and the grazing process through all its dimensions, and whether it's past deforested land or not," he said. "There are some record-keeping requirements that need to be held in place for five years, so it's a reasonably onerous obligation on us all to achieve." Lythe said its modelling showed there were just under 14,000 hectares of beef production farmland to October 2024 where forests had been removed, and 1600 "affected NAIT" farms. "So headline number, just under 14,000 hectares have had forest removal," he told the conference. The main types of removal were pine rotation, followed by woodlots then shelterbelts. The modelling showed 32 hectares of indigenous forest were removed, affecting 24 farms. "I've highlighted the indigenous loss as really the key critical area that we're focusing on," he said. "Thirty-two hectares of indigenous forest in New Zealand has been removed that breaches that European rule." Owners of farms deemed to have been deforested would need to demonstrate to Prism that the removal of trees was not to convert land for agricultural use. Lythe said farmers could mitigate the risk of cattle crossing into deforested land through fencing or other controls, and demonstrate that the removal of trees was due to either animal welfare, erosion control, health and safety or conservation and biodiversity protection. The New Zealand Deforestation Map would be updated before December, and updated every year. The Meat Industry Association was then expected to engage with the wider sector.
Otago Daily Times
4 hours ago
- Otago Daily Times
Cost of polytech changes revealed
By John Gerritsen of RNZ A Cabinet paper reveals re-establishing independent polytechnics will cost more than 500 courses and about 1000 jobs. The March paper from Vocational Education Minister Penny Simmonds said polytechnics had started to act on financial improvement plans that would ensure they were viable when they were cut free from super-institute Te Pūkenga. "Polytechnics have begun implementing their financial improvement plans, which as of late 2024 indicated reductions of approximately 550 programmes, up to 900 FTE and approximately 30 delivery sites," it said. "The final model for work-based learning will also change the spread of training provision between polytechnics, wānanga and private providers. It would be premature to commit to long-term plans to support important provision when there is potential for delivery to look very different once these processes are completed." The paper said the government would set aside $20 million to ensure the retention of strategically important, but potentially unviable courses. "I intend to review support for strategically important provision in the second half of 2026, including long-term options to support the organisations that provide it and how to incentivise delivery of the provision that regions need, through either polytechnics, Wānanga, or private providers who may be able to fill gaps," the paper said. It also said using $6.5m from a special funding category aimed at supporting Māori and Pacific students to boost government subsidies for polytech courses generally could have a negative effect. "Tertiary education organisations may see the removal of the Māori and Pacific learner criteria from the Learner Component as a signal that programmes tailored to support these learners are no longer needed and can be substituted with more generic student support programmes. This may negatively impact on Māori and Pacific learner outcomes." Tertiary Education Union national secretary Sandra Grey told RNZ's Nine to Noon programme today it was the first time the full scale of the cuts had been revealed. "This is the first time we've seen it in black and white. We've been feeling it every week as each institution tries to right-size so that it can cope with the minister's vision for them. "To see 500 jobs going in black and white is really hard for the sector." Grey said the changes would remove vocational education and training from some communities altogether. The government recently announced nine of the 16 polytechnics that joined Te Pūkenga would emerge as stand-alone institutes next year. Three of the remaining institutes would join a federation, with the fate of four others yet to be decided. Simmonds said in a statement: "The Cabinet paper confirms the scale of change required to re-establish a financially viable and regionally responsive vocational education network. The paper you are referring to is an early piece of advice and there were several updates made." The government had asked the Tertiary Education Commission (TEC) work with Te Pūkenga to assist all polytechnics to review their operations, "an exercise that should have happened five years ago when Te Pūkenga was set up, to ensure the viability of the polytechnic sector", she said. "As the minister, I am not privy to information regarding the operational decisions that polytechnics might contemplate. However, I would suggest that it is important for all polytechnics to be taking appropriate actions to ensure their overall viability and maintain their relationships. "We are absolutely committed to maintaining and improving access to vocational education across the regions. $20m has been secured from TEC to support provision in strategic regions and strategic delivery. "Our goal is to give each polytechnic the autonomy to tailor provision to the needs of their region - something the old centralised model simply didn't allow."
Otago Daily Times
4 hours ago
- Otago Daily Times
Nicola Willis: NZers not getting a 'raw deal' on butter
By Giles Dexter of RNZ The Finance Minister does not believe New Zealanders are getting a "raw deal" on butter, but has accepted there is no getting away from how expensive it is right now. Nicola Willis met Fonterra's chief executive Miles Hurrell at Parliament on Tuesday evening. While the two meet regularly, there was increased interest in the meeting due to the current price of butter. Willis had earlier said it was something she would discuss with Hurrell. Characterising the meeting as "constructive and engaging," Willis said Hurrell was candid about the way butter was priced in New Zealand. Her summarisation of her meeting with Fonterra largely zeroed in on her drive to increase supermarket competition. The large proportion of what people pay for butter is dictated by global demand, which is something the government could not control. "Were that price to come down, you would expect that to be reflected in the prices that New Zealand shoppers pay," Willis said. Hurrell had told her that butter had once been the hardest product for Fonterra to sell globally, but the increasing demand was due to reporting on its health benefits. "It was once viewed as a bogeyman," she said. The meeting had reinforced Willis' interest in increasing supermarket competition to put downward pressure on the price of butter. "All roads lead back to supermarket competition. I continue to believe that is the most powerful lever that the government has on this issue. We will never be able to control global dairy prices. What we can influence is the amount of competition in New Zealand's grocery sector and we have a lot of work under way to address that." Fonterra had also observed the supermarket competition. "Miles specifically conveyed that Fonterra operates in a number of markets around the world, most of which have a more competitive supermarket sector, and that it does feel different in New Zealand." She would leave it to supermarkets and Fonterra to argue who was charging what margin. "The sense that I got from my engagement with Miles is that it's a constant battle between them. Each party are probably going to point fingers at the other." Hurrell would not answer questions when RNZ approached him outside Parliament on Tuesday night, but a Fonterra spokesperson said the meeting was "constructive". Willis said she had encouraged Hurrell to front, in particular to explain what proportion of the margins go to Fonterra and what goes to supermarkets. Acknowledging that Fonterra's job was to get the best possible price for its shareholders, Willis also accepted New Zealanders saw the downsides of that when they were shopping. "I've been satisfied that I don't think consumers are getting a raw deal. I think that there is good work going on to ensure that there is pressure and competition from Fonterra to try and keep its prices low. But I get it. Butter is expensive right now. There's no getting away from that."
