1. Compliance
  2. Superannuation
  3. Q&A



Note, guidance on this website provided by the Government Actuary on the superannuation schemes remains current.

Q: What guidance is available on the member notice requirements applying under section 9B (for consents-based transfers between schemes)?

A: Under subsections (2) to (2B), where it is proposed to transfer all or a substantial number of members or beneficiaries from one scheme to another the trustees of each scheme must notify:

  • all members and beneficiaries of each registered scheme (other than those members and beneficiaries that, in the opinion of the FMA, are not likely to be materially affected by the proposed transfer) and
  • the FMA.

The notices must be in writing, and given at least one month prior to the date by which transfer consents from members and beneficiaries of the old scheme must be received by the trustees.

If trustees form the view that certain members and/or beneficiaries of either scheme may be 'not likely to be materially affected by the proposed transfer', it is expected the trustees will ensure that FMA is also of that opinion before they determine not to notify those persons.

The notices must advise relevant members and beneficiaries of the transfer, its implications, the date it is to occur, the date by which consents are to be received, and that a copy has been sent to FMA. At the same time, the same information has to be sent to FMA.

The purpose of the prior notice requirement is to ensure that members and beneficiaries have at least one month in which to consider the information and take advice before deciding whether or not to give consent.

Q: Can the FMA exempt trustees from written amendment or transfer consent requirements with respect to members and beneficiaries who cannot be contacted (section 9BA)?

A: Section 9BA states that FMA may exempt trustees of a registered superannuation scheme from the requirement to obtain the written consent of all members and beneficiaries of the scheme under sections 9 and 9B if FMA is satisfied that:

  • the trustees have not been able to contact all members or beneficiaries of the scheme despite having taken all reasonable steps to do so and
  • the proposed action is not unreasonable in relation to the best interests of any member or beneficiary who has not been contacted.

This section can apply to both trust deed amendment proposals (under section 9) and transfer proposals under (section 9B) which require members' or beneficiaries' consents.

We expect trustees wanting to use this section to provide us with a written list of members they are seeking to have the exemption applied to, the steps taken to contact them and why, in the opinion of the trustees, the proposed action under section 9 or 9B is not unreasonable as outlined above. Any exemption given will only relate to listed members.

Section 9BA cannot apply to a proposal to transfer members between schemes without their written consents, under section 9BAA (see below). Only duly notified members can be transferred from one scheme to another under section 9BAA, and members who cannot be contacted must be excluded from the transfers.

Q: When may the Financial Markets Authority approve transfers between schemes without written consents (sections 9BAA and 9BAB)?

A: Section 9BAB of the Superannuation Schemes Act 1989 allows the trustees of registered superannuation schemes, and employers within multi-employer schemes, to apply for FMA approval of a proposed bulk transfer to another scheme without obtaining members' and beneficiaries' written transfer consents as required by section 9B.

The terms and conditions of the scheme to which members or beneficiaries are to be transferred must be no less favourable than those of the existing scheme, and certain other conditions must also be met. FMA has not issued guidelines on this matter as we want to consider any applications on a case by case basis. However, in relation to the 'no less favourable' requirement, trustees should note the guidance set out in APRA Superannuation Circular No. I.C.4.

Members and beneficiaries must be notified that they have the right to make a submission to FMA about the transfer proposal and they should be given no less than 28 days to make that submission. Members should be given sufficient comparative information, including the amount of any scheme reserves/surplus, to enable them to make their own value judgements.

The trustees of the receiving scheme will be required to meet their Securities Act 1978 responsibilities with respect to offer documentation.

Q: What guidance does the FMA have on the tests for determining what is an 'adverse effect' on members, and what is 'material', when determining whether to approve a transfer without requiring member and beneficiary consents?

A: Transfer approval applications will be considered on a case by case basis and FMA must consider any member submissions received. Under section 9BAA(3), FMA may decline to approve a transfer if it considers that the transfer would adversely affect the interests of all or any members and beneficiaries of the old scheme in a material way.

When FMA addresses whether there is an 'adverse effect' and whether it is 'material' it must consider all aspects including, for example, how the two schemes' benefit designs, fees and (if relevant), investment allocations compare.

Q: What documentation will the FMA require from employers and/or trustees to enable transfers under these sections?

A: The documentation required is:

  • an analysis of the two scheme designs and, where relevant, how the schemes compare in other respects such as fees and expenses and funding ratios
  • if the transfer is between two multi-employer schemes, a draft of each proposed new participation agreement and benefit schedule.

We also require a formal transfer application, attaching copies of the transfer notice communications to members and beneficiaries of the old scheme and compliance certificates from the trustees of both schemes.

Q: What information should be sent to the FMA about trust deed amendments or entry into new participating employer agreements?

A: The Superannuation Schemes Act 1989 does not contain any requirement to advise FMA of the admission of new participating employers to a multi-employer scheme. However, it does require copies of trust deed amendments (and accompanying trustees' certificates) to be sent to FMA within 14 days of execution.

Q: What sort of documents should be used to admit participating employers to a scheme?

A: In the market there is a range of documents used to admit participating employers. Some of the different forms of these documents are as follows:

1. Under some trust deeds, a new participating employer can be admitted to a scheme merely by signing a pro forma application form which is then countersigned by or on behalf of the trustees. The agreement sometimes takes the form of a deed, entered into by the trustees and the new participating employer, which binds that employer into the obligations imposed on employers by the trust deed.

2. Sometimes the agreement signed by a new employer may specify some details which are left open in a trust deed. This could be where, for instance, a trust deed provides that the contributions payable by an employer are as specified in the application by that employer to participate in the scheme.

3. Occasionally, a participating employer agreement will alter the terms of a trust deed as it affects that particular employer. This can occur where the trust deed allows that a participating employer agreement may override some of the terms of the deed, as they affect that employer.

4. In a few cases, the deed itself is altered to allow the participation of a new employer (possibly on terms that are unique to that employer) and some trust deeds explicitly state that the execution of a new participating agreement is an amendment to the trust deed.

The first and second forms of agreement are not deed amendments, while the last one obviously is. The third example may or may not be regarded as an amendment to the trust deed - whether it is will depend on the precise wording of the deed.

Q: What practice should apply to participating employers in registered schemes?

A: The practice which should apply to registered schemes is that trustees should only forward to the Financial Markets Authority under the Superannuation Schemes Act 1989 copies of those participating employer agreements which involve trust deed amendments, and must therefore be duly certified by trustees. Copies of those agreements, and of the trustees' certificates, should be lodged within 14 days of the agreements being signed. This is the normal procedure for trust deed amendments for registered schemes. (see section 12 of the Superannuation Schemes Act 1989)

A subsequent amendment to such a participating agreement will also be subject to sections 9 and 12 of the Act, and a copy of the original participating agreement which is being amended must also be forwarded to FMA where it is not already held on our files.

Participating employer agreements which are not trust deed amendments need not be copied to FMA.

No advice is required for the withdrawal of a participating employer from a registered scheme, unless the withdrawal itself involves a new trust deed amendment.

At any stage FMA can ask to see participating employer agreements in respect of any particular scheme.

Q: How can errors affect the operation of new participation agreements?

A: Some participation agreements have a format which requires boxes to be ticked. An unfortunate error, such as an incorrect tick or some erroneous or illegible handwritten comment, could lead to the need for written consent for a subsequent amendment from members affected. It is recommended that trustees of multi-employer schemes review their administration procedures to ensure sufficient safeguards are in place to minimise such errors.

Q: What are the annual report requirements for trustees?

A: The Superannuation Schemes Act 1989 requires trustees to provide an annual report to scheme members, and to forward a copy of that annual report to the Financial Markets Authority.

Section 14 of the Act states that for annual reports:

  • The trustees of a registered superannuation scheme must, within 5 months after the end of each financial year, prepare a report on the scheme for that year
  • The annual report must include the matters specified in the Second Schedule to the Act
  • The trustees must send to FMA a copy of the completed report within 28 days after its completion.

Section 17 of the Act outlines members' right to information. These include a requirement that each member of a registered superannuation scheme must be given, within 6 months of the close of each financial year of the scheme, a copy of the annual report of the trustees in respect of that year.

Some trustees interpret section 14 of the Act to mean that a report is to be prepared for FMA in addition to that given to the members. That interpretation is incorrect. There should only be one annual report, which is sent to members and FMA.

Under section 14(3), where an annual report includes summarised accounts and an abridged audit report it must tell members where the full financial accounts are available on request and at no charge. FMA must also be provided with a copy of the full financial accounts at the same time as the report is lodged.

The Second Schedule of the Act states the matters to be specified in an annual report. One of these is a statement of numerical changes in the membership of the scheme during the financial year.

Some trustees continue to advise only the total membership at year end. FMA expects to see a detailed summary of changes, including members at the start of the year, number of new entrants, number of exits and number at the end of the year, in the report.

FMA also expects:

  • the new entrants to be broken down into
    • new members
    • transfers from other superannuation schemes
  • the exits to be broken down into
    • retirements
    • deaths/disablements
    • redundancies/retrenchments
    • withdrawals
    • transfers to other superannuation schemes.

As this information is purely for statistical purposes, if the trustees do not wish such a detailed summary to be included in the trustees' report, because it could identify a specific individual, they may supply this information in the covering letter sent to us with the trustees' report.

Q: What are the requirements for winding up a superannuation scheme?

A: The requirements are:

Winding up resolutions (section 21(1) (a))

A copy of the winding up resolution must be lodged with the Financial Markets Authority within 14 days after the resolution is passed. Trustees must ensure that the resolution is passed by the entity with the power to do so in terms of the trust deed. This is not always the trustee(s).

Final accounts (sections 21(1) (b), (c) and (d) (i))

Final audited accounts must be prepared within 5 months after the effective wind-up date, showing the position of the scheme as at that date. The effective wind-up date is the winding up date stipulated in the resolution or, if the effective date is not stated, the date on which the resolution is passed. Copies of the final audited accounts must then be forwarded within another 28 days to FMA and to each person who was a member of the scheme immediately before the effective wind-up date.

Under section 21(1A), FMA may extend the time period within which trustees must comply with any of the requirements of section 21(1)(b) to (d). However, such extensions will only be granted in exceptional circumstances.

Written advice regarding the basis of distribution of assets (section 21(1) (d) (ii))

FMA and those who were members immediately before the effective wind-up date must also be given a written statement of the manner in which the assets of the scheme are to be distributed. We do not usually require a list of the individual amounts. Note, the Act refers to the manner in which the assets are to be distributed. Therefore, this information and the final accounts should be supplied prior to the distribution of assets.

Date of the final distribution of assets (section 21(1) (e))

This is the last date on which the scheme had any assets and is the date on which the registration is deemed to be cancelled (section 21(3). The information should be sent promptly to FMA, and FMA should be kept informed of the reason for any delays in distributing the assets.

Q: Where can I find statistics on registered superannuation schemes?

A: Statistics on registered superannuation schemes can be found in the Superannuation Annual Reports available in our reports section.