It sounds sensible to have one scheme, but with any financial decision, you need to weigh up the pros and cons.
Where will you end up?
What if you might go back to live in Australia at some future time? If so it would probably be better to leave it there.
The Australian scheme is accessible at age 60. Kiwi Saver is locked in to the retirement age which is currently 65 but could rise.
The Australian schemes investment earnings are taxed between 7% & 15%, whereas Kiwi Saver will be taxed at your current PIR rate – either 17.5% or 28%.
If you move your funds to NZ and later on move back to Australia, and want your money out of NZ, you will lose if the NZ dollar has fallen.
By putting all your money in one scheme, you will increase in your risk.
By having a different manager in Australia, you will add extra diversification.
No matter what you do, ensure your Ozzie super and Kiwi Saver are in the appropriate funds.
Timeframe and fund options
For 3 to 7 years – a conservative to balanced portfolio – return should average 2% to 3% PA above bank rates but with some variation.
For 7 to 12 years – a balanced or growth portfolio – return should be 3% to 5% above bank rates but with moderate variation.
For 12 years or more – a growth portfolio – return should be 5% to 6% above bank rates with high variation.
A difference of only $63,000
Let's assume you have NZ$30,000 in your Australian scheme.
Your combined contributions into Kiwi Saver are $4,000 PA. and you have 20 years to go.
You choose conservative funds that average 4% PA. Outcome $189,611
But by using growth initially, then balanced, and finally conservative, your funds are more likely to average about 2% more – say 6% PA average over 20 years. Outcome total $252,185
That is potentially $63,000 more.
Same old, same old
Think it through, make a decision, and fire an email to both fund managers.
Same old same old with finance – regular attention to detail can make such a difference.
Who is encouraging you to move the money to New Zealand?
All the Kiwi Saver fund providers will be encouraging you to move the money across, because the more money they have in their funds, the more money they make.
So you need to be a little bit cautious – it might be good for them, but will it be good for you?
- Who is giving you advice or encouragement to do something with your money?
- Why would they say that? What's in it for them?
- You should know this before you ever take any financial advice.
This article was supplied by Alan Clarke who is the author of a book entitled "Retire Richer" which is a practical guide for everyone age 25 to 85. Alan also writes a regular blog on www.investandretire.co.nz
Alan is an independent authorised financial adviser (AFA) and his disclosure statement is available on request and free of charge.