The Australian government has introduced a long-awaited law making KiwiSaver accounts and compulsory Australian pension savings portable across the Tasman.
It follows an agreement between the two governments in 2009 but New Zealand ministers, who passed the equivalent law in 2010, have been privately frustrated that Australia had dragged the chain until now.
Australia's Minister for Financial Services and Superannuation Bill Shorten said the scheme would be voluntary and allow Australians and New Zealanders who have lived and worked in both countries to make the most of their retirement savings.
"The Australian Government is committed to the closest possible relations with New Zealand," he said.
The portability scheme would enhance the development of a seamless trans-Tasman labour market by removing an impediment to labour mobility.
The scheme will cut in on July 1 next year.
Now Australians and New Zealanders working in Australia must leave their superannuation behind when they permanently leave Australia.
"More than 50,000 New Zealanders moved to Australia last year, while about 14,000 people left Australia permanently for New Zealand," Shorten said.
"This Bill will permit the transfer of retirement savings between APRA-regulated Australian superannuation funds and New Zealand KiwiSaver schemes."
Kiwis who move to Australia will be able to transfer their savings to Australia and add them to their Australian superannuation benefits.
"Similarly, Australians moving to New Zealand, and New Zealanders returning home, will be able to take their Australian benefits with them, to consolidate with their New Zealand retirement savings."
Transfers will be tax free, but New Zealand transfers into the Australian superannuation system are subject to a contributions cap.
Shorten said this was the first time an international superannuation portability scheme has been implemented in Australia.
Announcing the agreement in November 2009, Finance Minister Bill English said Australia's tax office had estimated it holds about A$16.6 billion (NZ$20.8b) in "lost accounts" in the Australian superannuation system.
"We expect that much of this money could belong to New Zealanders who have returned home and these new rules will allow these funds to be brought back to New Zealand," English said then.
- © Fairfax NZ News