In times of economic uncertainty like the one we’re experiencing now, it’s important to get all the financial help you need to get through it. However, being aware of the potential long-term impact on your finances is also crucial.
The Financial Markets Authority (FMA) and the Commission for Financial Capability have recently issued statements reminding KiwiSaver members that, while their circumstances may qualify for a significant financial hardship withdrawal, this move should be carefully considered.
Here are some key things to know.
Staying put to ride out market volatility
As you know, the Government has put in place extraordinary measures to support New Zealanders during the COVID-19 outbreak (more on this below).
According to FMA’s chief executive Rob Everett, it’s important to make use of this assistance first, and use KiwiSaver hardship withdrawals as a last resort, to avoid hindering your retirement goals. Everett recommended New Zealanders – whenever possible – to leave KiwiSaver funds untouched and allow them to ride out market volatility.
This also applies to switching between investment funds: if your attitude to risk and retirement goals haven’t changed, it may be best to leave your funds where they are now. “When you switch from one fund to another, they have to sell all the assets against your name in the first one in order to invest in the second one, and you end up crystallising your loss, you end up basically banking your loss in those particular assets,” Everett explained.
Of course, if you’d like to get a clearer picture of your options, and before you make any decisions about switching or withdrawing, we recommend getting in contact with us at your earliest convenience.
What other help is available
Echoing the FMA’s recommendations, Retirement Commissioner Jane Wrightson has encouraged Kiwis to consider all forms of Government and bank and non-bank support before opting for a KiwiSaver financial hardship withdrawal.
The Government support package includes:
• Leave and self-isolation support;
• Wage subsidy scheme;
• Mortgage holiday and business finance support schemes;
• Business cash flow and tax measures;
• Support for Maori communities and businesses;
• A free government helpline: 0800 779 997 (8am–1am, 7 days a week);
• Other financial help from Work and Income.
As Wrightson pointed out, the key thing is to avoid making rash decisions. Once again, please contact us if you have any questions or need help planning your next steps.
Still like to proceed with a KiwiSaver withdrawal?
If you need to make a significant financial hardship withdrawal, please click here to learn more about eligibility criteria and conditions.
You’ll need to provide evidence that you’re suffering significant financial hardship as a result of COVID-19. KiwiSaver providers are working on simplifying some elements of the process to take into account the Level 4 lockdown guidelines, like the requirement to sign a form in front of an authorised witness. Statutory declarations and ways to enable applications to be witnessed remotely are being investigated.
If you’d like to proceed with this, please give us a call. We’re here to help.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.