KEY POINTS:
Good news if you have worked in Australia since 1992 and contributed to a superannuation scheme. You may soon be able to bring your contributions back to New Zealand.
The Government has reached a deal with Australia to enable retirement savings portability between the two countries.
The Australian
Government estimates it has up to $13 billion in "lost" accounts and around 20 to 30 per cent of that money might belong to Kiwis.
You won't be able to get your hands on any cold hard cash as the money will be transferred to a super scheme here. But it will be a change from the present system where New Zealanders have to wait until they are of Australian retirement age before they can bring their money back.
The agreement should also allow for New Zealanders to take their KiwiSaver retirement savings to Australia - good news for the thousands of Kiwis who move across the Tasman every year.
But details have yet to emerge on whether Kiwis can take all their money - including the Government's contributions - with them. Those details are expected to be thrashed out in a memorandum of understanding to be signed in October with legislation due to be introduced in 2009.
EMPLOYERS JOIN UP
Not only have 750,000 New Zealanders embraced KiwiSaver but it seems companies are also adopting the scheme and using it to replace and phase out existing company schemes.
A survey of 52 employers undertaken by the Retirement Policy and Research Centre has found 88 per cent had already made changes or were about to change their superannuation policies as a result of KiwiSaver.
Those changes ranged from winding up schemes to obtaining complying-fund or exempt status under the KiwiSaver regime.
The survey also found 76 per cent of employers with company schemes still open to staff would not have started them had they known KiwiSaver was going to be introduced.
Retirement Policy and Research Centre co-director Michael Littlewood said the survey suggested more workplace schemes would close and KiwiSaver would eventually become the only retirement savings vehicle available through the workplace.
"Given these findings, it's possible that over time most of those currently open plans will also be closed to new entrants. This could be an indication of the future of all workplace savings schemes apart from KiwiSaver."
It also found the majority of employers were against retirement savings being made compulsory. Eighty-one per cent rejected the idea and 79 per cent were against New Zealand following a similar path to Australia where compulsory contributions are added to pay.
From their own perspective employers rated KiwiSaver as slightly negative whereas they rated it slightly positive from an employee's perspective and slightly more positive from society's perspective. But Littlewood has warned that the results of the survey show many employers are becoming less engaged when it comes to using superannuation as an incentive for staff.
"KiwiSaver appears to be increasing the risk of larger employers' disengagement from this traditional part of their human resources strategy."
Littlewood said this could cause issues as KiwiSaver was not an appropriate retirement savings vehicle for everyone and it was likely to result in the reduction in schemes, meaning less options to choose from.
SAVINGS CRISIS?
There's a lot of debate over whether the money now being saved through KiwiSaver is new savings or money moved from other areas of savings to take advantage of the incentives offered through the Government scheme.
Some economists claim the money has come from other superannuation schemes, savings accounts and cash that would have been used to pay off debt and therefore the national savings level has not increased at all and may even have gone backwards because of the costs associated with KiwiSaver.
But the Government continues to point to the number of new people and particularly the under 25s who are joining up to the scheme and therefore must be saving money that they previously were not.
The debate may see some clarity later this year. The Ministry of Economic Development has commissioned PriceWaterhouseCoopers to undertake independent research on the effects of KiwiSaver.
PWC is in the process of interviewing all 33 providers and is expected to report back to the ministry by September. The ministry then has to file its report with the Finance and Revenue Ministers and Parliament before it can be made public.
Let's hope it doesn't get swallowed in the wash of election hype that will be in full swing by then.
TAKING RESPONSIBILITY
The numbers of KiwiSaver providers who offer a socially responsible investment fund option has been creeping up in the past couple of months and now Tower has become the first to sign up to the United Nations principals for responsible investment.
The principles are designed to get fund managers to throw their weight around in the board room and encourage firms to act in a manner that takes into account environmental, social and governance principles. In theory this aligns the company with what consumers want and therefore boosts the profits of the company.
Around 380 fund managers around the world have already signed up to it, including the New Zealand Superannuation fund - New Zealand's biggest investment manager - and the Accident Compensation Corporation, which is also a big investor.
But despite signing up, the Super fund and ACC have come under fire for investing in companies which make nuclear weapons and tobacco.
It was only in April this year that the Super fund announced it would pull out of investing in companies that make cluster bombs.
Tower Investments CEO Sam Stubbs said Tower was serious about putting responsible and ethical investment concerns at the forefront of its decision making.
The principles will apply across the whole of Tower's business, not just to its KiwiSaver funds, and will be monitored by external consultancy firm Mercer Consulting.
POWERING UP
The growth of alternative energy has been recognised with a new investment fund out this week by capital protection specialists Liontamer.
The New Zealand boutique investment firm, which Belgium bank KBC bought a 51 per cent stake in last year, has launched its Alternative Energy Series 1.
The fund invests in a basket of 15 global companies involved in renewable energy production including using resources such as wind, solar, geothermal, biomass and hydro power.
Liontamer is offering two options for investors; a 100 per cent capital protection version, which guarantees investors get their capital back at maturity as well as the potential for 90 per cent of the increase in value of the Liontamer Alternative Energy index, and a 90 per cent capital protection which offers 110 per cent of the rise in the index.
Funds are locked in for five-and-a-half years unless strong returns lead to early release. Those who exit early face penalty fees.
Liontamer is also launching alternative energy and climate change unit trusts in Australia this year to add to its existing water fund, which was launched in November last year. All of the funds have a socially responsible investment focus.
