In Australia, if you have worked there as an employee in the last 20+ years, you were required to join a compulsory superannuation scheme, or two, or three. If you had multiple employers, you may well have had multiple Australian compulsory superannuation schemes. We have met people with 9 or more different schemes – all with a very small amount of money in them.
Each Australian super scheme takes its fees out of your investments, while they are sitting there, and often the administration fees erode the value of the money that you have saved.
After several years of anticipation, the legislation has been passed and you can technically bring your Aussie super fund back into your NZ KiwiSaver.
However, there are already some wrinkles. Some fund managers in Australia have decided that they really don’t want to play the game. (AMP balks at transtasman super deal, AMP relents over transtasman super deal). Participation is voluntary for KiwiSaver providers, but most of the KiwiSaver providers will be offering the facility.
There is quite a bit of work for a KiwiSaver provider in NZ to set this up, as they need to add more ‘ring-fencing’ abilities to their computer systems, so that they can track which bit of money is which.
The paperwork is not going to be easy, but you should be able to arrange the transfer with a great deal of patience. We will assist our KiwiSaver clients and our financial planning and insurance clients to bring their funds back for no fee. However, you can probably do this yourself.
The first thing you need to do is find out where your Aussie super money is. You then need to get the correct forms to bring the funds back into your KiwiSaver.
There are a few things that you need to know though:
1. You cannot access your NZ KiwiSaver until the age of eligibility for NZ Superannuation (which is currently age 65.) But, your Australian sourced retirement savings will be able to be withdrawn from age 60 as long as you meet the Australian definition for retirement at that age, and any other associated Australian rules.
2. You cannot withdraw your Aust Superannuation funds out of your KiwiSaver for a deposit on your first home.
3. Taxation on the super funds are different in Australia and New Zealand. If you leave your funds in Australia, you may end up with more invested because the tax rates may be lower. However, there are other factors that can offset this factor in your decision to bring your funds back to New Zealand. These could include things like:
- Having control over where your funds are invested and how they are invested. Many of our clients have found it difficult to change their investment risk profiles with their Australian fund managers.
- Having all your super in one place with only one set of administration fees.
- Ease of management when you retire – without having to deal with Australian taxation and superannuation rules.
- Knowing that all your funds are in New Zealand, reducing the currency issue.
4. Once you have transferred your funds to your NZ KiwiSaver, you won’t be able to move them again to another country.
5. If you are transferring your fund, you need to transfer ALL of your Australian superannuation, you can’t leave some of there.
6. If you bring your Australian Super back to New Zealand, you may be able to withdraw them if you meet the KiwiSaver criteria for reasons of significant financial hardship or on compassionate grounds, such as serious illness.
The IRD points out that there is no specific taxation applied to the transfer of retirement savings from Australia to New Zealand. However, you need to note that capital gains tax exists on your Australian Superannuation. You also need to note that if have contributed greater than $150,000 per annum into your Australian super, there are likely to be taxation implications.
If you want to transfer your funds from your New Zealand KiwiSaver to an Australian Superannuation Scheme – this is now allowed, however, there are different factors to take into account.
If you have Australian Super (or think you have it might be ‘lost’), and you want to bring it back and add it to your KiwiSaver, contact us. We can assist you at no charge if you are already a Moneyworks KiwiSaver client, and steer you in the right direction if you aren’t. Email us on firstname.lastname@example.org.
For more blog entries that you might be interested in:
By Carey Church
The legislation to enable the transfer of superannuation savings between Australia and New Zealand has finally been passed in the Australian Parliament.
As a result, from 1st July 2013 there will be ‘portability’ of superannuation between Australia and New Zealand. The Bill outlines the taxation implications of transfers to Australia from New Zealand, which we will look at in a future post.
The transferred savings to your New Zealand KiwiSaver must be identifiable as separate funds within the KiwiSaver fund. As this will provide additional administration and cost to the KiwiSaver provider, don’t assume that all providers will offer this facility.
Australian‑sourced retirement savings held in KiwiSaver schemes:
- may not be withdrawn to purchase a first home;
- may be accessed when the individual reaches age 60 and satisfies the Australian definition of retirement at that age; and
- may not be transferred to a third country; and
- are subject to New Zealand tax and superannuation rules;
- the Australian Funds are not taxed on exit from the Australian superannuation scheme if you are a NZ citizen or permanent resident;
- there may be other rules and regulations that impact on how your Australian superannuation is treated in the KiwiSaver scheme under the SIS regulations.
There are advantages and disadvantages in moving your Australian Superannuation to your New Zealand KiwiSaver investment, which include:
Tax: New Zealand KiwiSaver Funds are currently taxed on earnings at a higher rate than Australian superannuation investments. However, in general New Zealand KiwiSaver investments do not currently have capital gains tax, whereas Australian superannuation does.
Fees: New Zealand KiwiSaver Fund fees are generally quite a lot less than Australian superannuation investments.
Amalgamation of your investments: A number of New Zealanders have small amounts invested in multiple Australian Superannuation funds, when they have worked for different employers. These are sometimes subject to minimum annual administration fees. By amalgamating all your investments in your one KiwiSaver investment, you can reduce fees, have a consistent investment approach and monitor your investments more successfully.
Diversification: At present you are only entitled to have one KiwiSaver account, so this may limit your diversification opportunities.
Currency Risk: If you live in New Zealand and plan to retire here, by holding your superannuation investments in New Zealand dollars, you are taking currency risk in the future out of your financial planning.
Control and monitoring: New Zealand based investors can find it difficult to monitor their superannuation investments in Australia. By bringing your funds back to New Zealand, you are likely to find that you feel that you have more control over your superannuation investments.
The decision to transfer your Australian Superannuation Funds into your New Zealand KiwiSaver fund is personal and unique to you and your situation. There are a number of factors that need to be taken into account, and you need to ensure that you have canvassed these before you make your decision.
By Carey Church