Bank acted correctly over KiwiSaver withdrawal requests

Selma’s house was badly damaged by an earthquake. Not long afterwards, Selma deposited $90,000 into her KiwiSaver investment at the bank.
May 2020

Two months later, Selma asked her bank about withdrawing funds from her KiwiSaver to help buy another house. The bank explained she was not eligible to withdraw because she had already owned a property before which meant she didn’t qualify as a first home buyer.  It encouraged her to speak with Housing NZ to see if she would be eligible for a second chance withdrawal. 

About two years later she again asked about withdrawing funds to purchase a house. The bank again said she did not qualify for a first home withdrawal and recommended she speak to Housing NZ. 

Another year later she submitted an application to withdraw her KiwiSaver funds on the grounds of financial hardship, explaining she was unemployed and struggling to pay her mortgage. The application was compiled by the bank and sent to her KiwiSaver supervisor for a decision.  The supervisor approved a partial withdrawal sufficient to cover unpaid living expenses.   

However, Selma was unhappy with the amount the supervisor agreed to release to her, explaining her family’s living expenses were higher than a regular family. She believed the bank was responsible for the supervisor’s decision. She also said she had been under so much stress after the earthquake that it had affected her capacity to make a sound decision about putting her extra money in her KiwiSaver. She complained that in these circumstances, the bank should not have encouraged her to do so. Finally, she said the bank’s communication with her about how to apply for withdrawals had been unsatisfactory and led to her not being able to access more of her funds.

Our investigation

Selma did not provide us information to evidence her concern that she did not have mental capacity to make a sound decision about depositing funds into her KiwiSaver. The bank’s records showed it had given clear advice to her about the implications of this at the time, particularly the limitations on when money could be withdrawn. We concluded that the bank had acted correctly in ensuring she was fully informed about the decision to deposit a lump sum to her KiwiSaver.

We also noted that the amount released from KiwiSaver is determined by the independent supervisor of the fund, and withdrawals are approved in response to hardship applications with the intention of meeting reasonable unpaid living expenses. As such, the bank could not influence or be held responsible for the supervisor’s decisions. In this situation, its role was confined to passing on all of Selma’s requests and other correspondence, which it did.

Finally, our examination of the bank’s records of correspondence with Selma showed the bank had at one point refused to communicate with her by phone, but it continued to correspond by email, responding to her questions and providing appropriate guidance material.


We did not uphold Selma’s complaint.

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