Finance Minister Bill English and Revenue Minister Peter Dunne have welcomed the Australian Government's announcement today that it has completed legislative steps to allow New Zealanders to transfer their retirement savings between complying Australian superannuation schemes and KiwiSaver.
The new arrangements take effect from 1 July, 2013.
"Australia's announcement is a direct result of the strong commitment between the New Zealand and Australian Governments to remove an obstacle to the free movement of labour between our two countries," Mr English says.
"Trans-Tasman portability of retirement savings will make it easier for people to take advantage of employment opportunities in both countries and take their retirement savings with them.
"The announcement today is good news for many people who have worked on both sides of the Tasman. It makes it easier for them to consolidate their retirement savings in their country of residence. "
After negotiations were started by the previous government, Mr English signed an agreement with Australian Treasurer Wayne Swan in July 2009, which paved the way for the new super portability scheme. Legislation allowing this to happen was passed by New Zealand's Parliament in September 2010.
Australia's Tax Office has estimated that there is about A$17.7 billion (NZ$21 billion) in "lost accounts" in the Australian superannuation system.
"We expect that some of this money belongs to New Zealanders who have returned home and these new rules will allow these funds to be brought back to New Zealand," Mr Dunne says.
"Under current rules, employers of Kiwis who work in Australia must contribute to an Australian complying superannuation fund, which locks in their savings until retirement age.
"From 1 July this year, returning New Zealanders will be able to transfer funds in their Australian superannuation schemes into participating KiwiSaver schemes and vice versa.
"Retirement savings between the two countries will be exempt from entry and exit taxes and KiwiSaver members moving from New Zealand to Australia will be able to retain any member tax credits if they transfer to an Australian scheme," Mr Dunne says.
While KiwiSaver members will not be able to withdraw money transferred from Australia to help them buy their first home, they may use 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Retirement savings transferred from Australia into a New Zealand KiwiSaver scheme can be withdrawn when members reach the age of 60 if they meet the definition of being retired as set out under the Australian Scheme rules.
KiwiSaver savings transferred to Australian schemes can be withdrawn when members reach 65, in accordance with the KiwiSaver rules.
Participation in the super portability scheme will be voluntary for members in deciding to transfer their funds, and for KiwiSaver providers in deciding whether to accept their funds from Australia.
More information is available on Inland Revenue's tax policy website.