Most people use their KiwiSaver to buy a house or retire but those facing hardship or serious illnesses are able to withdraw their money early. But a Newshub investigation has revealed inconsistencies in who can access money for medical conditions, leaving some people facing life-threatening consequences.
A Whakatāne woman who desperately needed weight loss surgery to save her life was told she couldn't access her KiwiSaver through a serious illness provision, while a Tauranga truck driver was told he could only use his if he was going to die within a year.
These experiences highlight issues around the early withdrawal of KiwiSaver with one expert saying investment firms are ill-equipped to deal with the decisions and often get it wrong.
Researcher Dr Mawera Karetai, 50, was diagnosed with a heart problem in 2017 which was caused by her weight.
Karetai's heart was failing because her weight meant it wasn't pumping enough blood. She was given a stark warning "get your affairs in order".
The health scare prompted Karetai to make some changes, over the next few years she lost 25kgs. But despite the mammoth effort, she still needed to lose 50kg more - something she wasn't going to be able to do without the help of surgery.
"I was very sick. I was still working full time because I'm pretty resilient. But I was really, really unwell," she told Newshub.
Karetai spent years living with the knowledge she could drop dead at any moment because of the pressure her weight was putting on her heart.
Desperate to improve her health Karetai enlisted the help of renowned Tauranga bariatric surgeon Dr Robert Cable.
Given her significant health issues, she and Dr Cable assumed she would have no issues withdrawing her KiwiSaver early to fund the life-saving surgery - but they were wrong.
According to Inland Revenue, people can apply to withdraw some or all of their KiwiSaver early for health reasons such as illness, injury or disability that permanently affects their ability to work or poses a risk of death or a life-shortening congenital condition that lowers their life expectancy below the age of eligibility for New Zealand superannuation (currently 65).
That exact advice was what prompted Tauranga truck driver Reuben, who didn't want his last name used, to apply to withdraw his KiwiSaver for weight loss surgery as well.
The 42-year-old normally spends his days transporting goods around the country but that came to a stop when he got too big to drive his rig.
Early in the year, Reuben tipped the scales at 150kg - too heavy to safely drive his truck. Facing losing his job and a vast array of health issues he applied to access his KiwiSaver under the serious illness provision. It was a move supported by Dr Cable who wrote to his KiwiSaver provider Westpac explaining why Reuben needed the surgery - but he too was denied.
Reuben, who was sure he fit the criteria, called his case manager to ask why but struggled to get a clear answer.
Instead, he was told he needed proof he was going to die within a year to access his money - something that came as a shock to Dr Cable who said it's incredibly difficult for doctors to predict exactly when people might die.
Dr Cable wrote another letter to Westpac explaining that but Reuben, worried he would be denied again, decided to apply under hardship.
"I finally got approved under hardship. But I was pretty angry that I got turned down [under medical] because we own our own home and we've got quite a bit of equity because we've worked hard for the last five or six years to buy a house."
Reuben said the entire process was stressful and humiliating. Before it was approved he spent days wracking his brains trying to figure out how he would pay for the surgery.
Westpac has since apologised for Reuben's experience and conceded "there were opportunities to better communicate and assist [Reuben] in this situation".
Karetai was equally upset when her serious illness application was denied by her KiwiSaver's supervisor Public Trust, seemingly for no reason.
Karetai couldn't understand the rejection and neither could Dr Cable.
Public Trust wouldn't budge and instead suggested she apply to access her KiwiSaver under the hardship provision.
"That was the most humiliating experience of my life to have all these people trawling through my personal finances, proving to them that I'm poor enough to get my money out, to save my life… Nobody should have to do that."
Karetai was eventually able to withdraw money through hardship but she still maintains she should have been eligible under serious illness.
KiwiSaver providers are 'ill-equipped to make these decisions
Karetai and Reuben's experiences highlight ongoing issues around KiwiSaver rules, the director of KiwiSaver advice firm National Capital Clive Fernandes told Newshub.
Fernandes said the legislation is very clear but people are still wrongly denied access to their savings.
"The criteria is actually quite clear. Health reasons are basically either an illness, injury or disability that stops you from working or poses the risk of death or you have a condition that will bring a life expectancy lower than 65," he told Newshub.
Fernandes said despite the legislation being clear, individual providers have a huge amount of discretionary power which causes inconsistencies.
"There needs to be a central body that makes the decisions. This decision has got nothing to do with the service that the providers are providing. KiwiSaver providers are investment managers, they are not equipped to make decisions on whether somebody is in hardship or does have a serious illness, etc."
He said having an oversight board within IRD who made the decisions would be better than the current system.
Fernandes said he believes the providers made a mistake denying Karetai and Reuben's serious illness claims - a stance that is shared by Dr Cable.
Dr Cable told Newshub providers need to give overweight people access to their KiwiSaver because many will die without surgery.
He said while he can understand providers are just trying to balance their books, weight loss surgery needs to be more accessible.
"They really desperately need the operation… so they're on a slippery slope. Often the only resort they've got is applying to KiwiSaver. They're not doing it to buy a boat or a car or some improvements on their home.
"They're doing it for health reasons often so they're around to see their kids or they get to see their grandkids and just to have a normal quality of life."
Public Trust told Newshub Karetai's serious illness claim was denied because she didn't meet the criteria. When questioned by Newshub what part of the criteria she failed to meet, they said they couldn't comment on specific cases "for privacy reasons".
Corporate Trustee Services general manager David Callanan said the process to withdraw KiwiSaver under the serious illness provision is robust and Public Trust follows industry guidelines when processing all applications.
"We receive around 9000 serious illness and significant financial hardship applications every year and we make an assessment based on the information provided – sometimes this means requesting additional information or documents to ensure the right decision is made. We always aim to ensure the process is fair and equitable for everyone."
Meanwhile, Reuben's provider, Westpac, told Newshub the bank has apologised for the confusion over his application.
"We have apologised for the confusion that arose when he came to us seeking an early withdrawal of his KiwiSaver funds and we have worked with him to release those funds through a hardship application.
"We deeply sympathise with his situation. The initial decision to decline an early withdrawal based on serious illness was made by the Westpac KiwiSaver Scheme's independent supervisor, The New Zealand Guardian Trust Company, based on its interpretative view that: the requirement for the member to have "an injury, illness or disability … that poses a serious and imminent risk of death" requires the relevant condition to pose an existing and significant risk of death occurring in the near future, taking into account the assumption that the member will receive available and conventional medical treatment; and whether the member is at serious and imminent risk of death due to their condition should be assessed flexibly and on a case-by-case basis, but with "imminent" generally taken to mean within the next 12 months.
"The high threshold test for a serious illness withdrawal led us to suggest [Reuben] apply for a significant financial hardship withdrawal instead, which he did, and which was granted. "
The spokespersons said supervisors have more flexibility when processing hardship withdrawals - which was why they suggested Reuben apply under the category.
"We recognise there were opportunities to better communicate and assist [Reuben] in this situation and we have discussed how we can improve this with our team members."
Post-surgery life
Karetai eventually had her surgery in late August and it's already been life-changing for her and her son - who no longer has to live in fear of her dropping dead.
"For the first time in my adult life I'm not hungry because when they take away that piece of the stomach… they take away the glands that make you feel hungry.
"I finally, finally, finally don't feel hungry and I can't tell you how incredible that feels."
Karetai said she's already been able to come off some of her medications too and has so much hope for life again.
"I had no hope before but you put on a smiley face every day like I've done my whole life. Get up, smile. It's a real thing. Being an overweight person carries a lot of stigma and shame. Being an overweight Māori woman makes you a stereotype."
Reuben also got his surgery a few months ago and since then has lost more than 30kgs.
"Even just climbing into the truck is so much easier. Going to work, getting out of bed, everything is just so much easier," he said.
Before the surgery, he had a list of health problems including hypertension and pre-diabetes but they are already improving.
"If I did not have the surgery, I was going to become a drain on society…It's getting better. I've got an appointment with my doctor to check my blood pressure and it's highly likely I'll be cutting pills out and stopping taking blood pressure medication.
"I also suffered from gout so with the loss of weight I'm hoping I can stop taking that pill as well. And the amount of painkillers I had to take for my sore back is no longer an issue anymore."
And his boss is so happy with his improved performance, he gave him a $2 an hour pay rise - an added bonus for Reuben who has a new lease on life.
