Following industry consultation and debate, the Financial Markets Conduct (KiwiSaver) Amendment Regulations 2017 (Amendment Regulations) came into force on 21 April 2017.
The Amendment Regulations impose new and more extensive information disclosure requirements on issuers of KiwiSaver schemes (Issuers).
The new requirements
Issuers have always been required to disclose prescribed information (confirmation information) to members in respect of each accounting period by way of Annual Member Statements. The Amendment Regulations create new requirements and Issuers must now include the following confirmation information in those Annual Member Statements:
- The member's balance at the start (or, if they joined part way through the accounting period, at the time of joining) and end of the accounting period.
- The difference, in dollars, between the member's balance at the start of the accounting period (or, if applicable, the time of joining) and at the end of the accounting period. The inclusion of returns data is intended to address the concerns raised during consultation of a possible undue emphasis on fees. The Amendment Regulations require both the disclosure of returns and fees in an attempt to ensure investors are provided with a balanced picture of fund performance.
- The approximate total sum, in dollars, of the fees charged to the member during the accounting period. Where fees cannot be determined, such information may be estimated or, in certain circumstances, omitted and the annual statement must include a statement to that effect. Further, an Issuer is also required to publish on its website certain information relating to the calculation, estimation, or omission of fee amounts included in the information provided to members.
- The approximate total sum, in dollars (whether positive or negative), of each type of transaction in relation to the member's account that occurred during the accounting period.
The Financial Markets Authority (FMA) has sought feedback on the proposed methodology for how total fees amounts should be calculated in the newly prescribed KiwiSaver Annual Statements (see here). Following this consultation, which closed on 5 May 2017, the FMA intends to issue guidance to assist KiwiSaver Issuers with their future fee calculations.
Superannuation schemes and workplace savings schemes
The annual confirmation information that must be provided to members of superannuation and workplace savings schemes remains unchanged.
When do the new requirements start?
The new requirements apply to accounting periods that start on or after 31 March 2017 and to accounting periods that started before, but end on or after, 31 March 2017, with the following exceptions:
- they don't apply to an accounting period where confirmation information has been provided under the old regime before the commencement of the Amendment Regulations, and
- an Issuer may choose, for any accounting period ending before 31 March 2018, not to comply with the new requirements and to instead provide the following alternative information: the confirmation information required by regulation 70 before it was replaced by the Amendment Regulations, the membership fee of the scheme, and the actual total fund charges for the disclosure year.
These transitional arrangements have been implemented to account for those Issuers who will be unable to implement the requisite systems to generate total fees data by the time 2017 Annual Member Statements are due.
Watch this space
Most of the changes to Annual Member Statements proposed during last year's consultation have been included in the Amendment Regulations. The exception is the proposal to include projections of members' retirement savings and income and information about how members can increase those figures. The Minister of Commerce and Consumer Affairs is still considering whether this information should be included in the Annual Member Statements and has a delegated authority from Cabinet to make a decision on this issue. It remains to be seen whether these further requirements will be included.
We can assist you in your organisation's transition to the new form of Annual Member Statements. If you have any questions on the incoming changes, please get in touch.