A personal finance columnist for the NZ Herald

Inside Money: Why KiwiSavers can't fly to Australia

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Photo / Thinkstock
Photo / Thinkstock

Last year a furore erupted over Australian superannuation funds refusing to transfer member savings to respective KiwiSaver schemes on request.

This was a clear breach of the trans-Tasman agreement on super portability - codified in legislation in both Australia and New Zealand - but, last year anyway, maybe excusable on technical grounds.

"On this side of the Tasman, most KiwiSaver schemes, keen to build up funds under management from whatever source, are well-prepared to take on Australian super money - and loudly advertise the fact."
David Chaplin

While the Aussie-NZ super traffic may now be proceeding smoothly, there's now evidence of a major logjam for KiwiSaver funds heading the other way.

Respected Australian superannuation writer, Trish Powers, told me last week she has received numerous complaints from ex-pat New Zealanders wanting to transfer their KiwiSaver holdings into an Australian super scheme.

The problem, as Powers explains in this article, is that while it's compulsory for both Australian and New Zealand schemes to release member funds on request, neither Australian super funds nor KiwiSaver schemes are required to accept it.

On this side of the Tasman, most KiwiSaver schemes, keen to build up funds under management from whatever source, are well-prepared to take on Australian super money - and loudly advertise the fact.

The Australians... well they can take it or leave it. And right now they're leaving it.
"Nine months after trans-Tasman superannuation portability became possible, we still have no Australian super fund accepting KiwiSaver transfers," Powers writes. "... I thought I had discovered one Aussie fund open to accepting transfers from KiwiSavers, but I was mistaken."

She is rightly appalled at the lack of action from the Australian super fund industry on accepting KiwiSaver transfers, describing the situation as an "absolute disaster" from a marketing point of view.

As always, the Australians are citing IT priorities, with accommodating the quirks of KiwiSaver in super accounts way down the list, especially considering the comparatively low balances involved.

But Powers points out the Australian funds need to give more weight to the desire of individuals to consolidate their super savings - an objective the funds themselves constantly promote.

She reports the Australian schemes might get around to maybe start accepting KiwiSaver money in the middle of this year. The KiwiSaver industry wouldn't want them to hurry up but a growing number of frustrated ex-pats have a right to expect the Australian funds to honour the trans-Tasman agreement in spirit as well as letter.

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A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. He is the editor of industry website Investment News. David has edited magazines and websites for the financial advice, investment and superannuation industries.

Read more by David Chaplin

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