Prime Minister John Key wants New Zealand to become an international financial hub specialising in the administration of overseas pension funds.

Mr Key says early advice is that between 3000 and 5000 jobs could be created if the plan comes off.

"It is very much in its infancy," he said last night. "Quite how successful it can be is yet to be proven, but we are keen to take the next step."

If successful, it would mean that overseas funds would be registered in and administered from New Zealand.

The benefit would be the creation of back-room jobs and taxing the fund administrators. The funds themselves would not be taxed.

Mr Key said Ireland had "done a lot of this work. It was cost effective, but also predictable."

The Prime Minister became very familiar with the reforms in Ireland when he was London-based head of Merrill Lynch's global foreign exchange business. He shifted a lot of the bank's business to Dublin.

Making New Zealand an international finance centre with "middle and back-office functions" in the funds management industry was one of the recommendations of the Capital Markets Taskforce report last month.

It found the "hub" notion viable but kept the detail of its advice on how to implement the plan out of the report, giving it directly to Mr Key instead.

It recommended that the development of New Zealand as a financial centre be overseen by the Department of the Prime Minister and Cabinet.

That would give Mr Key more control over its planning.

The PM said "it is fair to say we have taken the step that we want to progress it. The next step is to put in place the building blocks to make it possible and that includes how it might be structured, the different changes that might be required, and to think through the implementation plan."

Mr Key said he had already had preliminary advice from Inland Revenue and Treasury "which is supportive".

New Zealand already undertook some work in the area successfully.

"But to really accelerate the process, we have to make some of the technical changes the taskforce has called for."

Australia has recently released a report saying it wants to look at being a financial centre, but Mr Key said NZ had advantages over Australia.

Investment funds there had to contend with both state and federal governments.

And Australia was looking at a different angle of the market, he said. "It's more about attracting those actual funds to Australia as opposed to the back-office support of those funds."

Asked why an overseas fund would want to be administered here, Mr Key said if there were legal disputes, it might not want to have those resolved in the country where the funds were invested.

New Zealand had a reliable legal system and stable government.