by Paul McBeth
The scheme will be voluntary and transfers will only be allowed between KiwiSaver funds in New Zealand and Australian superannuation funds overseen by the Australian Prudential Regulation Authority. The ministers signed memorandum of understanding which is expected to be ratified in the middle of next year.
"Each individual will need to carefully weigh up the implications of the choice, because there is currently different tax treatment of investment earnings for super savings in each country," said Bruce Kerr, executive director of the Association of Superannuation Funds of New Zealand in a statement. "ASFONZ will continue to advocate for better alignment of super treatment between the two jurisdictions."
New Zealand implemented the KiwiSaver scheme in 2007 and topped one million members long before the 2015 target date. The National-led government cut the minimum contribution rate to 2% of an employee's wage when it came to power last year. The Australian government passed legislation for compulsory super in 1992, lifting minimum contributions to 9% in 2002.
Australia's tax office last year estimated it had around NZ$16.6 billion in superannuation accounts that it can't account for, and English expects a "considerable amount of this money could belong to New Zealanders who have returned home."
Grosvenor Financial Services Group has taken the opportunity to launch a free service called Grosvenor SuperTracker, which will help New Zealanders track down any funds that may be held in these "lost accounts".
Up to 25% of these funds could belong to New Zealanders who have returned home, said Grosvenor head of marketing and KiwiSaver Andrew Lendnal.
Reserve Bank Governor Alan Bollard told a business audience this week that increased national saving was "critical" to rebalancing the economy, and the ageing population will "put considerable strain on the fiscal position over the coming decades."
"Private savings plans will need to take account of these pressures in the future," he said.
Paul is a staff writer for Good Returns based in Wellington.
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