KiwiSaver hardship withdrawals spike in March as fuel, cost-of-living pressures hit households
Higher fuel costs and cost-of-living pressures are driving more Kiwis to seek financial assistance through KiwiSaver.
According to Inland Revenue figures, KiwiSaver hardship withdrawals hit $49.2 million in March, up from $41.2m in February.
More than 5600 people withdrew money from their KiwiSaver for hardship reasons in March, up from 4750 the prior month.
“We’re starting to hear now that people are coming to financial mentors because of fuel issues or not showing up for their appointment because they’ve just not found a way to get money in the tank,” FinCap senior policy advisor Jake Lilley said.
Lilley said there is usually a “rush of demand” on financial mentors in January and February as Christmas debt and back-to-school costs hit home.
“If it’s not one thing, it’s another.
“We do know there’s increases to power bills coming, we’re anticipating that will sort of just stack on as well.
“We do hear from mentors that sort of a sign things are going wrong that they’re alarmed that they’re seeing more people in work presented to them or perhaps a couple with two full time jobs.”
Lilley said another standout was the higher proportion of people whose incomes are only from benefits seeking help from financial mentors.
“It’s just a hard income to live on,” he said.
“I often hear about buy now, pay later as sort of a place people have been going because they just don’t know where else to go to get through the day.”
According to Stats NZ, prices for petrol in April were up 30.1% on an annual basis and 12.6% on a monthly basis, while diesel was up 91.3% on an annual basis and 36.6% on a monthly basis.
Since the beginning of the Middle East conflict in March, the average price of unleaded 91 petrol has increased from $2.49 a litre to $3.28, according to fuel tracking app Gaspy.
Diesel has increased on average from $1.38 to $3.48 over that time.
Tauranga Budget Advisory Service general manager Shirley McCombe said KiwiSaver withdrawals have been steadily increasing for some time.
“I see this as a direct response to the ongoing rise in the cost of living,” she said.
“When people are caught in a cycle of financial hardship, each new pressure simply compounds the existing problems.
“Many are dealing with high rents, rising food prices, increasing petrol costs, and higher electricity bills, particularly during winter.”
But McCombe said that while KiwiSaver hardship applications can appear to be a quick fix, the reality is quite different.
“If we don’t take the time to fully understand a client’s situation and support them to address the underlying issues, they are often back in the same position within a matter of months,” McCombe said.
Lilley said financial mentors were seeing more people last year than the year prior.
“You can only imagine how things are going with the shocks that households are facing at the moment.
“Our thing at the moment is we’re really worried financial mentors won’t be there to help people.
“We’re really worried about funding and people having to stop working as a financial mentor.”
Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.