Recently, we looked at some of the basics of KiwiSaver and noted that it was a transfer market, where thousands of New Zealanders’ move between schemes every year.
This month I am continuing with the transfer theme but more specifically, given that many Kiwis are moving home from overseas, an inquiry I see quite often is about transferring Australian superannuation to your KiwiSaver account.
If you have worked in Australia at any time since 1992 and have moved back to New Zealand, you may have Australian superannuation money.
Your employer would have paid this money directly to your Australian superannuation provider, and the percentage of income your employer would have been contributing for you has been steadily rising, from 3% of income back in 1992, up to 9.5% currently, not including any money you may have contributed yourself.
Maybe, like many people who have lived in Australia and then moved, you have lost touch with your superannuation money.
You may need to find out which Australian superannuation provider you are with, which fund or funds you invested in, or what fees you are paying.
The easiest way to do this is by visiting the Australian Taxation Office (ATO) website. Your KiwiSaver provider may also be able to help you navigate the site or assist you with completing a lost and unclaimed super form.
Alternatively, if you have a MyGov profile, you can login and check your superannuation status and providers online.
At MyGov you are also able to combine two or more superannuation accounts into one account if you choose to do so.
To transfer Australian super to your KiwiSaver account, it must be invested with an Australian Prudential Regulation Authority (APRA) certified provider. You can check if your fund is APRA certified by visiting superfundlookup.gov.au.
Some different types of funds cannot be transferred, as they are not covered by the transtasman portability arrangement including self-managed super funds, transition to retirement accounts, pension phase accounts and defined-benefit funds.
Again, your KiwiSaver provider may be able to help you answer if your Australian super can be transferred.
Any transfer of Australian superannuation to your KiwiSaver account must be for the whole amount of the money invested with your Australian provider(s). This will result in your account being closed. Partial transfers are not an option.
There may be benefits to transferring your Australian superannuation into your KiwiSaver scheme including making it easier to manage and keep track of your progress towards your lump sum at retirement. You might also save money on fees and duplication on insurance.
Before you decide to transfer your funds to New Zealand, it is really important to understand the fees you are charged (including any exit fees), any insurance benefits that come with your account and if you already have this cover or would need to replace it with a service in New Zealand.
You will be unable to withdraw the Australian-sourced funds for a first home if that is on your horizon.
From age 60, you may be able to withdraw the amount you transferred if you meet the Australian definition of retired.
Currently, the definition of retirement for Australian money transferred is having ceased all employment after reaching the age of 60 and never intending on entering employment again.
Conversely, if you retain your superannuation in Australia, the age at which you can access the money is called your preservation age. It is determined by when you were born.
Jump online and search for “preservation” on the Australian Taxation Office’s website to help understand your situation.
Another very important consideration is that New Zealand and Australian taxes are different.
Seeking specialist tax advice to discuss the impact for you of bringing your investment to New Zealand would be prudent.
Finally, the exchange rate should be taken into consideration as your money will generally be turned into New Zealand dollars before being deposited into your KiwiSaver account.
Just as KiwiSaver is real money and it is your money, so, too, is your Australian superannuation and taking some time to work through if consolidating it with your KiwiSaver account makes sense and will be time well spent.
- Trish Oakley is head of Summer (Forsyth Barr’s KiwiSaver scheme). This is not a recommendation to buy or sell any financial product and does not take your personal circumstances into account.
