By Amanda Morrall
Q) I have been in KiwiSaver from the very beginning. I am now looking at shifting to Perth for five years.
What is going to happen to my KiwiSaver? Can I keep it on hold and continue with it when I return to NZ in a few years time?
A) The fate of your KiwiSaver funds is the hands of Australia at the moment. Here's how and why:
Under the terms of the TransTasman Portabilty Agreement, New Zealanders will lose the current option of withdrawing all their money (less the member tax credit) following a minimum mandatory 12 month waiting period. This option will remain open to members who are leaving the country and going anywhere else but Australia. Track your contributions here.
As Australia has yet to sign off on the legislation at their end, this remains a viable option.
Provided you satisfy the requirements laid out under permanent emigration clause of the KiwiSaver Act, you can withdraw all your savings, including the kickstart, less the member tax credits. The requirement include a statutory declaration, proof of residency in Australia and documentary evidence such as airline tickets or passport stamps.
If you did want to leave your KiwiSaver "on hold" you could do so via a contributions holidays . To do so you must have been in KiwiSaver for a minimum of three months. The maximum holiday period is five years however there is no limit on the number of holidays you can take so you could stretch that holiday indefinitely if you wanted, well at least until you reached 65. Whether there would be any money left in your fund at that time is another matter altogether and would depend on how it performed and of course fees which don't go on holiday when you do.
Another option, if you wanted to keep the money in New Zealand, is to make voluntary contributions. You won't get the member tax credits but you'll keep adding to the fund.
As I mentioned above, the TransTasman Portability removes the option to withdraw the money. Government has obviously tried to dissuade you from this option by virtue of withholding the member tax credits. The benefit of the agreement is that you can hold onto your entire savings if you move it across the Tasman and shift it into a complying superannuation scheme over there. Remember that workplace savings are compulsory over there and the rate of contribution is much higher. It's 9% at present and is gradually being shifted to 12%.
So what happens if you put in an application to withdraw your savings and Australia signs off on the agreement in the interim? The letter of the law suggest you'll be bound to the TransTasman Agreement however one lawyer I spoke with suggested this is something that could be challenged on the basis of timing.
I hope this is helpful.
If you have a question on KiwiSaver, check out our Q&A section as you might find it's been answered. If not, send us an email and we'll try to get you an answer.
8 Comments
Hi Matt, according to one of my sources, back in March Treasury there was anticipating that the Aussie legislation would be released in an exposure draft bill for publication consultation. It was expected that the bill would be introduced in Parliament during the Autumn session, which is over now I believe.
If they don't deal with it before the end of the month it'll likely move to spring session. My guess is November but that's purely a guess.
Cheers,
Amanda
If you work in Oz then return to NZ is there anything you can do to get that money sent back? Young friend I know is watching their Oz super disappear every year due to fees. They reckon in 10-12years the whole $900AUD remaining will be wiped out, based on the fees they were charged this year. They haven't worked in Oz for a number of years. Any advice appreciated.
co---there appears to an abundance of buracratic stone walling going on in regard to this situation---garath morgans site has as much info as any-- as of march 12 there had been no resolution-a work in progress so to speak---cheers paul w
http://www.gmi.co.nz/kiwisaver/91/transfer-australian-super-to-kiwisaver.aspx
CO: Personal experience. Some years ago I got caught up in the fees fiasco. Did some contracting through an agency who deducted compulsory superannuation contributions out automatically and deposited them with their default provider. At the financial year end got a statement and annual report from the fund. The fees were astronomical. Wasn't working for that agency anymore. Rang the Fund Manager and complained to no effect. After 4 years the total amount invested was gone. Powerless. Even after my balance was zero, they kept sending me glossy glamorous expensive annual reports. Must have cost them about $10 pa in printing, postage and handling etc. So I kept my mouth shut. This was happening to a lot of people. At that time the Government became concerned and introduced a proposal for small amounts in various funds to be taken over and administered by the Tax Office (ATO) at no cost. As you moved around various contracting agencies or employers, who all had different default providers, you ended up with a multiplicity of accounts, all being ravaged by fees. Dont know what happened to the ATO proposal, but they subsequently introduced portability where you could transfer your fund from one provider to another at no cost so it could follow you wherever you went. I now have one fund.
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