The working group was established earlier this year with a brief to develop ways in which New Zealand can improve its savings rate, particularly around retirement.
However, it has a broad remit that also looks at way the debt to GDP ratio can be improved and how the country can become less reliant on foreign funds for internal investment.
Linked to this, John Key, the Kiwi Prime Minister, hopes to create an international financial centre in New Zealand, through measures such as establishing a fund regime similar to Ucits that overseas investors will find attractive. The aim is to attract foreign funds and investment in non-debt forms.
Though increasing retirement savings is the main focus of the working party, New Zealand pensions, known as superannuation schemes, are not included in the scope of the group’s recommendations for change.
However, according to Geraint Davies, chief executive of UK-based specialist QROPS adviser Montfort International, which has strong links to New Zealand and Australia, industry colleagues intend to highlight to the group how such schemes are being used in the QROPS market to allow 100% encashment of pension funds for foreign nationals.
“There is a concern out there that New Zealand could be seen as inappropriate centre for overseas investors, if it gets tagged as a QROPS launderette. The New Zealand financial planning fraternity clearly would not want this label.
"Advisers operating outside of New Zealand whose prime focus is the marketing of a cash and run QROPS philosophy should expect to come under some intense scrutiny as to whether they are of benefit to New Zealand. Having been involved in the Australian Superannuation Enquiry of 2002, no stone is left unturned.
“The whole aim is to look at how to benefit New Zealand by creating a financial centre, but there is no benefit in getting in foreign funds that are then encashed by non-residents who use New Zealand pension schemes as QROPS.”
Davies has referred to “influential” and “high profile” individuals and pressure groups in New Zealand’s financial advice and pension sectors who are preparing their submissions to the working party.
Their evidence will highlight how the reputation of the country’s pension sector, and wider financial services industry, is suffering as a result of QROPS abuse. It is expected that the first of these submissions will be received in the first quarter on 2011, according to Davies.
“New Zealand is looking to retain funds under management but the way some people are using and promoting superannuation schemes is not doing this. This point will form part of the submissions,” said Davies.
