Access to Aussie super set to get easier
The banking industry is taking another step towards freeing up the huge sums of money marooned in Australian superannuation schemes.
Difficulties in transferring funds across to KiwiSaver mean billions of dollars have been "locked" by the Australian Tax Office (ATO).
While the rules were changed a year ago to allow portability, the process is far from smooth.
Yesterday ANZ launched a new way of getting around the roadblocks, and the industry as a whole is exploring how it can follow suit.
Those who have approached the ATO to recover lost accounts have been told they cannot transfer the money directly into KiwiSaver.
Instead, they first need to move it to an Australian superannuation scheme, which up until now has been extremely difficult from outside the country.
ANZ's solution is to allow New Zealanders to open an account with an ANZ scheme in Australia, which uses a "super-matching tool" to track down and collect their missing retirement savings.
From there, the money can be transferred back to an ANZ KiwiSaver scheme in New Zealand.
While seemingly simple, the bank had to seek a special exemption from the Financial Markets Authority (FMA) in order to offer Australian super to New Zealand residents.
The FMA confirmed it was now in discussions with the New Zealand Bankers' Association about the possibility of a class exemption.
The four major banks, ASB, ANZ, BNZ and Westpac, all have parent companies with super schemes in Australia, as does default KiwiSaver provider AMP.
BNZ said it had been helping customers bring their Australian-based funds back home, if it could be located.
"Helping customers release locked funds is something we're certainly looking in to with our NAB colleagues in Australia," said spokeswoman Emily Davies.
Westpac said while it had not seen a strong demand for the service, it was "watching with interest".
AMP said it was still working with its Australian counterparts to simplify the process, and had already repatriated $5 million for nearly 250 customers since the rules changed.
ANZ has also helped over 540 customers bring home more than $11.4m.
However, with about a quarter of the $19 billion of "lost" superannuation funds in Australia estimated to belong to Kiwis, those figures only represent the tip of the iceberg.
Every New Zealander who has worked across the Tasman is likely to have a super fund, because employers have to contribute 9 per cent of the base salary.
ANZ Wealth New Zealand managing director John Body said at present, only about 20 per cent of those trying to transfer their super back home were successful.
Many savers were giving up out of frustration with the various forms, fees and processes, especially if they had accounts spread across multiple employers.
Across the industry, only about 2000 people had successfully repatriated funds, in the context of more than 21,000 returning home from Australia in the past year alone.
Body said those who used the new tool to track down lost or locked funds could leave their money in the Australian account until retirement if they preferred.
That was an individual decision which people should take advice on, including over tax issues, Body said.
Australian super returns are taxed at a maximum rate of 15 per cent, almost half the top fund tax rate of 28 per cent in New Zealand.
Body also said he would expect other KiwiSaver providers to follow ANZ's lead.
"We're all in the business of making things easier for our customers."
He agreed it was an advantage to be the first provider to offer the switching service for lost funds, and it was likely to secure new customers for the bank.
ANZ is already the biggest KiwiSaver provider, with more than 585,000 members and over $4.8b in funds under management.