This article was published on 25 October 2008. Some information may be out of date.


  • Does KiwiSaver allow for earlier withdrawal for someone with Down syndrome?
  • Would having savings in KiwiSaver affect entitlement to benefits?
  • Does it make sense to look at productive and non-productive KiwiSavers?
  • Some property investors stand to gain from the current climate.

Plus: Readers’ comments on KiwiSaver

QI have a concern regarding KiwiSaver for my 7 year old with Down syndrome.

I enrolled both my daughters into KiwiSaver because I think it is a great way to start saving for their future. Then I started thinking about the reality of it all. People with DS normally do not live to the ripe old ages other people do (i.e. 65 and older).

I have rung KiwiSaver — IRD etc. to find out if they had made any plans for people with disabilities, and everybody I spoke to was thrown for “a loop”. Nobody has thought about this at all.

People with Down syndrome do not have the same life spans as other people. There has been made no provision for our children to perhaps draw on KiwiSaver when they reach the age of say 50.

It would have been good if they had taken this into consideration. Once again people with disabilities are treated as second rate citizens.

AGood on you for getting your girls into KiwiSaver, and sorry to hear you’ve had trouble getting information.

Whether your daughter can get her money out early seems to depend on the trustees of her KiwiSaver fund, but it looks promising.

Inland Revenue says it can’t give advice about a particular case or condition. “However, the general position is that people who are suffering serious illness may be able to withdraw their savings early.

“The KiwiSaver Act makes it explicit that serious illness means ‘an injury, illness or disability —

  1. that results in the member being unable to engage in work for which he or she is suited…, or
  2. that poses a serious and imminent risk of death.”

The department goes on to say that “if the trustees are satisfied that a person meets the criteria, he or she is eligible for funds withdrawal.”

Another possibility, although not as good, is early withdrawal on the basis of serious financial hardship. In that case, the government kick-start and member tax credits can’t be withdrawn.

Still, your daughter would be able to access the money she put in plus all the investment returns on the account over the years — which would be well over half the total balance. And the government contributions would be available at 65.

For more info, I went to the Ministry of Economic Development, which regulates trustees. Their response: “As IRD point out the trustees have discretion in this area and they are the ones that need to be reasonably satisfied that a person meets the criteria for serious illness withdrawal.

“There is no provision in the legislation for MED to issue guidelines as to how the trustee should exercise that discretion.”

You might want to write to the trustees of your daughter’s KiwiSaver provider — ring or email the provider and ask how to reach them — to find out how they feel about the situation. If they don’t respond well, you could move to a more responsive provider. If you have trouble finding a suitable provider, get back to me.

It shouldn’t be hard to move provider. You just contact the new one and they will arrange to move your money from the old one, and tell Inland Revenue.

QI work with people who have intellectual disabilities in a supported employment role. We have 31 clients in fully waged positions out in the workforce. Obviously, they are entitled to the same rights as other employees in relation to KiwiSaver.

My colleague and I have chosen to support all new employees through the KiwiSaver maze as part of our role, and we are working through those with existing jobs. I have been meaning to write to you for some time to tell you so.

Obviously, there are issues for our clients that are different from or additional to those in the rest of the workforce. Your book has given us really wonderful information concerning the scheme and has proven invaluable.

I wonder if I could ask a question: What would happen if, instead of spending his money throughout his life, a client of ours accumulated a KiwiSaver nest egg of say, $30,000 or $50,000? This is quite feasible.

Suppose this client then wished to access full residential services, similar to those offered by IHC or other agencies before he reached rest home age because of declining health and an inability to cope living in the community. Would his KiwiSaver nest egg stand in his way of accessing those services?

AThe short answer is “no”.

Inland Revenue comments, “Our understanding is that funds in a KiwiSaver account will generally have no impact on benefit entitlement.”

And from the Ministry of Social Development: “If a person entered fulltime residential care before reaching rest home age, currently 65 years of age, and the KiwiSaver scheme is registered under the KiwiSaver Act 2006, then the KiwiSaver accumulated amount would have no effect on the person’s entitlement to Residential Support or Care Subsidy. There are two reasons for this:

  • “A KiwiSaver fund is classed as an exempted asset in legislation.
  • “Persons under 65 years of age entering residential care are not asset tested.”

It sounds as if you are on pretty solid ground. I love your positive attitude to KiwiSaver, and thanks for your kind comments.

QWhat I would like to see is an analysis of KiwiSaver contributors; especially how many are in the following categories:

  • children
  • beneficiaries
  • those over 60 years but not yet 65
  • low income earners, earning under the average wage of about $45,000

The answers to the first three will show how many non-productive contributors, like me (category 3), are being subsidised by the productive sector.

Why should I, non-productive, saving $1000 for the next 5 years come out with a nest egg of $11,000-plus. Especially in the economic environment now predicted, that might be seen as an obscene rate of return.

AKiwiSaver does indeed deliver really high returns to those over 60. Most will earn the equivalent to more than 30 per cent, even though their KiwiSaver account is actually earning much less than that. It’s the government contributions that make a huge difference.

On the different categories of KiwiSavers, those under 18 make up about 13 per cent, and those over 55 make up about 19 per cent. There isn’t a recent breakdown of people over 55, but earlier data showed there were slightly more 60 to 65s than 55 to 60s.

There is no info available on the number of beneficiary KiwiSavers.

On income, I couldn’t get an answer to your exact question, but generally KiwiSaver members are across the board income-wise, with those who have opted in being on somewhat higher than average incomes and those automatically enrolled being on somewhat lower income.

Make of that what you will. It does seem that low-income earners are pretty well represented.

In any case, not all children or people over 60 are “non-productive”, and many beneficiaries receive benefits for only a short time before becoming “productive” again. Those who don’t probably have long-term health problems, and I for one am really pleased to see them participating in KiwiSaver.

Still, I applaud your attitude — that you are perhaps getting more than your fair share. It’s a welcome change from people griping because they feel they are getting too little.

QIn relation to your comment about the property investors who may be losers in the current climate, it is worth noting that for the conservatively geared small investor the fall in prices actually assists in improving the affordability of acquiring further properties.

One of the best things that a small investor could do currently is reduce their mortgage and rebuild their equity-to-debt ratio in their current portfolio so that they could take full advantage when property prices begin a recovery in three to five years time.

Property as a get rich quick vehicle is a dangerous game, but as a get rich slow option it still does just fine.

AI’ve got no argument with that.

In a recent column I said that losers when house prices fall include, “Those who have invested in property assuming its value will always rise.”

If, however, you have allowed for the possibility of a price fall, and know you are in a position to ride out the downturn — however long it takes — you should do well.

I agree that reducing any debt — including mortgages — seems prudent these days, whether it’s a conservative move or in preparation for further buying before the next property upturn.

The tricky part, of course, will be knowing when the upturn is coming. Your three to five years might be spot on, but it might not. Every economic cycle is different.

That’s one of the disadvantages of property investment compared with shares. With the latter, you can buy or sell gradually, but with property you generally have to trade large amounts all at once.


The following are some of the winning entries in the Herald’s Money Column giveaway of my new book, “KiwiSaver Max: How to get the best out of it”. To enter, readers had to say in 50 or fewer words what they think of KiwiSaver — good, bad or both.

Compulsory saving is a great idea, but KiwiSaver is hard to understand and it is unfair that employers have to pay some employees more if they opt in and others don’t. I think everyone should be responsible for their own retirement.

— Roban Jury, Kawakawa

Comment: Making KiwiSaver compulsory would introduce a whole raft of other problems. I hope it doesn’t happen. I take your point about unequal pay. It’s one of those issues that can be looked at from several different perspectives. On taking responsibility for your own retirement, it seems to me that that is what KiwiSaver is all about.

I don’t think KiwiSaver will save any Kiwis. We lost 81,000 Kiwis last year, (45,000 to Australia). At this rate, by the time I retire, I will be the only Kiwi left so it won’t save me either.

— Tony Cooper, Mt Albert, Auckland

Comment: But you will at least have the beach all to yourself.

No paywalls or ads — just generous people like you. All Kiwis deserve accurate, unbiased financial guidance. So let’s keep it free. Can you help? Every bit makes a difference.

Mary Holm is a freelance journalist, a director of Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. From 2011 to 2019 she was a founding director of the Financial Markets Authority. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary’s advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to [email protected] or click here. Letters should not exceed 200 words. We won’t publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.