Benge & Co Green Grocer manager Thomas Damian Blake told coworkers and police he had been assaulted and robbed.

A grocery store manager who faked a robbery is the third Blenheim defendant in a fortnight to offer his KiwiSaver funds to pay back victims.

But a financial adviser has cautioned against people using their retirement savings as a "bargaining chip" in legal matters.

Thomas Damian Blake, 44, is the latest person to offer KiwiSaver funds in an attempt to reduce his sentence, as he stares down the barrel of a jail term.

SUPPLIED KiwiSaver does have a financial hardship clause, but it was never meant for this, says finance expert.

Blake pretended he had been assaulted and robbed at Benge & Co Green Grocers, in Blenheim, telling an elaborate story to coworkers and police in May.

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But Blake had taken more than $8000 from the store safe himself, police later discovered, topping off several weeks of taking money from the till.

SCOTT HAMMOND/STUFF Police were called to what they thought was an aggravated robbery at Benge & Co Green Grocers in May.

He admitted charges of theft and making a false statement to police and was supposed to be sentenced at the Blenheim District Court on Monday, expecting to go to prison.

But his lawyer Philip Watson said a lump sum reparation payment could affect the length of that sentence.

Blake had about $27,800 in his KiwiSaver account, and he wanted to put it towards paying off the grocery store owner and another former employer he ripped off the year before in Auckland.

KiwiSaver's financial hardship clause meant people that could prove financial hardship could apply to withdraw funds, not including the Government contribution or the annual $521 member tax credit.

Banks assessed a client's situation and then an independent supervisor would approve or decline applications.

Commission for Financial Capability managing editor Tom Hartmann said he had never heard of KiwiSaver being used for reparation before.

KiwiSaver always allowed for financial hardship withdrawals, but "what is new here seems to be that KiwiSaver funds are being used as a bargaining chip", Hartmann said.

"As far as we can see, there's not a precedent for that."

If a person was ordered to pay tens of thousands of dollars to the court as reparation, and could not afford to do so, that could be considered financial hardship, Hartmann said.

"On the other hand, if someone is able to reduce the time they would be in prison [by offering KiwiSaver for reparation] and therefore out in the workforce instead, actually earning and saving for their retirement, financially it might make sense."

And if the defendant was young, they still had time to build up their retirement fund again, Hartmann said.

"But KiwiSaver is designed to help people get ahead and save for the future in the medium-term with a home deposit, or long-term retirement savings.

"This is using KiwiSaver for an outcome or purpose it was never intended for. People need to take into account what kind of a long-term impact that's going to have on their retirement savings."

Blake's appearance came just days after two other defendants offered KiwiSaver funds for reparation.

Marble shop manager Quentin Kyle Richards, 33, was jailed for 17 months in April, after secretly commissioning marble benchtops and selling them, pocketing the cash.

But last week he won an appeal of his sentence after taking $38,000 from his KiwiSaver to offer as reparation towards the $56,000 loss he caused the company. In exchange, Justice Collins reduced Richards' sentence to 6.5 months' home detention.

Defence lawyer Laurie Murdoch referred to that decision at the sentencing of Hayden James Kerwin, 36, last week, saying Kerwin was willing to offer the $13,000 in his KiwiSaver account as reparation.

"I don't see why they would give it to one case and not the other," Murdoch said.

The truck stop parts manager bought $15,000 worth of drones, electronics, car parts and stereos on the company account, and sold them on to fuel his meth habit, adding small generic items to client invoices to cover the expenses.

Kerwin was sentenced to 7.5 months' home detention, to be served at residential rehab centre Odyssey House in Christchurch.

Judge Russell told Blake he was "obviously" interested in paying the grocery company back as quickly as possible.

But Blake was still paying off the last employer he stole from in Auckland last year, shortly before moving to Blenheim to work at the grocery store.

Blake still owed about $47,000 to the first employer and had been paying it off at $100 a month.

Any extra funds would have to go to the first victim before Blake could start paying off the green grocers, Judge Russell said.

"But it means this victim would get paid sooner ... it seems sensible, doesn't it?" Judge Russell said.

"I consider the victims should be recompensed for the loss they have suffered, by the maximum extent that is possible."

Watson said Blake would rather be sentenced as planned, but he recognised that paying a large reparation amount could reduce his sentence.

Judge Russell remanded Blake on bail to October 8 for sentencing, to give him time to apply to withdraw his funds from KiwiSaver and pay it to the court.