Find out what options you may have below if you have been affected by COVID-19
We are here to help our members affected by the COVID-19 pandemic. Find answers below to some of the frequently asked questions that we have received from our members around KiwiSaver and COVID-19.
Find out more about what options may be available to you.
You can apply through Inland Revenue for a ‘Savings Suspension’. If you have been contributing to KiwiSaver for over a year you do not need to give a reason for the suspension.
If you are contributing a higher percentage rate of your income than the minimum 3%, you can reduce this to a lower contribution rate. You can make this change by filling out the ‘KiwiSaver deduction form KS2’ and giving to your employer.
Under the Significant Financial Hardship provision, where you have not been able to get support from other organisations (e.g. WINZ), you can apply for a Significant Financial Hardship withdrawal. Christian KiwiSaver Scheme can approve an amount at our discretion once the application has been assessed.
This should be your last resort option as it will impact the amount of money you will have available when you are eligible to access your money from age 65.
Where has my money gone?
The outbreak of coronavirus is affecting share markets and economies around the world. For many KiwiSaver members, balances may have dropped.
You still hold the same investments (like shares for example), but they currently have less value. We recommend you read out latest investment commentary update as it gives further information around what has been seen with the markets over the Covid-19 pandemic.
Market volatility is normal throughout the lifetime of an investment like a KiwiSaver account. For example, markets have rebounded significantly since the end of March (the effects of which will not have been reflected in your account balance since we only allocate returns on a quarterly basis). It has been the experience with every market crash in the last 100 years that the market has eventually recovered. Patience is a virtue when it comes to investing!
No money has been taken out of your KiwiSaver account by the government. For a more in-depth look at the performance of your KiwiSaver account, you can log into the Christian KiwiSaver Scheme portal.
Should I be changing the type of fund my KiwiSaver account is invested in?
We can’t provide specific advice on your personal circumstances but, as a general rule, your investment timeframe is the most important consideration with fund selection i.e. when you think you’re likely to need the money (either for retirement or to buy your first home).
For example, people with a 20-year retirement horizon and who aren’t planning on making a first home withdrawal may want to be in a growth-oriented fund if they’re not in one already. Over the long term, a growth-oriented investor will benefit significantly as markets recover.
Switching funds temporarily, say from Growth to Conservative, will lock in any loss. When the market recovers, buying back into growth assets (like shares) will be more expensive, meaning you will likely have fewer growth assets in your portfolio than prior to the crisis.
Changing funds can have a big impact on your future retirement income. You can read further information about what sort of fund is best for your risk appetite on sorted.co.nz.
Should I decrease the amount I contribute or stop contributions altogether?
Depending on your day-to-day financial circumstances and the uncertainty around how long a recession may be, it may be prudent to wind back your contributions.
Our suggestion is that this should only be done if you really need the extra money now to help with day to day expenses. The good thing about contributing when share prices are down is that you get more shares for your money!
Do bear in mind, that contributing less now may mean your employer also contributes less to your account and you may miss out on some of the government contribution to your account. Fewer contributions now will mean less retirement income in the future.
To decrease your contributions, you will need to get in touch with your employer. If you’ve been in KiwiSaver for 12 months you can suspend contributions to your KiwiSaver account for between 3 months and 1 year.
Information on how to pause your contributions can be found on the Inland Revenue Website.
Can I withdraw my KiwiSaver money?
The law governing KiwiSaver doesn’t generally allow withdrawals until you turn 65. In some specific circumstances, because of significant financial hardship or for a first home purchase, early withdrawals can be made.
You should think carefully about your investment goals and timeframes as withdrawing all your KiwiSaver funds now locks in any losses. Historically, investors who have been able to avoid selling during drops have been rewarded by the market over the long haul.
To stop the losses why don’t you move my KiwiSaver investment out of shares and put the money in the bank?
While it may be hard to see the value of your KiwiSaver account decline, periods of negative returns and volatility are what we expect from shares and it is the price we pay for expected higher long-term returns.
We are long term investors, not short term traders. When share markets are volatile, we believe that buying and holding stocks rather than trying to time the market ups and downs is the best way of protecting and growing your assets.
I need money quickly, where can I get some?
To make an early withdrawal from your KiwiSaver account you need to meet certain eligibility, and there is a process we need to go through.
If you need cash quickly, we encourage you to speak with your bank or employer. The Government has also released a package to help meet Kiwis’ financial costs due to the impacts of Covid-19. If you are needing to talk to someone about applying for an early withdrawal, call our team on 0508 738 473.
Support for your mental wellbeing
The New Zealand Government has a dedicated page on the covid19.govt.nz website to help with mental wellbeing. Visit the site to discover tips, tools and places where you can get further support. Remember to reach out to your usual supports such as whānau, friends, workmates and wider community if you are having a tough time.
Check in with your employer to see if they already have an employee assistant program that may be able to be utilised for free or at a reduced rate. Your local church community may also have options for someone to reach out to.