Three times the pre-pandemic rate and accelerating
In March 2026, 5,610 KiwiSaver members withdrew more than $49 million for financial hardship, the second-highest monthly total since records began in August 2016. That was 12.65% higher than March 2025, when $44.3 million went out the door. December 2025 was worse still, with 6,030 withdrawals setting an outright record.
Over the full year to March 2026, more than 60,000 hardship withdrawals were made, roughly three times typical pre-pandemic rates. Calendar year 2025 saw 58,460 withdrawals totalling $514.8 million, up 23% from 47,390 withdrawals worth $403.8 million in 2024. The decade-long trajectory is staggering: cumulative hardship withdrawals stood at $41.1 million in 2015 and hit $471.2 million by June 2025, a 1,046% increase.
This is not a blip. Pie Funds CEO Ana-Marie Lockyer confirms there has been “no meaningful slowdown in hardship withdrawals”, with approved applications remaining static rather than trending down. A sustained structural condition, not a temporary spike.
Hardship now outpaces home buying
For most of KiwiSaver’s history, first-home withdrawals dominated. That has flipped. Since December 2023, hardship withdrawals have consistently exceeded first-home withdrawals every month except June 2024. In 2025, hardship exceeded first-home withdrawals by 10,000.
The distinction matters. First-home withdrawals convert retirement savings into housing equity, an asset that typically appreciates. Hardship withdrawals consume retirement capital to cover immediate living costs, with nothing created in return. The average withdrawal is around $8,000. Tom Hartmann, personal finance lead at Sorted, estimates that an $8,000 withdrawal costs approximately $50,000 off a final retirement balance over a 30-year horizon. Multiply that across 60,000 withdrawals a year and the collective retirement shortfall becomes enormous.
The pain is real but concentrated
Simplicity’s chief economist Shamubeel Eaqub provides the most honest framing. Hardship withdrawals affected around 1.6% of KiwiSaver members and represented just 0.3% of total savings. The $123.1 billion scheme is not under threat. But Eaqub is clear about what the data signals: “The job market and economy remain sluggish. We’re not out of the woods yet, and for many, this recession still feels very real.”
ANZ Investments’ Sian August confirms the breadth: “Hardship applications are being driven primarily by cost-of-living pressures and short-term income disruption, affecting customers across all age groups.” This is not a young-worker problem or a low-income-only problem.
Meanwhile, the most vulnerable face a hidden sting. MSD’s Graham Allpress has warned that benefit recipients making hardship withdrawals may not realise the impact on their entitlements. Withdrawn cash becomes a counted asset, potentially reducing Accommodation Supplement or Temporary Additional Support. People in the most acute distress may be making their situation worse.
What employers should be reading into this
The business angle is underexplored. Employers are paying a minimum 3% contribution into KiwiSaver accounts that a growing share of workers are drawing down immediately to cover living costs. That employer contribution is not building retirement capital. It is being consumed.
More practically, financially stressed employees are less productive, more absent, and more likely to leave. When Tracey Phillips, chief executive of Henderson Budget Service, says “more people than ever are requesting help withdrawing KiwiSaver for hardship reasons”, that pressure is showing up in workplaces, not just budget advisory offices.
For consumer-facing businesses, the signal is even more direct. Households liquidating retirement savings to cover basics are not buying new cars, renovating kitchens, or booking holidays. Dean Anderson, founder of Kernel, frames it as “evidence of a two-speed economic recovery”. One cohort is investing and spending. The other is cannibalising its future.
A system that still cannot explain itself
Retirement Commissioner Jane Wrightson’s call for better data collection on withdrawal reasons is remarkable for what it implies. After nearly two decades of KiwiSaver, the government still cannot tell you precisely why people are withdrawing. Anderson is calling for centralisation of hardship assessments within WINZ to avoid inconsistent decisions and provider-shopping.
Neither reform is happening. Meanwhile, 60,000 New Zealanders a year are burning through their retirement to survive the present. That number is a policy failure and a demand-side warning that every business with consumer exposure should be watching closely.
Sources
- NZ Herald: KiwiSaver financial hardship withdrawals spike amid fuel crisis (2026-04-22)
- RNZ: Benefit warning for KiwiSaver withdrawals (2026-04-22)
- RNZ: KiwiSaver withdrawals surge in 2025 (2026-01-28)
- 1News: What to know about KiwiSaver hardship withdrawals (2024-05-21)
- Inland Revenue: Statistics on KiwiSaver funds withdrawn by amount
- Simplicity: Hardship withdrawals are rising – and telling us something important
- RNZ: How long are KiwiSaver members waiting for withdrawals