New Zealanders who have worked in Australia will soon be able to bring home billions of dollars in savings locked up in superannuation accounts which are being slowly drained by the companies that manage the money.
The Australian Government yesterday announced new legislation to establish a transtasman retirement savings portability scheme.
The scheme would allow Australians and New Zealanders to take their retirement savings with them when they moved across the Tasman.
However, the Australians are playing catch up, matching legislation passed two years ago in New Zealand.
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At that time, Finance Minister Bill English noted Australia's Tax Office estimated it held about A$13 billion ($16.4 billion) in "lost accounts" in the Australian superannuation system. Much of that was believed to belong to New Zealanders who had returned home after working in Australia.
Sydney-based New Zealand rights advocate David Faulkner yesterday said such lost accounts containing perhaps several thousand dollars were a significant issue. While New Zealanders who returned home could access their Australian super savings once they reached retirement age, in many cases the interest on those savings would not cover management fees which eventually ate up the cash completely.
"Your money just disappears. ... These Australian super companies do quite well."
Financial Services Council chief executive Peter Neilson said the Australian law changes due to take effect in July next year were good news for New Zealand.
"A number of New Zealanders who do have considerable savings in Australia from their retirement superannuation guarantee scheme, will probably decide to come home."
But on the other hand, the ability to bring their retirement savings home with them after working in Australia would make the prospect of moving there in the first place even more attractive, Mr Neilson said.
Under the new Australian and existing New Zealand laws, money transferred from Australia will have to go into a KiwiSaver account where it will be subject to the usual access restrictions. However, New Zealanders buying their first home will not be able to withdraw any cash earned in Australia from their KiwiSaver account.