Over at Lee's general store this morning I noted The Dominion's lead story was about the "surprise" multi-billion dollar "windfall" about to hit New Zealand courtesy of the Australian superannuation system. It shouldn't have been a surprise, the story has been floating around since last August - I'll claim the
scoop on that one.
The news, if you missed it, is that repatriated New Zealanders who have accumulated savings in Australian super schemes should soon - well maybe next year (or the year after) - be able to transfer it to their KiwiSaver schemes.
The stories have concentrated on the so-called 'lost' superannuation accounts but, once trans-Tasman portability has been approved, even New Zealanders who know where their Australian super is should be able to bring it back home.There are at least couple of reasons why they wouldn't want to, however.
For one, investments in Australian super schemes are taxed at a lower rate than in New Zealand - 15 per cent versus the 19.5 per cent or 30 per cent impost applied to KiwiSaver investment returns. Secondly, holding Australian-dollar denominated retirement assets could add a nice touch of currency diversity to your portfolio.
But if you only have a piddling amount - depending on your definition of piddling - locked away in an Australian super fund it could make sense to import it to your KiwiSaver scheme rather than having two sets of fees eroding the miniature nest egg.
And the 'lost' super pool is a good place for Kiwis to start tracking these tiny sums. According to the Australian Tax Office (ATO), about $15 billion of compulsory super savings sits in dormant accounts, which are managed by one of several Eligible Rollover Funds (ERF). The best guess is that perhaps one-third of this $15 billion belongs to New Zealanders who have fled back home leaving behind their unloved super. If true, that's more than is currently circulating in the entire KiwiSaver system - our local managers would appreciate any Australian funds you can spare.
There are a few free online search engines to help you find your lost super such as Ausfund and the ATO itself. Other providers will charge a fee for the service. You may be asked to recall the details of all those menial 'hospitality' jobs you once held and the addresses of the various dives you called home. Good luck.
The fact that so much super money sits unclaimed is down to a design flaw of the Australian system which its government is only now trying to correct. When compulsory super started there in 1992 each employer selected a provider, or ran their own non-transferrable schemes,with the result that when people changed jobs they usually also were signed up to a different fund. What followed has been almost 20 years of expensive administrative complexity.
With its single individual, portable account model KiwiSaver has at least avoided that pitfall. Thank you Australia.
David Chaplin
Image: Wikimedia Commons
Over at Lee's general store this morning I noted The Dominion's lead story was about the "surprise" multi-billion dollar "windfall" about to hit New Zealand courtesy of the Australian superannuation system. It shouldn't have been a surprise, the story has been floating around since last August - I'll claim the
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