Kiwi planners keen on Aussie clients
Financial planners in New Zealand may use the introduction of the Trans-Tasman Portability Scheme as a way to upsell incoming clients on insurance.
The Trans-Tasman Portability Scheme was introduced on 1 July and allows residents of Australia and New Zealand who relocate permanently to either country to transfer their retirement savings to their new residence.
New Zealand’s Kiwisaver scheme does not have the same embedded life insurance component as the Australian superannuation system - and hence any Australian transferring retirement savings there will lose their benefits.
Financial Services Complaints Limited general manager Trevor Slater said that 200 Kiwi planners at a professional development day he attended in New Zealand were advised that Australians who transferred retirement savings to New Zealand, or New Zealanders returning home, were a “golden opportunity” for planners to get New Zealand clients’ money back into that country and to upsell them on insurance cover.
Slater said this was because once a member transferred their money to a Kiwisaver scheme, there was no recourse to recover benefits.
“There will be regulation around it because advisers in New Zealand still have to be registered and have the same level of disclosures - the problem is if they muck it up, we’ve got no jurisdiction as a dispute resolution scheme to tell an Australian superannuation scheme to take the money back and reinstate all the benefits.”
The Australian superannuation system has a number of other benefits that could be lost if funds were transferred across the Tasman, including a lower tax rate on earnings and an earlier preservation age for some.
Migration statistics from Statistics New Zealand indicate that almost 16,000 Australians - most originating from New Zealand - relocated to New Zealand on a permanent basis in 2012.
Only a handful of New Zealand funds have set up the capability to accept transfers from Australian super funds. Australian super funds, bogged down by regulations, appear to be allowing their members to transfer funds into New Zealand but not the other way.
Industry super fund Sunsuper said it would set up the process following the bedding down of the current spate of Australian superannuation reforms.
“We are currently completing the implementation of the Stronger Super reforms, including the launch of our MySuper product,” it said.
“Once this is complete, it is our intention to implement the changes required to accept transfers from New Zealand as soon as possible.”
Australian super funds are required to release funds to New Zealand if requested. However the scheme is voluntary for members, and funds are only accepted on a voluntary basis by complying schemes.
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