Are tighter KiwiSaver rules stopping weight loss surgeries?

A bariatric surgeon says about half of his initial consults with patients now do not proceed to surgery - and a more stringent KiwiSaver approach may be to blame.Sean Liddle, a general and bariatric surgeon practising in Northland said there were a few reasons why about half of his initial consults with clients did not end in surgery.Some patients chose to have surgery offshore, where the cost could be lower, he said.Sometimes it was financial constraints."An increasing proportion of patients rely on withdrawing KiwiSaver funds to help finance treatment. Anecdotally, the criteria and approval process for KiwiSaver hardship withdrawals appear to have become more stringent, and I am seeing a higher number of applications being declined."This may be preventing some patients from proceeding with surgery despite an initial interest."Christine Liggins, founder of Debtfix, which is now managing KiwiSaver withdrawal applications for a number of KiwiSaver providers, said some had changed the way they assessed applications for weight loss surgery, and were only paying the initial deposit.They then paid the rest once evidence of the surgery was provided."This likely stopped some because they had to spend the money on the bariatric surgery," she said.Whereas previously, she said some people might have ended up not using the money for the intended purpose."Which is why I am advocating for the funds to be paid directly to the source of the hardship rather than deposited in someone's account."David Callanan, general manager of corporate trustee services at Public Trust, said surgery was cited in a relatively small number of hardship withdrawal cases."The most common reasons for people applying to withdraw are living costs, overdue bills and loans, and overdue mortgage or rent."We encourage people to contact their KiwiSaver provider for guidance on applying for a KiwiSaver significant financial hardship withdrawal to cover medical costs."Greg Smith, investment specialist at Generate, said the rules around accessing KiwiSaver for bariatric surgery had become better understood through industry guidance and complaints rulings, particularly around the difference between significant financial hardship and serious illness."Under the serious illness provisions, the threshold is extremely high. Obesity and related health conditions may be serious, but applicants generally need to show they are permanently unable to work or face an imminent risk of death. Bariatric surgery is often viewed as a treatment intended to improve health and restore functioning, which is why many applications on this ground are declined."Under the significant financial hardship provisions, the focus shifts from medical need to financial need. Applicants need to demonstrate not only that the surgery is necessary, but also that they have exhausted other reasonable options to pay for it, such as savings, insurance, finance, or other resources. So if surgeons are seeing fewer patients proceed to surgery after an initial consultation, it may be because people have become more aware that KiwiSaver withdrawals are not automatic, and that meeting the legal tests can be difficult. But I wouldn't characterise that as KiwiSaver providers becoming tougher. It's more that supervisors are applying the statutory requirements, and recent rulings have clarified just how strict those requirements are."Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money