Kiwis' super trapped in Aussie
Billions of dollars of lost superannuation risks being stranded in Australia thanks to fishhooks in the rules supposed to help bring it back.
Starting last month New Zealanders have been able to retrieve their savings from Australia before they retire and put them in KiwiSaver.
But unworkable rules are threatening to stymie people's efforts, prompting a diplomatic offensive by Kiwi officials.
It is not known how much of the Aussies' mega $1.7 trillion savings scheme belongs to Kiwis but New Zealanders are thought to have squirreled away and misplaced up to a quarter of the $24.5b of "lost" super.
Every New Zealander who has worked in Australia is likely to have a super fund because saving 9 per cent of salary is compulsory there. Some will have multiple accounts because, unlike New Zealand, Australia has no central savings hub.
Announcing the new portability rules in May, Finance Minister Bill English and Revenue Minister Peter Dunne said the change would let Kiwis who had returned home bring their lost money back.
But New Zealanders approaching the Australian Tax Office (ATO) to find lost accounts are being told they cannot transfer the money directly to KiwiSaver.
The ATO is telling people its holding pen for lost super does not count as a qualifying superannuation fund under the trans-Tasman transfer rules, says Chapman Tripp partner Mike Woodbury.
To repatriate the money, Kiwis would first need to move it to an Australian superannuation scheme.
But that is difficult because the schemes are not generally allowed to open accounts for people living outside Australia.
"If you've already emigrated to New Zealand it's a catch 22. If you're not in a complying super scheme already, it's difficult to subscribe for membership of one . . . because they can't offer securities outside Australia," said Woodbury.
It is unclear whether Aussie schemes would want the business anyway, knowing the account would be used as a conduit to move the money straight to New Zealand.
In another roadblock, New Zealanders who already have money in qualifying Australian super schemes are having to find Australian-authorised professionals to witness the statutory declarations they need to bring the money back.
While some Aussie schemes were being pragmatic, under Australian regulations people needed a declaration saying they had moved here permanently to be witnessed by someone recognised in Australia, said Woodbury.
"If you live in Auckland or Wellington you can go to the Australian High Commission or consulate general, or, if you can track down an Australian-registered solicitor, that person can witness the declaration."
The IRD says it is aware of both issues and is talking to Australian authorities.
"We are working towards a solution to smooth the practical operation of the new scheme and make it easier for people to access their funds," it said in an emailed statement. The IRD said while there was inconvenience, the issues did "not necessarily prevent people using the new trans-Tasman portability scheme".
A working group set up by super savings umbrella group Workplace Savings NZ is also lobbying to improve the process.
Woodbury said he was hopeful of reaching a pragmatic solution, such as letting people use a New Zealand-authorised witness such as a policeman, teacher or solicitor. "Lost" accounts also needed a better process because they tended to be small amounts, he said.
"It needs to be made simpler for Mrs Jones of Oamaru," he said.
The transfer rules caught Aussies on the hop after regulations were introduced on their side of Tasman just a few weeks before taking effect.
Politicians agreed to allow transfers in 2009 and New Zealand made the matching law change letting Aussies repatriate KiwiSaver back in 2010.
However, progress was slower on the Australian side and the rules came into effect on July 1.
Straight away, the IRD had to go into bat for KiwiSavers trying to retrieve their Aussie Super, asking the ATO to tweak its website because Australian schemes wrongly thought releasing the money was voluntary.
Australian Minister for Financial Services and Superannuation Bill Shorten also gave the impression when he announced the changes that participation was completely voluntary for schemes.
Only accepting super transfers is voluntary.
People can choose whether or not to move their money and have been advised to weigh up fees, tax, returns and other factors before deciding.
Ana-Marie Lockyer, head of global wealth at ANZ, told a savings conference in Wellington last week that while money was trickling in, there were "a lot customer experience issues" on the Australian side. Transfers could take between two and 12 weeks, she said.
Despite the bugs, Lockyer called on KiwiSaver providers to encourage people who wanted to retrieve their money to try it "or the Aussies will continue to not be ready".
If necessary people could complain to the Australian Superannuation Complaints Tribunal, she said.
Woodbury said the memorandum of understanding between the two governments contained an escalation clause, which could be invoked if there were ongoing issues frustrating the agreement.
"The two governments have agreed in principal to facilitate these transfers so if money is either marooned in the Australian Taxation Office or you are unable to get a statutory declaration, in each case creating a catch-22 . . . we need a workable remedy."
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