Discover the Ins and Outs of KiwiSaver: Your Guide to Retirement Savings, First Home Purchases, and Financial Distress. Unravel the nuances of using KiwiSaver for your financial needs while uncovering why it's rarely a solution for existing mortgages. Get insights on penalties, taxes, and the government's role in accessing funds during tough times.
___________________________________________
“This is off the back of a debate around Nationals ‘pay your bond with Kiwisaver’ policy’s…
Context – My partner and I own a home with a $460k mortgage. We have $80k combined in KiwiSaver (we’ve already used KiwiSaver to buy into the home).
I’m not looking to move away from Kiwisaver it’s more a question / thought about why we are not offered the ability at a given time (once every 1, 2, 3 years for example) to draw down our KiwiSaver to pay off debt, in this instance a mortgage.
Essentially we want to get out of debt as quickly as possible.
If we could draw down what are the pros / cons? Why is this not an option currently and how could we change this?”
(Original question on Reddit)
___________________________________________
KiwiSaver is a retirement savings scheme that aims to help New Zealanders save for their future. It can also be utilized for purchasing a first home or in times of financial distress. However, KiwiSaver cannot be used to pay off an existing mortgage except in rare and extreme situations.
One reason for this is that KiwiSaver is intended to be used for retirement savings, and withdrawing funds before retirement could significantly reduce the amount of money you have available when you retire. Additionally, if you withdraw funds from your KiwiSaver account before you turn 65, you may be subject to penalties and taxes.
If you are experiencing financial hardship with an existing mortgage, you may be able to access your funds. However, this is only allowed in certain circumstances and requires approval from the government.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
