She was told that to improve her chances of survival, she should also have immune therapy – with the drug Keytruda – alongside chemotherapy. However, she doesn’t meet the criteria for that to be publicly funded.
Unable to take on debt against her home, she applied to her KiwiSaver provider under the “serious illness” withdrawal provision in a desperate attempt to raise the $89,000 required to fund the potentially life-saving treatment.
Just before Christmas, that application was declined.
“I was devastated. I felt a complete stranger had just sealed my fate – like I had been delivered a death sentence.”
You might wonder why it was declined, given she’s clearly facing a serious illness.
The answer is, in short, because under the legal test, she’s not likely to die soon enough.
There are two criteria for withdrawing your KiwiSaver under the serious illness provision – being “totally and permanently unable to work” or facing an “imminent risk of death”.
Financial Services Complaints is a disputes body many providers use when complaints are escalated. Its “Consumer Guide” to serious illness withdrawals says it interprets “imminent” to mean “that death must be about to happen, or is very likely to happen, in the next 6–18 months”.
Sheridan says when she told people her application had been declined, “They were appalled that cancer was not considered a serious illness, especially my advanced and aggressive cancer.”
Calling it a “serious illness” withdrawal at all seems misleading – it’s really only applicable when someone is on death’s doorstep.
Surely a more reasonable test would be whether a specialist certifies that the illness is likely to prevent someone reaching retirement age – not whether they’re likely to die within a specific timeframe.
That fact is acknowledged in a 2021 amendment to the legislation that means if you were born with specific life-shortening, congenital conditions, you can apply to access your funds sooner. Cancer, especially the aggressive kind, can also be life-shortening – the distinction between the two seems arbitrary.
It’s difficult to ascertain how many people actually manage to meet the serious illness threshold. The Financial Markets Authority’s KiwiSaver annual report shows $5.9 billion was withdrawn in the year to March 2025. Of that, 51% was withdrawn by people 65 or over, 30% by people buying their first home, and 7% because of financial hardship (which was up significantly).
“Serious illness” withdrawals, however, are reported in the “Other” category, lumped in with a bunch of other reasons like withdrawals because of permanent emigration or death. I asked the IRD for clarification, but it told me it doesn’t get a breakdown from KiwiSaver providers, so it’s not clear how many seriously ill people have succeeded in getting their money out.
The other potential avenue to apply for withdrawal is on “financial hardship” grounds, but I wanted to know what would – or wouldn’t – get you over the line when it comes to funding healthcare. Do you have to be destitute as well as facing death?
Applications for withdrawal are not ultimately decided by your fund provider, but by their independent supervisor. Public Trust is one of the five KiwiSaver supervisors, so I asked them – do you have to sell the house, remortgage the house, or something else to qualify to withdraw your KiwiSaver for medical treatment under the “hardship” provision?
Amy Cavanaugh from Public Trust clarified applicants “must have evidence to prove they have exhausted other options”, for example “using savings, cashing in any investments they have, or prove they are unable to get a loan. It’s not expected a person would be required to remortgage or sell their family home, though investment properties may be viewed differently”.
Ultimately, whether the grounds for withdrawal are hardship or serious illness, supervisors can only apply the law as it’s written, which is what Sheridan believes urgently needs to be addressed.
What use are your retirement savings if you’re dead? Photo / NZME
“The definition of serious illness needs to change – cancer is serious. The circumstances of each individual and their particular disease should be taken into account.”
KiwiSaver expert, author and columnist Mary Holm is also in favour of change: “This is one of the changes I would most like to see in KiwiSaver. I can understand why providers make it hard to do a financial hardship withdrawal, but not a serious illness withdrawal. The rules seem too harsh to me.”
I have to agree. I’m not suggesting a free-for-all – of course we shouldn’t just throw open the floodgates. But surely if there is a credible medical prognosis that sometime is unlikely to reach 65, it shouldn’t matter whether death is likely to occur within a rigid timeframe.
And what if they then survive and are left with little in retirement? That choice should rest with the person whose life is on the line.
After all, what use are your retirement savings if you’re dead?
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