KiwiSaver members can get up to $521 from the Government each year they are in KiwiSaver with the Government putting in 50c for each dollar a member contributes up to $1042.
The contribution is calculated over the year to June 30 so anyone who turns 65 part-way through the year will have their government contribution pro-rated depending on when their birthday is.
KiwiSaver members can take their money out of KiwiSaver at 65 either in a lump sum or by taking regular payments and must apply to their provider to get access to the savings.
The IRD spokeswoman said it had told providers that until its system issue was resolved it would manually process any final government contribution claims or adjustments where the provider considered the request urgent.
"The scheme provider also has the option to pay out the majority of the members' funds while this is being worked through, but this will come down to individual providers as to whether they will allow this."
The spokeswoman said the issue was affecting fewer than a thousand KiwiSaver members and a fix was being worked on as a priority.
First-home withdrawals were not being affected by the issue, she added.
An ANZ spokeswoman said the matter was impacting all KiwiSaver providers but only members who were making a full withdrawal for the first time, which was normally at 65 or later.
"Currently only around 50 ANZ KiwiSaver members are impacted."
She said the bank was advising members there could be an additional one to two days' delay in processing their withdrawal as it needed to implement some additional processes with the IRD.
"We're continuing to monitor this carefully to ensure that all requests are processed with minimal delay."
As of February 197,000 Kiwis had closed their KiwiSaver account due to retirement.
That was up from 179,500 a year earlier.
There are more than 3.2 million people in KiwiSaver.
