Portability not a no-brainer

Moving superannuation savings from Australia to a New Zealand account is not a straightforward transaction, says one adviser who specialises in KiwiSaver.

Thursday, November 7th 2013, 5:33PM

by Susan Edmunds

Carey Church, of Moneyworks, says she has already been dealing with about half a dozen people who want to bring their Australian super back to New Zealand, and consolidate it in their KiwiSaver accounts. Some had been wanting to make the change for as long as five years.

It became possible this year.

The FMA issued a notice to AFAs this week: “FMA expects those providing advice or selling KiwiSaver to put their customers first, and to concentrate on what outcomes are being achieved for them.”

It said this would mean providing information on fees and costs, access to information and advice, benefits, tax implications and the ramifications of exchange rate movements.

Clients should also be warned to consider the fees being charged in Australia compared to what they would pay on the money here. Some would also have benefits tied to their Australian savings, such as insurance, which would need to be part of the decision.

Tax could also make a difference: Neither country will tax the transfer of retirement savings to the other country. But Australia generally has a flat rate of 15% on earnings from superannuation schemes. New Zealand’s tax rate on superannuation earnings can range from 10.5% to 28%. But Australia has a capital gains tax for equities while New Zealand currently does not.

The FMA said: “We also expect advisers to offer the option of financial advice to customers.”

It said it would be closely monitoring advertising and other information relating to transtasman portability, to make sure it is not misleading, deceptive of confusing.

Church said she would use the FMA’s comments as a template for dealing with clients considering a change.
“A lot of people will have multiple super accounts in Australia, which makes it tricky. But that’s what’s attractive, consolidating little bits of Australian super and bring it back to have control over here, you know what’s happening with your super.”

But she said people who had large chunks of Australian savings would have more factors to consider, especially if they were not necessarily going to stay in New Zealand.

Much of what the FMA outlined was already what advisers were doing, she said, but it was helpful to have a clear guide.

“What the FMA has done [releasing a guide] is really good, it’s what they should be doing. It will help advisers get their heads around what the FMA thinks is important for clients to understand.”

« Kiwis' 'vitriol' towards advisers revealed

IFA working on pro-bono offering »

Special Offers