1. Compliance
  2. KiwiSaver
  3. Your on-going obligations

Your on-going obligations

 

The core obligations of KiwiSaver providers are set out in the KiwiSaver Act 2006 (the Act).

In summary, these obligations include the need to:

  • lodge a copy of the trust deed and other documents with the FMA, as set out in the Schedule 2 to the Act.
  • prepare statistics-based annual returns and lodge these with FMA (section 125)
  • provide members with annual personalised statements of contributions and balances (section 125A)
  • lodge copies of amendments to the trust deed within 14 days of execution (section 129)
  • when they wind up a scheme, follow the processes in the Act (sections 173-176).

Quarterly and annual disclosure statements

The KiwiSaver (Periodic Disclosure) Regulations 2013 (Regulations) are designed to facilitate access to information and promote transparency and comparability of KiwiSaver schemes. They came into force on 1 July 2013.

The Regulations require KiwiSaver scheme managers to produce Quarterly Disclosure Statements (QDS) and Annual Disclosure Statements (ADS) for each KiwiSaver fund (as defined in the Regulations) within a non-restricted KiwiSaver scheme. These statements must be made publicly available on the KiwiSaver scheme manager's website with a hyperlink to an electronic Comma Separated Values (CSV) data file.

QDS, ADS and related data files must also be submitted to FMA, within 15 working days of the respective quarter end for a QDS, and 60 working days of the respective year end for an ADS.

FMA has developed a process guide to help managers of non-restricted KiwiSaver schemes prepare and file their disclosure statements. 

The process guide:

  • outlines file format and data requirements that you will need to consider when preparing a QDS or ADS and related data files
  • details the options available to you for filing your disclosure statements and data files with FMA.

See the process guide.

See also FMA's 'Helpful Hints' which clarifies aspects of the Regulations and provides some helpful hints to ensure your disclosure statements are compliant.

Transfers between KiwiSaver schemes

No requirement for a signed application form

A person can transfer between KiwiSaver schemes without having to physically sign an application form to join the new scheme. The contract between the prospective member and the new scheme can be made electronically by meeting the requirements for a valid contract and those applicable to electronic contracts.

Transfers between KiwiSaver schemes

Can the manager of an old scheme refuse to transfer a member's balance to the new scheme if an application form is not provided by the manager of the new scheme?

Section 56(2) of the KiwiSaver Act 2006 requires the manager of the new scheme give evidence to the manager of the old scheme that the member wants to transfer. Therefore, there are 2 important points managers should consider: 

  1. The manager of the old scheme is entitled to require evidence that supports the transfer request. This is important to ensure the manager properly meet its duties under the KiwiSaver Act 2006.
  2. While the evidence required is not specified, it must be sufficient to confirm the member wishes to transfer. Section 56(2) does not require evidence the member has joined the new scheme, but that the member wishes to transfer. This should not allow the manager of the old scheme to insist upon receiving a copy of an application form, or other evidence of the member contracting to join the new scheme.

The type of evidence required under section 56(2) must be sufficient for the manager to satisfy itself the member is a member of the old scheme and that they wish to transfer.

The manager of the old scheme is entitled to ensure the member transferring is a member of the old scheme and the transfer is legitimate.  But the standard of evidence required should not be set so high that it results in unnecessary or prolonged delays for members. It's equally important managers of the new scheme ensure any application to join a new scheme is legitimate and initiated by the member.

This doesn't relieve managers of their requirements to comply with obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

Other information about obligations

All KiwiSaver schemes (other than certain employer and restricted-entry schemes) must have:

  • a manager who is the issuer for the purposes of the Securities Act 1978
  • a licensed external trustee whose main function is to supervise the manager.

Prospectus registration

Providers must also comply with obligations that apply to all issuers. This includes the need for most KiwiSaver schemes to have a registered prospectus. The only exceptions are certain existing employer schemes that are exempted under the Securities Act (Employer Superannuation Schemes) Exemption Notice 2004.

See Offer information for more information.

Find out how FMA interprets KiwiSaver obligations in our guidance library.

Monitoring and surveillance

Trustee Supervision

FMA monitors that KiwiSaver Schemes are compliant with their obligations.

Participants involved in KiwiSaver management and oversight must ensure they meet regulatory standards and act with customer interests in mind.

See the most recent KiwiSaver report.

See guidance notes on KiwiSaver here.

Trustees (for non-restricted KiwiSaver schemes) also have a responsibility as front-line supervisors for monitoring the management and administration of these schemes.

FMA's focus areas

Investments - Managers must exercise care, diligence and skill in the investment of scheme assets, and act in accordance with the stated investment policy and objectives. In 2013 we completed our initial review of how KiwiSaver trustees monitor the investment activities of managers, with a focus on processes and controls. The review resulted in FMA issuing a guidance note to KiwiSaver Trustees and identified what further monitoring work should be undertaken.

Unit Pricing - Unit pricing errors can have adverse implications for investors. FMA will consider how KiwiSaver scheme trustees monitor managers' pricing activities.

Disclosure - FMA will review KiwiSaver scheme offer documents in conjunction with the statement of investment policy and objectives to test whether: investment strategies are appropriately disclosed, and disclosure documents are understandable to investors.

Our Effective Disclosure guidance for issuers highlights the need for product transparency from the perspective of a prudent but non-expert investor. As part of our 2013 work programme, we will monitor how issuers adapt to our guidance.

Fees - Two new sets of requirements aim to increase transparency of fees and allow easier comparison between schemes. Once implemented, we will monitor compliance with these new requirements, which include quarterly reporting on fees to members and fee disclosure in trustee annual reports. After a period of 'settling in' of the Guidance Note: KiwiSaver Performance Fees, we will undertake a review to determine to what extent this guidance is being met.

KiwiSaver scheme trustees - Trustees' responsibility as front-line supervisors is crucial to the effective operation of KiwiSaver schemes. We will include a focus on KiwiSaver as part of our ongoing monitoring of trustees. FMA will also work to clarify our expectations of trustees in respect of KiwiSaver schemes.

Advice - FMA has already issued guidance on KiwiSaver sales and distribution and will monitor how distributors adjust to the guidance. We expect distributors to monitor sales practices and avoid inappropriate customer incentives. We will issue information for customers on the selection of non-advice or advice services in response to feedback and will take action in the event of mis-selling.

Breaches and Offences

Under the KiwiSaver Act 2006 (the Act) it is an offence to fail to provide information required under the Act. (section 197)

There are a number of other offences, including failing to carry out any direction from FMA and knowingly supplying false or misleading information about a KiwiSaver scheme. See section 198 of the Act for a full list of other offences.

The Act provides for fines where persons are convicted of any of the listed criminal offences. (section 199)

See information on breaches and offences in the Issuers section.

See FMA's Enforcement Policy.

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