By Amanda Morrall
Q) I have been in KiwiSaver from the very beginning. I am now looking at shifting to Perth for five years.
What is going to happen to my KiwiSaver? Can I keep it on hold and continue with it when I return to NZ in a few years time?
A) The fate of your KiwiSaver funds is the hands of Australia at the moment. Here's how and why:
Under the terms of the TransTasman Portabilty Agreement, New Zealanders will lose the current option of withdrawing all their money (less the member tax credit) following a minimum mandatory 12 month waiting period. This option will remain open to members who are leaving the country and going anywhere else but Australia. Track your contributions here.
As Australia has yet to sign off on the legislation at their end, this remains a viable option.
Provided you satisfy the requirements laid out under permanent emigration clause of the KiwiSaver Act, you can withdraw all your savings, including the kickstart, less the member tax credits. The requirement include a statutory declaration, proof of residency in Australia and documentary evidence such as airline tickets or passport stamps.
If you did want to leave your KiwiSaver "on hold" you could do so via a contributions holidays . To do so you must have been in KiwiSaver for a minimum of three months. The maximum holiday period is five years however there is no limit on the number of holidays you can take so you could stretch that holiday indefinitely if you wanted, well at least until you reached 65. Whether there would be any money left in your fund at that time is another matter altogether and would depend on how it performed and of course fees which don't go on holiday when you do.
Another option, if you wanted to keep the money in New Zealand, is to make voluntary contributions. You won't get the member tax credits but you'll keep adding to the fund.
As I mentioned above, the TransTasman Portability removes the option to withdraw the money. Government has obviously tried to dissuade you from this option by virtue of withholding the member tax credits. The benefit of the agreement is that you can hold onto your entire savings if you move it across the Tasman and shift it into a complying superannuation scheme over there. Remember that workplace savings are compulsory over there and the rate of contribution is much higher. It's 9% at present and is gradually being shifted to 12%.
So what happens if you put in an application to withdraw your savings and Australia signs off on the agreement in the interim? The letter of the law suggest you'll be bound to the TransTasman Agreement however one lawyer I spoke with suggested this is something that could be challenged on the basis of timing.
I hope this is helpful.
If you have a question on KiwiSaver, check out our Q&A section as you might find it's been answered. If not, send us an email and we'll try to get you an answer.