KiwiSaver early withdrawals topped $243m in May as political parties roll out KiwiSaver policies ahead of the election

Early KiwiSaver withdrawals continued in May with members taking out over $243 million for first home deposits and financial hardship.

This comes as KiwiSaver policies a hot election year topic - with National announcing several proposals for the savings scheme at its annual conference on Sunday.

May’s early withdrawal value is lower than the monthly high in March of more than $296 million. In April, withdrawals reached over $229 million.

May’s dollar value was $243,036,329 and the number of total early withdrawals was 9520, with 4420 for first home purchases and 5090 for financial hardship.

By value, first home buyers took out a lot more money than those experiencing financial hardship, but members can withdraw funds under both categories within the same timeframe. May withdrawals for financial hardship totalled $43.9 million, while withdrawals for first homes reached $199.1 million.

The figures come from Inland Revenue (IRD), which rounds the number of KiwiSaver fund withdrawals up to the nearest 10.

People usually withdraw money from their KiwiSaver when they reach 65, which is retirement age, but you can also apply for early withdrawals to buy your first house or because of financial hardship.

In May, there were 83,522 savings suspensions, which is when people temporarily stop their contributions. Of those, 1138 had a saving suspension due to financial hardship.

As of May, 837,436 members had their accounts closed or chose to opt out of KiwiSaver. Of this, 647,855 members had their accounts closed while 189,581 chose to opt out.

Members usually have their accounts closed because of death, permanently leaving the country, retirement, serious illness or other reasons.

In terms of KiwiSaver schemes, 640,594 people were in default allocated schemes, 206,917 were in employer nominated schemes and 2,604,732 had actively chosen their schemes in May.

At 767,700, the 35 to 44 age demographic had the largest number of KiwiSaver members. The 25 to 34 age category follows with 733,738 members.

During May, 5378 people became active or provisional KiwiSaver members, you have eight weeks before you can choose to opt out. There are a total of 3,461,349 active or provisional KiwiSaver members, IRD data shows.

KiwiSaver and the election

National Party leader Christopher Luxon announced at his party’s annual conference on Sunday, that if re-elected, National would make KiwiSaver or an equivalent scheme compulsory for workers, automatically enrol every baby born in New Zealand along with a $1500 Baby Boost payment, and make a contribution into a parent’s KiwiSaver while they’re on paid parental leave.

In November, the National Party released its first key election policy - increasing contribution rates for employers and employees. Additional increases would start from April 2029, rising by 0.5% per year until April 2032 - to a 6% contribution rate for employers and employees each.

New Zealand First was the first party to announce its KiwiSaver election policy in September, proposing to increase employee and employer contributions to 10% and making KiwiSaver compulsory. At the time, New Zealand First leader Winston Peters said KiwiSavers and employers would receive tax cuts to cover the increases.

Peters has also promised to make KiwiSaver compulsory from birth, with an automatic Crown contribution of $1000.

‘Don’t tinker with KiwiSaver year to year’

Speaking to interest.co.nz on Monday, John Berry, chief executive of Pathfinder, a fund manager and KiwiSaver provider, said while he was broadly supportive of changes being suggested, he was unhappy about the approach being taken towards KiwiSaver.

Berry had thought about it in terms of three principles: certainty, a need for a long-term strategy and fairness.

Changes had been made in 2025 to KiwiSaver settings and we were now proposing more in 2026, he said.

“Don’t tinker with KiwiSaver year to year. Have your settings and give people certainty, and help people understand what it’s about and let them build trust in it.”

Berry called for a long-term strategy that was well-planned, well thought through and well understood.

He said New Zealand needed a strategy that was not for the next election cycle but multi-decade.

“We should be thinking about making KiwiSaver fit for purpose for the next 50 to 100 years.”

Berry said it was important to make sure that settings which are changed were fair to all New Zealanders.

Examples of this were people who were self-employed, those on low incomes, people whose employer already has a superannuation scheme.

“There’s so many different people at a different stage of their life that are going to be impacted by changes we make to KiwiSaver so we need to make sure we’re being fair, not just to different people now, but also to different people as they go through their life stages.”

Berry called for a wide-ranging discussion about the interests of different New Zealanders and the potential solutions for each stage of life and where people are at in their life.

“We need cross-party support for it and we shouldn’t be making this an election issue … What we’re talking about are actually changes that will impact savings habits and retirement outcomes over 50 years, over 100 years.”

Berry said this was not just about the next few years.

“This is about multi-decades and changing [KiwiSaver settings] every three to five years, changing the settings, is really unhelpful to New Zealanders who are trying to plan for their retirement.”