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Aust super schemes not playing ball with KiwiSaver

Many Australian superannuation providers aren't playing ball when it comes to trans-Tasman portability, says Ana-Marie Lockyer, ANZ Wealth's head of retirement solutions.

Wednesday, August 21st 2013, 6:49AM

by Susan Edmunds

New Zealanders with superannuation in Australian schemes have been able to transfer it to schemes here - and vice versa - since the beginning of July.

It is compulsory for providers to allow savers to withdraw their accounts but they do not have to receive funds from across the ditch.

But Lockyer, told delegates at the Workplace Savings Forum last week, that some Australian superannuation providers had their resources tied up with dealing with changes in the super scheme landscape there, and were not prepared to engage about portability.

Money that is transferred between countries has to be ring-fenced - in Australia, Kiwi savings can't be withdrawn until the saver turns 65, and Australian funds in New Zealand have to be ringfenced so they can't be used for things such as first-home withdrawals.

Lockyer said Australian providers were spending a lot of money on other reforms and had not started to accept funds yet. Others were dragging their feet when it came to releasing funds.

She said 48% of the Australian providers ANZ was dealing with were participating, 33% were not and others were but said they were not sure how to do it yet.

The lack of participation was due to cost and other priorities. Some providers are sticking to the letter of the law and requiring that people make a statutory declaration under Australian law that they have left the country - which is hard to do if someone is residing outside the cities where there is an Australian consulate.

There are also problems with New Zealanders' "lost" superannuation that is being held by the ATO. There is estimated to be up to $7 billion in that situation.

But funds can't be transferred until they can in an official Australian superannuation scheme. And it is very hard to do that from New Zealand, because it becomes an offer of securities here. It is expected that loophole will be looked at.

Most New Zealand KiwiSaver providers are not charging fees to people who want to transfer money from Australia but Lockyer said it would not be unreasonable to do so.

The Insurance and Saving Ombudsman has received several complaints from people leaving New Zealand for Australia who were not able to withdraw their savings before portability kicked in.

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