KiwiSaver could be cracked open for anyone under 30 to cover the cost of a rental bond if the National Party takes power in October, but the policy has gone down like a lead balloon among experts Newshub has spoken with.
On Monday, National's housing spokesperson Chris Bishop called the policy - initially proposed by the party's youth wing - a "commonsense change" that will make it easier for young people to pay their bonds and free up cash.
Bishop acknowledged Kiwis who choose to take money out of their KiwiSaver to cover rental bonds will miss out on interest it would have otherwise accumulated in the account.
"We think for many young people - and it's not mandatory, it's an option for people - but for many young people... they would rather have that money they have saved up, that they can't have access to until they are 65, they would rather have that money over in the Tenancy Services, paying for that bond."
When BusinessDesk's investment editor Frances Cook heard the announcement she was "quite shocked", telling AM on Tuesday she made "some noises that are not fit to repeat on TV".
Cook said withdrawing funds from one's KiwiSaver to pay rental bond is one of the "most financially irresponsible ideas" she had "heard in years".
"I understand that politicians are looking for ways to help with the cost of living, this is not a good idea."
Cook told AM accessing KiwiSaver could run the risk of "your landlord might not giv[ing] you your bond back" - and would lose you a lot of interest.
"I mean a really small bond, most bonds are probably more than this, but a really small bond of $800 could be worth $16,000 by the time you retire, because of everything it's earned over that time."
Director of Academic Quality at Massey Business School, associate Professor Claire Matthews, told Newshub the policy is "absolutely appalling".
Prof Matthews said KiwiSaver is a retirement savings product and should remain that way.
"The moment you start diverting it for other things, such as this does, it removes that focus and takes it away from being a KiwiSaver product."
She said it's already hard to get young Kiwis to think about saving or their retirement because it's "so far in the distance".
"The point of KiwiSaver is to get people saving from the time they start work so that they've got that fund built up, so when they get to retirement, there's something better for them."
Bishop said the policy would be an option for Kiwis under 30, but Professor Matthews said "if it's not available, then people will generally find a way".
"People are coping with funding bonds now without accessing their KiwiSaver, so this policy doesn't seem to be filling the need."
Currently, Kiwis can apply for a bond grant through Work and Income if they do not have enough cash to pay it.
The grant comes with criteria, but if someone is eligible the bond will be paid directly to the landlord and cover up to four weeks worth of rent. It has to be paid back.
She disagreed with Bishop that the policy was a "commonsense change".
"If it was a commonsense change, what they would be proposing would be something like regular increases to KiwiSaver contributions so that actually people were saving more."
Professor Matthews said if paying for rental bond is such an issue, she encouraged the National Party to "look at the rental market".
"They should be fixing the rental market, not trying to play with KiwiSaver."
Director of the Financial Education and Research Centre at Massey University Pushpa Wood said there are mechanisms already available for those who struggle to pay bond, like the bond grant.
Wood suggested that the grant bond itself may need tweaking to make "it slightly more accessible, rather than raiding the long-term savings".
Wood told Newshub, Aotearoa as a nation still hasn't wrapped its head around that KiwiSaver is just a retirement fund.
"It is a long-term safeguard for people in their retirement. It's not a short-term savings plan, it's not an emergency fund."
She believes giving under-30-year-olds access to KiwiSaver in order to cover rental bond "takes away the whole thinking behind long-term savings".
"We as a nation are really bad about it. Let's be honest. We're not, we don't have a very good record of savings."
