Financial Services Complaints is a disputes body many providers use when complaints are escalated. Its \u201cConsumer Guide\u201d to serious illness withdrawals says it interprets \u201cimminent\u201d to mean \u201cthat death must be about to happen, or is very likely to happen, in the next 6\u201318 months\u201d.<\/p>\n
Sheridan says when she told people her application had been declined, \u201cThey were appalled that cancer was not considered a serious illness, especially my advanced and aggressive cancer.\u201d<\/p>\n
Calling it a \u201cserious illness\u201d withdrawal at all seems misleading \u2013 it\u2019s really only applicable when someone is on death\u2019s doorstep.<\/p>\n
Surely a more reasonable test would be whether a specialist certifies that the illness is likely to prevent someone reaching retirement age \u2013 not whether they\u2019re likely to die within a specific timeframe.<\/p>\n
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 \u2013 the distinction between the two seems arbitrary.<\/p>\n
It\u2019s difficult to ascertain how many people actually manage to meet the serious illness threshold. The Financial Markets Authority\u2019s KiwiSaver annual report shows $5.9 billion was withdrawn in the year to March 2025. Of that, 51% was withdrawn by people 65 or over, 30% by people buying their first home, and 7% because of financial hardship (which was up significantly). <\/p>\n
\u201cSerious illness\u201d withdrawals, however, are reported in the \u201cOther\u201d 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\u2019t get a breakdown from KiwiSaver providers, so it\u2019s not clear how many seriously ill people have succeeded in getting their money out.<\/p>\n
The other potential avenue to apply for withdrawal is on \u201cfinancial hardship\u201d grounds, but I wanted to know what would \u2013 or wouldn\u2019t \u2013 get you over the line when it comes to funding healthcare. Do you have to be destitute as well as facing death?<\/p>\n
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 \u2013 do you have to sell the house, remortgage the house, or something else to qualify to withdraw your KiwiSaver for medical treatment under the \u201chardship\u201d provision?<\/p>\n
Amy Cavanaugh from Public Trust clarified applicants \u201cmust have evidence to prove they have exhausted other options\u201d, for example \u201cusing savings, cashing in any investments they have, or prove they are unable to get a loan. It\u2019s not expected a person would be required to remortgage or sell their family home, though investment properties may be viewed differently\u201d.<\/p>\n
Ultimately, whether the grounds for withdrawal are hardship or serious illness, supervisors can only apply the law as it\u2019s written, which is what Sheridan believes urgently needs to be addressed.<\/p>\n
What use are your retirement savings if you\u2019re dead? Photo \/ NZME<\/p>\n
\u201cThe definition of serious illness needs to change \u2013 cancer is serious. The circumstances of each individual and their particular disease should be taken into account.\u201d<\/p>\n
KiwiSaver expert, author and columnist Mary Holm is also in favour of change: \u201cThis 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.\u201d<\/p>\n
I have to agree. I\u2019m not suggesting a free-for-all \u2013 of course we shouldn\u2019t just throw open the floodgates. But surely if there is a credible medical prognosis that sometime is unlikely to reach 65, it shouldn\u2019t matter whether death is likely to occur within a rigid timeframe.<\/p>\n
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.<\/p>\n
After all, what use are your retirement savings if you\u2019re dead?<\/p>\n