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Dunedin Budget Advisory Service executive officer Andrew Henderson wants advisers like him to manage all applications to access KiwiSaver money in cases of financial hardship.
People are able to access their KiwiSaver funds outside retirement if they are buying a first home, moving overseas permanently, suffering from significant financial hardship or they have a serious illness.
Those with financial hardship have to prove that to their KiwiSaver fund manager.
"Significant financial hardship means that you cannot afford essential costs: so you can’t afford rent, food, power, medical, transport," Mr Henderson said.
"With regard to significant financial hardship withdrawals, we do help a lot of people with these."
He said more than 200 people a year came to the service to ask for help withdrawing money from their KiwiSaver account.
"What the KiwiSaver providers do is they only look ahead three months.
"If I said I’ve got a budget shortfall of $100 a week, they would look forward 13 weeks and release enough money to cover that shortfall and then it’s up to me to manage that $100 a week."
Mr Henderson was supporting a recommendation made in January by the Commission for Financial Capability [CFFC] in its review of retirement income policies.
In the review the commission recommends transferring the management of hardship applications to a centralised hub.
That centralised hub would be FinCap, a national support organisation for budget services such as the Dunedin Budget Advisory Service.
FinCap would pass any application on to the relevant regional centre, such as Dunedin Budget Advisory Service.
It was important for people experiencing financial hardship to try other solutions first without taking money out of their KiwiSaver, Mr Henderson said.
"KiwiSaver is a good thing and if you can keep your money in KiwiSaver that’s a good thing.
"By approaching a budgeting service we can look at the whole picture and possibly look at other solutions.
"So there are things like negotiating with creditors, interest-free loans — all these other things we can access, which may be more appropriate than just getting your KiwiSaver money out."
The CFFC says withdrawals from KiwiSaver due to financial hardship accounted for $107.9million in 2019, up 7% on the year before.
It also said in cases where a budget adviser was involved, 20% of hardship withdrawal applications were eventually avoided.
In cases where it is an experienced budget adviser that avoidance rate could be as high as 50%, the review said.
Mr Henderson was confident there was usually an alternative to taking money out of KiwiSaver and the centralised hub idea would reduce the number of hardship applications.