Australian super transfer update November 2009
Legislation allowing New Zealanders returning home from Australia to bring their retirement savings with them will be introduced to Parliament in about two weeks, Finance Minister Bill English says.
Providing the necessary law changes are made in Australia, it is envisaged the new arrangements will take effect in the second half of next year.
“This is an important step forward for our wider Single Economic Market programme with Australia, particularly in helping the free movement of labour between the two countries,” Mr English says.
“In particular, it will allow New Zealanders and Australians to consolidate their financial affairs in the country in which they live.”
Currently, Kiwis who work in Australia must contribute to an Australian complying superannuation fund. However, the savings are locked into the Australian scheme until the saver reaches retirement age.
Mr English signed an agreement with Australian Treasurer Wayne Swan in July, which paved the way for the new super portability scheme.
It will allow retirement savings from certain Australian superannuation funds to be transferred into New Zealand KiwSaver funds – and vice versa. New Zealanders bringing their savings home must put them into a KiwiSaver fund.
Australia’s Tax Office has estimated that it holds about A$13 billion (NZ$16.6 billion) 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,” Mr English says.
Participation in the super portability scheme will be voluntary.
The Government will include the changes in the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver and Remedial Matters) Bill, expected to be introduced to Parliament in mid November. Key facts about the Super portability changes
The transfer of retirement savings between the two countries will be exempt from entry and exit taxes. Under current tax laws, transferring savings from Australia to New Zealand may be regarded as a taxable dividend. The proposed legislation will ensure this does not happen.
KiwiSaver members moving from New Zealand to Australia will be able to retain any member tax credits if they transfer to an Australian scheme.
KiwiSaver members will not be able to withdraw money transferred from Australia to help them buy their first home, but they can use the interest earned on those savings for this purpose.
Retirement savings transferred from Australia into a New Zealand KiwiSaver scheme can be withdrawn when members reach the age of 60 as long as they have retired – as set out under Australian scheme rules. KiwiSaver savings transferred to Australian schemes can be withdrawn when members reach 65 – as per New Zealand KiwiSaver rules.
Contact Thorners if you have questions or require advice on this exciting financial development – we service clients NZ wide.
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Looking for an investment that has an AA credit rating?
At Thorners we have access to a myriad of investment options and we are always guided by the Standard & Poors rating list.
Non bank deposit takers have been in the limelight over recent years as many have got into financial difficulty and only two remain with an AA S&P credit rating which is the equivalent rating held by the the big Trading Banks.
If you are looking to invest wisely, contact us to discuss your options.
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Retail deposit guarantee scheme to be extended
The Finance Minister has announced that the retail deposit guarantee scheme which was due to expire on 12 October 2010 will now be extended through to 31 December 2011.
Some changes to the scheme’s terms and conditions are being made which include:
* Participating institutions fees will be changed to reflect their risk profile.
* Eligible bank deposits will be covered up to a maximum $500,000 per depositor per institution and, eligible non-bank deposits to a maximum $250,000 per depositor per institution. The maximum at the moment is $1 million per depositor per institution.
* Deposit-taking institutions with a credit rating of BB or higher can apply to participate but institutions with a lower credit rating or no credit rating won’t be eligible despite being included in the current scheme.
* Collective investment schemes won’t be eligible for the new scheme.
The Government will introduce legislation to enact the changes prior to the current scheme expiring.
Call Denis if you are considering investing or renewing your existing bank or finance company deposits to get some sound advice. Either contact Denis by email denis@thorner.co.nz or on 0274 575 190.
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Bring Home Your Australian Super Funds
It is estimated that $AUD15 Billion of Aussie Super is sitting in lost or unclaimed accounts and approximately 25% of these funds potentially belong to New Zealander’s who have returned home.
Legislation is being introduced in 2009 that will allow Kiwi’s to repatriate their Australian super funds back to their New Zealand KiwiSaver account.
Thorners can help you track down your lost Super Australian Super funds. Just email us your Australian tax file number, full name, date of birth and address and we will see what we can find and give you some options for transferring it back. Transfers won’t be possible until the new Australian legislation becomes law.
Click here to learn more about KiwiSaver http://www.thorner.co.nz/services/kiwisaver/
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Investment Risk Profiles – Default KiwiSaver Schemes
Are you in a Kiwisaver default scheme?
Does your risk profile match your expectations?
An element of successful investing is paying attention to your risk profile – and understanding what that means for your long-term returns. Your risk profile is about what you want your investments to achieve and your attitude to the risks involved. While this may change over the longer-term, it’s important to understand how you feel about risk before you commit to your investment.
“One of the worst things an investor can do is change their risk profile (which is linked to their investment strategy) because of short term-market moves – you can’t expect to be a high risk investor when markets are booming and a low risk investor when times are tough. The point of a risk profile, or investment strategy, is to ensure your portfolio is structured so you can look past short-term moves to get the result you need.”
By determining your risk profile – such as growth, balanced or conservative – you can understand how comfortable you are with your investment choices, by setting a strategy which is consistent with your risk tolerance.
At Thorners, all clients complete a Risk Profile so that they can gauge their appetite for the various options available and at the end, they have an understanding of why they are investing in a particular fund.
As KiwiSaver Default schemes are conservative, they may not match your investment expectations. Contact us to discuss your options.
Enter To Win Free House and Contents Insurance Cover For A Year
All new business placed with Thorners between 5 September 2008 until 29 October 2008 puts you in the draw to win free House and Contents Insurance cover for a year compliments of Vero insurance. Renewals are excluded.
There has never been a better time to get a new insurance policy, mortgage, investment or to take out a KiwiSaver.
Email or phone us soon to make sure you are in the draw.
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Upper Hutt Spring Festival KiwiSaver Promotion 6th September 2008
Saturday the 6th September 2008 sees the annual Upper Hutt Spring Festival being held in the downtown shopping area.
Visit Thorners office at 22 Main Street to check out the great incentives to take out a new KiwiSaver for yourself, children or grandchildren this Saturday.
Gifts for children and great prizes for adults have been kindly donated by our suppliers for adults taking the time to discuss their financial or insurance needs with us.
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(04) 528 8088
I’m 64 – Should I take out a KiwiSaver?
Taking a quote from a prominent NZ financial adviser in last weekend papers, we would have to agree that everybody aged 64 should be in KiwiSaver before they turn 65.
So long as you join before age 65 and contribute $20 per week for five years, you will be elegible for the initial $1,000 Government kick start, the tax credit of $1,043 p.a. plus the $40 p.a. fee subsidy. After five years you will have a nest egg of $11,630 plus interest and this won’t have any effect on your National Super payment.
Where else can you get a return of 36% without any risk? We could almost go as far as recommending to borrow to top up the payments if you couldn’t quite afford the $20 per week just to get the full return.
Even those aged 55 plus should join as the return after calculating in employer contributions will overshadow ordinary investment returns every year.
Talk to us soon to get the finer details.
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