[ Last Updated 8 December 2006 ]
Short Description
These questions and answers give background information on the KiwiSaver regulations.
November 2006
General
When do the regulations come into force?
The KiwiSaver Act 2006, the KiwiSaver Regulations 2006 and the Superannuation Schemes (Fees) Amendment Regulations come into force on 1 December 2006.
Do the KiwiSaver Regulations 2006 address all the issues the Act provides for?
The KiwiSaver Regulations 2006 address the issues necessary for implementation of KiwiSaver. Some further regulations may be made in 2007, which are likely to include regulations regarding the fee subsidy and mortgage diversion. Other regulations contemplated by the Act will be promulgated if and when needed.
Savers
Will the fact that the Act and regulations come into force mean employees will be automatically enrolled in a KiwiSaver scheme if they change jobs?
The provisions enabling a person to become a member of a KiwiSaver scheme, either by automatic enrolment or by opt-in, will not come into force on 1 December 2006. These provisions will come into force on 1 July 2007, when KiwiSaver is launched.
Will KiwiSaver schemes be able to charge a member any fees they like if a member has been automatically enrolled in a KiwiSaver scheme?
KiwiSaver schemes will be able to charge any fees for membership in a KiwiSaver scheme, subject to those fees not being unreasonable. The Government Actuary or a Court has the authority to determine whether or not a fee charged by a KiwiSaver scheme is unreasonable. The KiwiSaver regulations specify a process that may be followed when such an assessment is undertaken. The regulations also set out relevant matters for any consideration of fees charged by a KiwiSaver scheme.
Employers
Can employers apply for exemptions from automatic enrolment from 1 December 2006?
All employers can apply to the Government Actuary for an exemption from automatic enrolment if they comply with the requirements specified in the Act. The regulations also require any employer to provide the Government Actuary with appropriate cross references and a copy of the relevant documentary evidence showing they provide access to a superannuation scheme that complies with the requirements in the KiwiSaver Act.
What are the fees required for an application for ‘exempt employer' status?
There is no fee payable for an application to be exempt from automatic enrolment. The KiwiSaver Regulations do not provide for a fee to be charged on application by an employer to be exempt from automatic enrolment.
Do the KiwiSaver Regulations require employers to undertake any action to verify the identities of employees who are automatically enrolled in a KiwiSaver scheme?
The obligation, under the Financial Transactions Reporting Act, to verify the identity of a member falls on the provider of the scheme. The KiwiSaver Act provides that where a member has been automatically enrolled, the provider may be exempt from the verification requirements in that Act, as long they take reasonable efforts to verify the identity of the member. The KiwiSaver regulations specify what will be reasonable efforts for these purposes.
Providers
Are all KiwiSaver schemes expected to provide an annual return to the Government Actuary by 31 May for the 12-month period preceding 31 March of every year?
All KiwiSaver schemes will have to provide an annual return, as specified in the regulations, to the Government Actuary by 31 May, beginning on 31 May 2008. The information contained in the annual return must relate to the 12-month period immediately preceding 31 March of every year. Any information contained in the annual return may be unaudited and relate only to any part of the 12 month period where the scheme was a registered KiwiSaver scheme.
What is the purpose of requiring all KiwiSaver schemes to provide an annual return to the Government Actuary?
The purpose of the annual return is to collect statistical data about KiwiSaver. This information will be useful for the government, as it will allow the government to evaluate the progress of KiwiSaver and, if necessary, amend the design of the scheme. It will also be beneficial for the industry to have up-to-date statistical information on KiwiSaver, as this will give providers more accurate information about the KiwiSaver market to inform the development of the design of their schemes.
How will the Government Actuary or a Court decide if a fee charged by a KiwiSaver scheme is unreasonable?
The KiwiSaver Regulations 2006 specify a process the Government Actuary or a Court may follow when assessing whether a fee is unreasonable. The process allows the Government Actuary or a Court to consider whether the fee charged by a scheme is significantly higher than fees charged by a comparable scheme. If the Government Actuary or a Court determines that the fee may be unreasonable, they must conduct an in-depth assessment of the fee in relation to a number of relevant matters prescribed by the regulations. Both the Government Actuary and a Court are not bound to use this process and may use an alternative process if they wish to do so.
What are the matters the Government Actuary or a Court must take into account when assessing whether the fees charged by a KiwiSaver scheme are unreasonable?
When assessing whether a fee charged by a KiwiSaver scheme is unreasonable, the Government Actuary or a Court must examine whether the fees charged by a scheme are significantly higher than fees charged by comparable schemes. If the fees are significantly higher, the Government Actuary or a Court must consider whether any differences in costs of the scheme, the structure of the scheme, the number of members in the scheme, the fee structure of the scheme, the amount of funds held by the scheme, or any subsidisation of the fees, make it reasonable for the fee to be higher. The Government Actuary or a Court may also consider any other matter they believe is relevant.
Do default providers have to verify the identity of members who are defaulted into KiwiSaver schemes as required by the Financial Transaction Reporting Act?
The KiwiSaver Act provides that where an employee is defaulted into a KiwiSaver scheme, that scheme is exempt from verifying the identity of the member as required by the Financial Transactions Reporting Act. These schemes, however, are required to undertake reasonable efforts to verify identity of those employees. The KiwiSaver Regulations 2006 provide a process that will constitute a reasonable effort for these purposes. This does not exclude alternative processes being undertaken that may also constitute a reasonable effort. It simply provides default KiwiSaver schemes with a safe harbour for the purposes of the requirement in the KiwiSaver Act.