In financial mentors' offices across New Zealand, a quiet arithmetic of survival is playing out: people receiving government support are spending eight dollars more than every hundred they earn, not on excess, but on rent, food, and power. Fincap's 2025 data — drawn from over thirty thousand cases and nearly a billion dollars in client debt — reveals not a collection of personal misfortunes but a structural failure, one in which retirement savings have become emergency funds and the gap between income and necessity grows wider each year. The question being asked across these desks is not how t
Beneficiaries spending 8% more than they receive weekly, debt hits $933M
Vulnerable beneficiary households are unable to afford essentials including food, power, and housing, forcing them to sacrifice retirement savings and face debt collection harassment.
Retirement savings have become a short-term relief valve for immediate desperation.
Mark
When you say beneficiaries are spending 8% more than they receive, what does that actually look like week to week?
Mimi
It means a person on a benefit gets, say, $500. They need to spend $540 to cover rent, food, power, transport. That $40 gap doesn't disappear. It accumulates. Over a year that's over $2,000. Over five years, you're looking at the kind of debt we're seeing—nearly a billion dollars across the client base.
Mark
But people must be getting money from somewhere to cover that gap. Where does it come from?
Mimi
That's the question, isn't it. Some borrow from family. Some use credit cards. Some raid their KiwiSaver—that's the big one now. Mentors are spending 40 percent of their time helping people withdraw retirement savings just to eat and pay rent. It's become normalized.
Mark
Why has KiwiSaver hardship withdrawal increased so dramatically—over 1000 percent since 2015?
Mimi
Because the gap between what benefits provide and what things actually cost has widened. In 2015, maybe you could scrape by. Now you can't. And KiwiSaver is there, accessible, and it feels like your own money. But it's not a solution. It's borrowing from your future self.
Mark
The report mentions debt collectors are a major problem. What's happening there?
Mimi
Eighty-six percent of mentors see debt collectors making demands that force clients to choose between paying debt and buying food. There's almost no regulation. A collector can be aggressive, threatening, and there's little recourse. It's called a wild west for a reason.
Mark
If someone's on a benefit and spending 8% more than they receive, and they're already cutting power use, what's left to cut?
Mimi
Nothing. That's the point. They're not overspending on luxuries. Rent is 38 percent of income. Groceries are nearly 20 percent. Debt repayment is 14 percent. There's nowhere left to cut without going without essentials. The system itself is broken.
Mark
What would actually fix this?
Mimi
Fincap says you need more funding for mentors, regulation of debt collectors, and—implied but not stated—benefits that are actually sufficient to live on. But that's a bigger conversation than the sector can have alone.
O Pulso
- Beneficiaries are spending a record $108 for every $100 received weekly, with rent and groceries alone consuming nearly 60% of income — leaving almost nothing for power, debt, or the unexpected.
- KiwiSaver hardship withdrawals have surged 1046% since 2015, and for the first time more people are raiding retirement savings for immediate survival than to buy a first home.
- Debt collectors are operating in what Fincap calls a 'wild west,' with 86% of financial mentors reporting demands that would strip clients of money needed for basic essentials.
- Financial mentors — already swamped, spending 40% of their time on KiwiSaver hardship applications alone — are warning that individual coping mechanisms are masking a systemic crisis that statistics cannot fully capture.
- Fincap is calling for debt collector licensing, Fair Trading Act amendments, and at least $5.5 million in additional annual funding before the options for vulnerable households narrow further.
In financial mentors' offices across New Zealand, a quiet arithmetic of survival is playing out: people receiving government support are spending eight dollars more than every hundred they earn, not on excess, but on rent, food, and power. Fincap's 2025 data — drawn from over thirty thousand cases and nearly a billion dollars in client debt — reveals not a collection of personal misfortunes but a structural failure, one in which retirement savings have become emergency funds and the gap between income and necessity grows wider each year. The question being asked across these desks is not how to get ahead, but how to endure.
Walk into a financial mentor's office in New Zealand and the conversation is rarely about ambition. It is about which bill goes unpaid this week. Fincap, the network coordinating financial mentors and the MoneyTalks helpline, handled 30,654 cases in 2025 — most of them people living entirely on benefits. The headline figure is unsparing: the median client spent $107 for every $100 received each week. For those on benefits alone, that rose to $108. Total client debt reached $933 million, up 121 percent over five years.
Chief executive Fleur Howard describes a budget with almost no room to move. Rent consumed 38 percent of income. Groceries took nearly 20 percent. Debt repayment — much of it owed back to the government — claimed another 14 percent. Power prices rose 12 percent through 2025, yet clients' electricity spending as a share of income barely shifted, suggesting families were simply going without heat and light rather than spending more.
The most telling symptom of the crisis is what has happened to KiwiSaver. One in eight clients was seeking a hardship withdrawal from their retirement savings. Mentors reported spending 40 percent of their time processing these applications. Hardship withdrawals have increased 1046 percent since 2015, and for the first time, more people are withdrawing for financial distress than to purchase a first home. Howard warned that this dynamic allows structural failure to masquerade as personal choice — a household that empties its retirement account to cover rent this month does not appear in housing crisis statistics.
Debt collection compounds the harm. Eighty-six percent of mentors reported seeing collectors make demands that would leave clients unable to afford essentials. Fincap is pushing for licensing, regulatory oversight, and Fair Trading Act amendments to address what Howard called a 'wild west' sector. The organisation is also seeking at least $5.5 million in additional annual funding, arguing that earlier intervention preserves more options — but that mentors are already overwhelmed, responding to crises rather than preventing them.
Walk into a financial mentor's office in New Zealand and you'll find yourself in the middle of a quiet crisis. The people sitting across the desk are not asking for luxuries. They're asking how to choose between power and groceries. According to Fincap, the network that coordinates financial mentors and runs the MoneyTalks helpline, this is no longer an edge case—it's the norm.
In 2025, financial mentors handled 30,654 cases. The majority involved people living on benefits alone. What those numbers reveal is stark: the median client was spending $107 for every $100 they received each week. For those relying solely on government support, the gap widened to $108 for every $100. This is not a temporary squeeze. This is structural. The total debt carried by Fincap's clients reached $933 million, up 121 percent over five years.
Fleur Howard, Fincap's chief executive, describes the debt as increasingly concentrated in essentials. Rent or board consumed 38.1 percent of income. Groceries took another 19.5 percent. Debt repayment—much of it owed to the government itself—claimed a median 14.2 percent. The math leaves almost nothing. Power prices rose 12 percent through 2025, yet clients' electricity spending as a percentage of weekly income barely budged, suggesting families were simply doing without.
The employment picture has darkened too. Just over half of Fincap's clients relied entirely on benefits. Another 17 percent earned only wages. But the proportion receiving part-time work dropped from 20 percent to 16 percent over four years. The median weekly income of all clients fell from $765.32 in 2024 to $760.58. There are not enough jobs, and the benefit itself is insufficient. People on benefits, Howard noted, are hit by rising costs "in a far greater way" than others.
One survival mechanism has become so prevalent it now dominates the work of financial mentors: KiwiSaver hardship withdrawals. One in eight clients was seeking to tap their retirement savings. Mentors reported spending 40 percent of their time on these applications. The volume is staggering—hardship withdrawals have increased 1046 percent since 2015. For the first time, more people are withdrawing for hardship than for first-home purchases. Retirement savings, once a long-term investment, have become a short-term relief valve for immediate desperation.
Howard expressed deep concern about this shift. "The fact that there are now a greater number of hardship withdrawals than first home withdrawals means that more whānau are using their funds for short-term relief of financial stress rather than purchasing for an investment." These withdrawals allow systemic problems to hide behind individual coping. A household that empties its retirement account to pay rent this month is not counted as a housing crisis. It's counted as a personal choice.
Debt collection adds another layer of harm. Eighty-six percent of mentors reported seeing debt collectors make demands that would prevent clients from affording essentials. The sector operates largely unregulated—Howard called it a "wild west." Fincap is pushing for licensing requirements, regulatory oversight, and amendments to the Fair Trading Act to penalize harassment. Without intervention, Howard warned, these debts "have a really long tail and they'll keep popping up into the future just driving people further into a debt spiral."
The financial mentor sector itself is stretched thin. Fincap is asking for at least $5.5 million in additional annual funding. The earlier people access mentoring, Howard said, the more options they have. But mentors are swamped. The system is reactive, not preventive. By the time someone reaches a financial mentor, the options have narrowed. The withdrawals from KiwiSaver, the debt collection letters, the choice between heating and eating—these are symptoms of a system that has stopped working for a significant portion of the population.
Citações Notáveis
The fact that there are now a greater number of hardship withdrawals than first home withdrawals means that more whānau are using their funds for short-term relief of financial stress rather than purchasing for an investment.— Fleur Howard, Fincap chief executive
If we can get effective debt collection regulation now that is going to minimise harm in the years to come because these debts have a really long tail and they'll keep popping up into the future just driving people further into a debt spiral.— Fleur Howard, Fincap chief executive
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Economy & Finance