Kiwisavers could be breaking into their nest eggs to pay for pricey medical treatment, but few people know they have the option.
A little-known clause that lets sick or injured people skip public waiting lists is mouldering on the shelves because most people don't know it is there, says a lobbyist.
A Wellington couple found their provider was happy to release savings for a hearing device, which was not publicly funded, for their 6-year-old daughter.
Usually KiwiSaver is locked away until people turn 65. Well-known exceptions are for buying a first home or in cases of hardship - typically when people cannot pay their bills after losing a job or some other setback.
A seldom-used part of the hardship clause allows withdrawals when significant financial difficulties would arise because of the cost of medical treatment for an illness or injury of a KiwiSaver member or their dependant.
Vedran Babich, Fisher Funds operations manager, said this was the first medical case he had seen under the hardship provision.
"Usually we get requests when people have repossession notices. There were a lot of withdrawals around earthquakes. [But] KiwiSaver is more flexible than people think."
A lawyer and a law student, Peter and Kate McKenzie-Bridle, would not appear to be the obvious candidates for a traditional hardship withdrawal.
They agreed to share details of their case to help other families who might need private medical treatment, and to raise awareness of their fight for better public funding for children like their daughter, Lucy. Lucy, who has very little natural hearing, received taxpayer funding for a cochlear implant, an electronic device fitted near the ear that stimulates hearing.
But people who want an implant for their other ear must raise up to $50,000 themselves.
The couple felt Lucy needed adequate hearing in both ears to keep up at school. "A gap was starting to emerge," Peter McKenzie-Bridle says.
Lucy's second implant was cheaper because it was implanted at the same time her first implant was replaced.
Raiding the retirement nest egg was not ideal, says Peter. "We could have sold the house or raised a second mortgage to pay for it . . . but we didn't have any other money really that we could pay $30,000 from without going into debt."
He showed letters to Fisher Funds showing double cochlear implants were the recommended treatment and presented a professional budget showing they could not easily fund the quoted $30,000 from their existing budget.
Taking a large loan or selling their house or car was not feasible, they argued.
Fisher's trustee approved a withdrawal of up to $30,000 - the full cost. However they did not need the whole amount thanks to help from family and friends.
Whether medical treatment was needed was "a subject we deal with on case by case basis", said Babich. "In this case we were dealing with a child that can't really go through a normal school curriculum."
The co-founder of a website lobbying for better cochlear funding for children, Sym Gardiner, said more people should know about the option.
KiwiSaver could be "very useful" for families with two or more children needing implants or adults who faced a long waiting list, he said.
"Many of these people on the adult waiting list . . . could be accessing cochlear implants by privately funding them through KiwiSaver. Very few do because they don't know it is an option," he said.
Few other families appear to have used the clause.
Large KiwiSaver providers ASB and Westpac, were unaware of similar cases, however, ANZ's Onepath said it had received a few applications.
As with the first home withdrawal, savers can withdraw their own savings and employer contributions but not government money. A separate exemption lets people withdraw funds if they are terminally ill or too sick to work.
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