Kiwisaver: The boomerang Super

Roughly 1000 people brought back a combined $80 million of super funds from Australia last year to add to their KiwiSaver pot. Photo / Getty Images

Q: I have come back to New Zealand from Australia after 20 years and brought my Australian Super across two years ago. I have about $50,000 sitting in my KiwiSaver account and a Mortgage Link financial adviser said I will have access to the Australian content of my KiwiSaver after it has been invested here for three years.

Is he correct? You cannot access all your Australian superannuation content unless you have reached entitlement to retirement by Australian rules.

Shifting superannuation money across the Tasman got easier in 2012 when new arrangements were agreed between both governments. Under this system, retirement savings could follow you if you decide to permanently move to either Australia or New Zealand.

It was hoped it would help reduce the $16 billion in "lost" super sitting with the Australian Tax Office (ATO) - from small, inactive superannuation accounts being left with the ATO by Australian superannuation providers.

Roughly 1000 people brought back a combined $80 million of super funds from Australia last year to add to their KiwiSaver pot.

The catch is that some rules from the country where the funds originated will apply and KiwiSaver providers had to put systems in place to make sure they knew which portion came from Australia.

How soon you can withdraw the Australian portion of your money can be a tricky area, says Sean Donovan, KiwiSaver associate at Milford Asset Management.

"You can only withdraw your Australian-sourced funds if you have reached 60 and you satisfy the Australian definition of retirement.

"However, it cannot be used for a KiwiSaver first-home withdrawal," he says.

The Australian definition of retirement is:

• retired permanently from work and reached your "preservation" age; or

• reached 60 and stopped an employment arrangement after turning 60; or

• reached 65.

"Preservation age is the Government-specified age at which you can gain access to your superannuation benefits, provided you have permanently retired from the workforce," says Donovan. "Preservation age varies according to your birth date."

I checked with Josh Bronkhorst, managing director of mortgage brokers Mortgage Link to see what advice his company had been giving its clients.

He says the transtasman rules have been a source of confusion and they have had many queries.

"Our advisers are aware that you can transfer the funds to KiwiSaver, but based on the same rules that apply to the transferring fund, they are locked in, with the exception that the investment returns on those funds can be withdrawn early," Bronkhorst says.

Money transferred to KiwiSaver from Australian super funds can't be used for a first home because it's not a feature of the Australian retirement regime.

You can, however, use any investment earnings you have made on the Australian portion, once it is in KiwiSaver, for a first home.

Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players, email Helen Twose. Helen cannot answer all questions, correspond directly with readers, or give financial advice.