Australians and New Zealanders moving between the two countries will find it easier to consolidate their retirement savings if draft legislation is passed later this year.
The Minister for Financial Services and Superannuation, Bill Shorten, this week released details of a trans-Tasman retirement-savings portability scheme.
“The new scheme will help Australians and New Zealanders make the most of their retirement savings, as they will be able to take their retirement savings with them across the Tasman when they move,” he said.
“This will make it easier for people to move freely between the two countries, help consolidate their retirement savings in their country of residence and avoid paying fees and charges on accounts in the two countries.”
A bridge across the Tasman
Currently, Australians and New Zealanders working in Australia cannot take their superannuation with them when they permanently leave Australia.
New Zealanders who move to Australia will be able to consolidate their New Zealand retirement savings with their Australian superannuation benefits. About 50,000 New Zealanders moved to Australia in the last year.
Similarly, Australians moving to New Zealand, and New Zealanders returning home, will be able to consolidate their Australian benefits with their New Zealand retirement savings. About 14,000 people living in Australia moved to New Zealand in the last year.
Greater mobility of labour
“The scheme is intended to enhance labour mobility between Australia and New Zealand,” said Shorten.
“This measure is an important step in our closer economic relations with New Zealand, and supports progress toward the goal of a single economic market, to which the Australian and New Zealand Governments are committed.”
The move follows an announcement by the Australian Securities and Investments Commission (ASIC) and New Zealand’s Financial Markets Authority (FMA) in July to explore mutual-recognition arrangements for Australian and New Zealand financial advisers.
And financial advisers, too
A tweak to the rules will enable financial advisers to provide services in each other’s countries based on the qualifications and experience they have obtained in their home country.
While Trans-Tasman Mutual Recognition legislation already applies to Australian financial-services licence holders, most of these are companies rather than individuals.
To enable individual financial advisers with relevant qualifications to operate on either side of the Tasman, both regulators recognised a need for a different mechanism based on the spirit of that legislation.
“The mutual recognition arrangements will strengthen the Australian and New Zealand financial-services industries by increasing competition and lowering transaction costs,” said ASIC chairman, Greg Medcraft, in a statement.
“We hope many financial advisers here and in New Zealand take advantage of this new arrangement.”
The fine print
The proposed retirement-savings reform will permit the transfer of retirement savings between certain Australian superannuation funds and New Zealand KiwiSaver schemes.
The legislation is expected to be introduced into Parliament later this year, and is likely to take effect from July 1, 2013.
View the draft legislation and explanatory memorandum here.
Submissions on the exposure draft close on September 28.
