Information Document September 2012 Legal Changes to the Westpac KiwiSaver Scheme

Transcription

1 Information Document September 2012 Legal Changes to the Westpac KiwiSaver Scheme Overview This Information Document describes some legal changes which will be made to the Westpac KiwiSaver Scheme (Scheme) effective 20 September 2012 (Effective Date) pursuant to the KiwiSaver Amendment Act 2011 (Amending Act). It identifies: the material amendments that will be made to the Trust Deed for the Scheme (Trust Deed) under the Amending Act; and the material changes to the terms and conditions of members Scheme membership that will result from the changes made by the Amending Act. The key changes resulting from the restructuring of the Scheme and the Amending Act will be that: BT Funds Management (NZ) Limited () becomes the issuer of membership interests in the Scheme for securities legislation purposes, with primary responsibility for managing and administering the Scheme; and the of the Scheme (The New Zealand Guardian Trust Company Limited) becomes responsible for supervising the s performance of its duties, but remains responsible for the custody of Scheme assets. The will remain responsible for assessing significant financial hardship and serious illness-based withdrawal applications. This Information Document is provided under section 65(1)(a) of the Amending Act. More information about the Scheme is contained in the Investment Statement, which is available on our website Trust Deed amendments On the Effective Date, the and the will replace the Scheme s current Trust Deed (dated 4 April 2007) with a new Trust Deed, prescribing: governance amendments necessary or desirable for compliance with the relevant legislation as amended by the Amending Act (these amendments are being made with the Financial Markets Authority s prior written consent under section 63 of the Amending Act); and general amendments agreed between the and the.

2 You can obtain a copy of the text of the proposed replacement Trust Deed (marked up to show every proposed amendment to the current Trust Deed) free of charge by calling us on or by calling into any Westpac branch. Scheme changes table The table on pages 2 to 6 of this Information Document (in which capitalised terms have the meanings given to them in the Trust Deed) is a high-level outline of the material governance amendments to the Trust Deed, and the material changes to Scheme membership terms, that will result from the Amending Act. It is not comprehensive a more detailed summary of the amended Trust Deed will be included in the Scheme s 20 September 2012 Prospectus. and Roles Because the currently has primary responsibility for managing and administering the Scheme, the acts as its delegate. The delegates to the the performance (on the s behalf) of the following functions: managing and making all decisions relating to investments; administering the Scheme (including maintaining accounts, unitising contributions, valuing Scheme assets, attending to benefit payments and ensuring compliance with legislation); determining the terms of all contracts to be entered into in respect of the Scheme and entering into those contracts as the s agent; and appointing service providers and agreeing the terms and conditions of their appointment. The will now replace the as the issuer of interests in the Scheme for securities legislation purposes and will have primary responsibility for managing and administering the Scheme, including offering interests in the Scheme and managing Scheme investments and property. It will no longer be acting as the s delegate. The will now directly perform the following functions (among others): making all decisions relating to investments; determining the terms of all contracts to be entered into in respect of the Scheme; on notice to the, appointing service providers (not including a custodian) on such terms and conditions as are agreed by the and the service provider; and ensuring compliance by the Scheme with the requirements of the KiwiSaver Act 2006, the Securities Act 1978, the Financial Reporting Act 1993 and all other applicable legislation. Because the will remain responsible for the custody of Scheme assets: the will still be acting as the s delegate when operating Scheme bank accounts (which include the tax bank account); and the will be permitted to give directions to the regarding the operation of bank accounts, or to terminate the s authority to operate bank accounts, in certain circumstances prescribed in the Trust Deed.

3 and Roles The is currently the issuer of interests in the Scheme for securities legislation purposes and has primary responsibility for managing and administering the Scheme. This means the is responsible for administering the trusts governing the Scheme in accordance with the Trust Deed and all relevant legislation (including the KiwiSaver Act). The is also responsible for holding, or ensuring that a nominee appointed in accordance with the Trust Deed holds, all of the assets of each Investment Fund on trust for Members in accordance with the terms of the Trust Deed. The will now be the independent trustee of the Scheme, responsible not for managing and administering the Scheme but for supervising the (although it remains responsible for assessing significant financial hardship and serious illness withdrawal applications). In particular, the will supervise the performance of the s duties in relation to the Scheme under the Trust Deed and relevant legislation. All Scheme assets will remain vested in the (or any nominee it appoints in accordance with the Trust Deed) to hold on trust for Members in accordance with the terms of the Trust Deed. s intervention powers The currently has the right not to act on an investment direction from the if in its opinion the proposed investment, acquisition or disposal is not in accordance with the investment policy of the Scheme or the relevant Investment Fund or Portfolio, or is contrary to the provisions of the Trust Deed. The can: itself exercise any of the powers, authorities, functions and discretions delegated to the ; require the to exercise any of those powers, authorities, functions or discretions in accordance with reasonable written instructions from the ; or terminate the authority of the to exercise any of those powers, authorities, functions or discretions; to the extent that the reasonably believes doing so is necessary: to prevent the from being in breach of its obligations under any rule of law or to cause such a breach to cease; and to cause the Scheme to be managed and administered in a proper and efficient manner. s intervention powers The will now be required to refuse to act on an investment direction from the if the considers that the proposed investment, acquisition or disposal either: would breach the Trust Deed or an enactment; or would be manifestly not in the best interests of Members. If the refuses to act on an investment direction from the, the will be required to notify the and the Financial Markets Authority in writing of the s reasons for the refusal. Because the will now be primarily responsible for managing and administering the Scheme, the will no longer have any step-in powers to act in place of or give directions to the. However the will still have the general ability to enforce the terms of the Trust Deed should the fail to fulfil its obligations.

4 and standards of care The is currently required to use all reasonable endeavours and skill to ensure that it exercises the powers, authorities, functions and discretions vested in it under the Trust Deed in a proper and efficient manner. The must, in exercising its powers and performing its duties as manager: act in the members best interests; when exercising powers of investment, exercise the care, diligence and skill required of a professional trustee under section 13C of the Act 1956; and when performing its other functions, exercise the care, diligence and skill that a prudent person engaged in the profession or business of acting as a manager would exercise in managing the affairs of others. The must also use its best endeavours and skill to ensure that the affairs of the Scheme are conducted in a proper and efficient manner. No express standard of care is included in the Trust Deed but the must conform to the prudent person standard set out in the Act The, in exercising its powers and performing its duties as trustee, must: act in the members best interests; and exercise the care, diligence and skill that a prudent person engaged in the profession or business of acting as a trustee would exercise in acting as the trustee of a KiwiSaver scheme. Under the amended Trust Deed, the must also provide to the (as soon as possible following receipt) copies of all notices or documents received by the or any of its nominees in relation to any assets of an Investment Fund. Exoneration and indemnity The and are currently personally liable (and are not entitled to any indemnity from Scheme assets) in circumstances of fraud, wilful default or gross negligence, or where they fail to show the degree of care and skill required having regard to the provisions of, and the powers, authorities and discretions conferred by, the Trust Deed. Exoneration and indemnity The and will be personally liable (and will not be entitled to any indemnity from Scheme assets) for any failure to meet the standard of care now required by the Trust Deed and the KiwiSaver Act (as outlined above).

5 Appointing and removing and The Trust Deed does not currently contain any provisions concerning the appointment and removal of the. The Scheme must have a manager which must not be an associated person of the and must otherwise be entitled by law to act as manager of the Scheme. Subject to all applicable laws, the may apply to the High Court for an order to remove the from office if the is satisfied that either: there is a significant risk that the interests of Members will be materially prejudiced if the remains in office; or the provisions of the Trust Deed are no longer adequate to give proper protection to members. The will be required to give prior notice to the of its intention to apply to the High Court for an order to remove the, including notifying the of its reasons for seeking that order. Currently the Trust Deed requires only that the of the Scheme be a corporate body. However the KiwiSaver Act 2006 requires that the be independent from the. The Scheme must have a single which must not be an associated person of the and must otherwise be entitled by law to act as of the Scheme (this now means that the must be the current holder of a licence under the Securities s and Statutory Supervisors Act 2011 to act as a KiwiSaver scheme trustee).

6 Other changes Contributions and withdrawals Under the current Trust Deed, it is the which accepts contributions required to be made to the Scheme in respect of a Member under the KiwiSaver Act (and all amounts transferred from other KiwiSaver schemes or from superannuation schemes). The is required, if directed by the, to accept other amounts in respect of a Member and can only accept such amounts if so directed. Contributions and withdrawals When the amendments take effect, it will be the which accepts all contributions required to be made to the Scheme by or in respect of a Member under the KiwiSaver Act (and all amounts transferred from another KiwiSaver scheme or superannuation scheme). The will be permitted, at its discretion, to accept other amounts by or in respect of a Member. Investment Funds The is currently required to establish separate Investment Funds within the Scheme, and separate Portfolios within an Investment Fund, as and when directed to do so by the, unless the reasonably considers that doing so would cause the to breach its legal obligations. The is also required to terminate, close or amend an Investment Fund or Portfolio, or amalgamate any two or more Investment Funds or Portfolios, as and when directed to do so by the and on terms and conditions directed by the, unless the reasonably considers that doing so will cause the to breach its legal obligations. Investment Funds The will be permitted to establish and maintain, on such terms and conditions as it determines, separate Investment Funds within the Scheme, and separate Portfolios within an Investment Fund. The will be permitted to terminate, close or alter any Investment Fund or Portfolio, or amalgamate any two or more Investment Funds or Portfolios, on such terms and conditions as it thinks fit. The must in each case provide written notice to the. Reports and information from to The is currently required to supply the with the information and reports set out in Schedule 2 to the Trust Deed unless otherwise agreed between the and the Reports and information from to The will continue to be required to supply the with the information and reports set out in Schedule 2 to the Trust Deed (which will be amended to require the provision of additional reports and information where the parties agree). Under the KiwiSaver Act as amended, the will also be required to provide the (on request) with additional Scheme-related documents and records, and any information required by the about the Scheme, the s affairs or the s property.