New study measures the impact of COVID-19 on New Zealanders' financial wellbeing
Ten percent of households across New Zealand had missed a rent or mortgage payment during the level 4 lockdown, according to a new survey conducted by the Commission for Financial Capability (CFFC).
The survey of 3,000 New Zealanders across the last two weeks in April measured the impact of the COVID-19 pandemic on New Zealanders’ financial wellbeing. The survey revealed that 34% of households were in difficulty and 40% were at risk of tipping into hardship.
The survey also found that lowered confidence was leading to decisions “informed by panic” – such as taking out extra loans or trying to access KiwiSaver funds through hardship withdrawals. While the number of respondents who had applied to withdraw their KiwiSaver funds under hardship by the end of April was low, the survey revealed that 16% of members were considering it, including 30% of Māori and Pacific members and 22% of renters. Renters drawing down their funds could derail plans to use them as a deposit on a first home.
Meanwhile, free financial guidance, and the option to negotiate with creditors, were under-utilised.
Jane Wrightson, head of the CFFC, retirement commissioner, said the survey was a snapshot of New Zealanders’ fragile finances at the end of the level 4 lockdown.
“It was a dark time for many, and we acknowledge that some may be feeling more optimistic now that we’re in level 2 and following the budget announcements,” said Wrightson. “However, it is generally accepted that income loss will get worse before it gets better.”
Looking further ahead, Wrightson said New Zealanders might need help with saving to build up their resilience against future financial shocks.
“Our Review of Retirement Income Policies last year recommended that KiwiSaver accounts be built with a sidecar savings facility which could be drawn upon in emergencies,” said Wrightson, adding that this may also prevent people in hardship turning to their KiwiSaver fund as a first rather than a last resort.
CFFC said that it would seek to do the survey again at a later date to see how New Zealanders were faring after the lockdown.
