How people affected by cyclone can get $5000
KiwiSaver has ANALYSIS: become a natural disaster insurance scheme.
Following the Auckland flooding in January, and the devastating impact of Cyclone Gabrielle, people have turned to KiwiSaver to help them get through.
And KiwiSaver supervisors have relaxed the application process for people in financial hardship as a result of the two extreme weather events, who are seeking to take out sums of up to $5000.
As well as being a retirement savings scheme, KiwiSaver plays many roles in people’s money lives. It is used as a first-home deposit saving scheme.
It acts like life insurance, as money saved is released when people die, or fall terminally ill.
It acts like a form of funeral insurance, because money can be taken out to help pay for the funeral of a dependent of someone doing it tough financially. People who are seriously ill, or injured, can access it for things like the treatment costs, or modifying their home, for example, putting in a wheelchair ramp.
And now, in the latest stage of its evolution, it is acting like a form of post-disaster cashflow insurance.
It’s not a free-for-all, though. To get money out, people must prove to their KiwiSaver manager’s supervisor that they really do qualify to get their money out under the KiwiSaver Act hardship rules.
And those supervisors must be also reasonably sure that alternative sources of funding have been exhausted.
That includes people’s own savings, as well as money that may be available from sources such as Work and Income.
After the Auckland flooding the three big KiwiSaver supervisory companies got together under the auspices of the Corporate Trustees Association to agree to a relaxing of the rules.
Angus Dale-Jones, CTA executive director, said they agreed to prioritise natural disaster applications, especially for vulnerable people, and where practicable to reduce the burden of evidence when the supporting information was not easily available, especially for urgent costs and repairs under $5000.
And in some situations, they allowed people to make ‘‘statutory declarations’’ over the phone.
Ruper Carlyon, founder of the Kō ura KiwiSaver scheme, said even with the relaxation agreed by supervisors, hardship withdrawals were not quick.
‘‘It can be anywhere from three days to three weeks,’’ he said.
‘‘If we get a perfect set of documentation, and it’s all easy to understand, and we can get that back to our supervisor, we can get that back in 24 hours, and paid out one day later,’’ he said.
Hardship withdrawal forms were not easy documents, and many people needed a bit of help filling them out, Carlyon said.
But, he said, the supervisors were being helpful.
‘‘We’ve been told, if it’s cyclone-related, if it’s clear they need the money, we can rush it through,’’ he said.
The $5000 sum under which supervisors are being more relaxed is a pragmatic amount.
‘‘That works out to be about 13 weeks of living expenses.’’
Kō ura was seeking bank statements, the reasons why people needed the money they were trying to withdraw, and evidence the person was suffering financial hardship.
While Carlyon did not like to see people drawing on their retirement savings, he also saw this as being an important function of KiwiSaver.
‘‘There’s no point in telling someone, ‘No, no, no’, this is all about your retirement, and have them go through three months of misery now,’’ he said.
During Covid-19 lockdowns, Australians were allowed to draw A$20,000 from their super funds with no questions asked, but Carlyon does not favour such a move here.
‘‘I think people who didn’t need the money took most of the money out,’’ he said.