There are over 650,000 Kiwis living in Aussie. Every year, thousands return back to Aotearoa. No surprises there. But while working over the ditch, they’re generally obliged to sign up to the Australian superannuation scheme - and it’s a sizable 9.5% that their employer pays on-top of their wages.
But what happens when they move home? Should they bring their Aussie-super back to NZ’s KiwiSaver scheme?
Unfortunately like most things, there’s no one-size fits all answer. It depends on your personal circumstances, and we’ve had a go at breaking down the key factors below.
Here are a few things to know about before making the move:
Pros
It can be done: Kiwis can transfer their super into KiwiSaver (and vice-versa) if you’re planning on moving to that country permanently.
Tax: Transferring the money across the ditch is a tax-free transaction.
Save on Fees: If you have both KiwiSaver and a superannuation fund, you are probably paying two sets of fees. So, it makes sense to have your money in one place, and get charged just once.
Retirement rules: Instead of waiting until you’re 65 (the registered retirement age in NZ), you can access your KiwiSaver at 60, in line with the Australian rules.
NZ withdrawal rules: compassionate ground rules apply in New Zealand, so you can apply to withdraw your funds early if you suffer a serious illness or financial hardship.
Cons
First Home Withdrawals: You can’t withdraw your Australian money for your first home, even after it has been transferred into KiwiSaver. The money is locked up until retirement, because Australian rules apply.
Insurance Benefits: Australian super often comes with added benefits, for example life insurance. You could lose these entitlements by moving the funds out of Australia. It’s so important you read the fine print, or talk to an expert.
Exit and Entry Fees: You may be charged for the transfer into your KiwiSaver fund (or exit-fees for leaving) – If you have a few different super funds, you may be charged the fee several times.
Exchange Rate: It can take some time to transfer the money, and the exchange rate will fluctuate over time. The applicable rate when the funds are transferred may positively or negatively impact your nest egg.
Tax burdens – Tax on Aussie super is only 15%, whereas in New Zealand it is up to 28% depending on your income. Only Kiwis who pay less than 15% PIR on their KiwiSaver (i.e. earn $14,000 or less, will pay less tax in NZ than Aussie.
Get specialised advice about switching your nest-egg
Moving your nest-egg overseas can be quite a daunting decision. It’s a good idea to weigh up the pros and cons of moving the money, or leaving it where it is for now. Your decision will primarily relate to your individual circumstances, i.e. your age, your financial needs at the time, how much you earn, and whether you intend on retiring here in New Zealand.
It’s a great idea to get independent financial advice before moving the money. Seeking help from people who do this sort of thing every day, can make the process a whole lot easier.
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