Minister for Financial Services and Superannuation Bill Shorten announced on Friday that regulations to implement the scheme have been registered and diplomatic notes exchanged between the governments of Australia and New Zealand.
The government released a consultation on the draft arrangements last month, providing industry with only a short time to respond.
The SMSF Professionals’ Association of Australia (SPAA), the Financial Planning Association (FPA) and Mercer each made a submission in which they expressed disappointment that self-managed super funds (SMSFs) would not be allowed to accept New Zealand funds transferred into Australia.
SPAA and the FPA each said SMSFs are strictly regulated under the same laws governing Australian Prudential Regulation Authority (APRA)-regulated funds.
“The FPA questions why this [exclusion] is the case and requests Treasury to disclose the justification for such a decision,” the FPA stated in its recent submission.
“Further, the FPA seeks explanation for how this decision is in the best interest of the public and the individual member who is transferring their benefits to Australia, even in the circumstances where the initial transfer has been made to an APRA-regulated superannuation fund.”
The draft regulations only allowed for APRA-regulated funds to accept such transfers, and this issue was not changed in Friday’s update. A spokesperson from Minister Shorten's office told InvestorDaily the exclusion remained in place because the international agreement between the two countries did not allow for SMSFs to be included.
Requirements to keep monies transferred from New Zealand separate from Australian savings post-transfer drew criticism from several industry bodies which were concerned about unnecessary duplication, administration and complexity, but those requests were unsuccessful.
According to Friday’s statement from Mr Shorten, “transferred savings must be separately identifiable within the account established in the host country to allow the application of certain source country rules”.
The Association of Superannuation Funds of Australia (ASFA) provided a submission outlining several concerns about the details of the draft legislation, while also asking for clarity around the implementation date.
The government has confirmed the scheme will commence on July 1 this year.
ASFA and the Australian Institute of Superannuation Trustees (AIST) each expressed concern over the level of personal member details that Australian funds are required to have before they transfer their savings over to a complying KiwiSaver scheme. This was also not addressed in Friday’s statement.
ASFA, AIST and Mercer had each requested clarification of whether Australian funds would be required to accept rollovers from New Zealand or if the scheme would be optional. The government confirmed participation in the scheme would be voluntary for both members and for funds.
New Zealand retirement savings transferred to Australia will be treated as non-concessional contributions and subject to the Australian non-concessional cap arrangements on their initial entry to the Australian superannuation system, he stated.
Savings transferred to Australia will “generally” be preserved until the New Zealand superannuation qualification age, currently 65.
