KiwiSaver can be dipped into if you are suffering from serious illness or financial hardship, but just how hard is it to qualify for either of these? This article in NZ Herald discusses just how hard it is to judge whether or not your circumstances will allow you to withdraw funds from KiwiSaver.
“About a year ago I did some serious investigation into joining KiwiSaver, but decided against it because I could not get a definite answer to my questions. I have multiple sclerosis, which at some point may prevent me from working. If it does I want to be able to withdraw my KiwiSaver. I thought KiwiSaver would have a list of illnesses that qualify, as with life insurance early payouts, but it would appear that is not the case. The conclusion I came to was it would depend on the committee and the day.”
Fund managers should make these provisions more explicit and they have no excuse not to do so. It is not good enough to have a committee make the choice – inequity is bound to creep in as some will be granted and some will not and the criteria will vary. Insurers have successfully defined thresh-holds for payouts for decades. Rather than having a list of diseases that qualify, there should be a definition of disablement that qualifies. That should be backed up by a terminal illness type of qualification.
I think the logic works like this, if you are effectively being pushed into early retirement by disability, then you should be able to access your retirement funds. Or put another way, caution is well and good, but the money should be there to spend while you still live.