Global and domestic regulatory influences on workplace savings

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1 Global and domestic regulatory influences on workplace savings Stephen Ward Partner Emma Harding Senior Solicitor

2 Outline Stephen Financial Markets Conduct Bill Anti-Money Laundering and Countering Financing of Terrorism Act 2009 Emma Changes to QROPS regulations Pending FATCA regulations FMA effective disclosure Trans-Tasman portability laws FMA Sale and Distribution of KiwiSaver Guidance Note IRD foreign superannuation scheme proposals

3 Domestic Influences Financial Markets Conduct Bill Anti-Money Laundering and Countering Financing of Terrorism Act 2009

4 FMC Bill: Out with the old FMC Bill will repeal: Superannuation Schemes Act parts of the KiwiSaver Act Securities Regulations Securities Act (and others)

5 In with the new New Zealand criteria Restricted schemes Licensed trustees Product Disclosure Statements

6 Timing Bill is currently before Parliament and awaiting the Select Committee report Expected to become law late 2012/early 2013 Two-year transitional period

7 AML/CFT Act 10 months to go until the Act is fully in force What does this mean for superannuation schemes?

8 Preparation for the Act Conduct a risk assessment Requirement to review regularly Implement a compliance programme Appoint a compliance officer

9 Due diligence Verify the identity of members when they join the scheme Report suspicious transactions Provide annual report

10 Any questions? Financial Markets Conduct Bill Anti-Money Laundering and Countering Financing of Terrorism Act 2009

11 QROPS changes Major changes made to the UK qualifying recognised overseas pension scheme (QROPS) rules in April 2012 Special rule for NZ non-kiwisaver schemes 70% of benefits to be used to provide an income for life Requires amendment of Trust Deeds No change to benefit payments for KiwiSaver schemes

12 QROPS changes HMRC confirmation that income for life restrictions apply only to new UK pension monies from 6 April 2012 can have different benefit restrictions in the same scheme for pre and post 6 April monies Changes to reporting requirements affecting all QROPS KiwiSaver schemes and non-kiwisaver schemes and all jurisdictions Increased HMRC powers to require information from a QROPS Tighter timeframes for QROPS reporting to HMRC Extension of time period for which QROPS must report payments to relevant members Future direction close scrutiny on QROPS providers and possible legislative changes in relation to third country QROPS

13 FATCA regulations Foreign Account Tax Compliance Act (FATCA) Registration with the US Internal Revenue Service (by 30 June 2013) Initial and on-going obligations to report details about American investors and their investments Affects superannuation and KiwiSaver schemes but exemption appears likely Delayed implementation for some of the regime

14 Effective Disclosure Now being implemented In force now for any new issues 1 January 2013 for continuous issuers Clear, concise and effective but not changing the law Provides specific guidance for managed funds (including superannuation and KiwiSaver schemes)

15 Examples of defective disclosure Original Members may contribute to the Scheme the amount(s), at the time(s) and in the manner determined by the member (subject to the approval of the Trustee) and set out in the member's application or as agreed between the member and the Trustee from time to time. Members may also make lump sum contributions (minimum $1,000.00) with the approval of the Trustee. Lump sum contributions are payable to the Trustee. Regular contributions are payable by direct debit to the bank account nominated by the Trustee unless other payment arrangements are agreed with the Trustee (for example by direct deduction from salary or wages). Lump sum contributions may be made by cheque payable to the Trustee (crossed and marked "not transferable" or "account payee only"). Reviewed You may (but are not required to) make lump sum contributions (minimum $1,000) with our approval, to the Trustee. Lump sum contributions may be made by cheque payable to the Trustee (crossed and marked "not transferable" or "account payee only"). You may (but are not required to) agree to make regular contributions by way of nomination in your application form. Regular contributions are payable by direct debit to the bank account nominated by us unless other payment arrangements are agreed with us (for example by direct deduction from salary or wages).

16 Trans-Tasman superannuation portability Memorandum of Understanding permits transfers of retirement savings between APRA regulated superannuation funds (complying superannuation schemes) and KiwiSaver schemes If members satisfy the requirements set out under the permanent emigration withdrawal rules, members can transfer all their savings, including the kickstart, less member tax credits, but won t be able to withdraw their savings in cash Still waiting to see Australian Treasury exposure draft Bill Legislation likely to be passed at the very end of 2012 or beginning of 2013, with implementation two months following (Q2 2013?)

17 FMA Sale and Distribution of KiwiSaver Guidance Note Consultation draft released 25 June 2012 and submissions have closed Provides guidance on: when the FMA consider financial advice to be given (in relation to the Financial Advisers Act 2008); and whether advice is a class or personalised service. The guidance note may also be of some relevance to financial products other than KiwiSaver Overreaches the law in some places response to submissions will be interesting

18 New proposals on NZ taxation of NZ residents that are members of foreign superannuation schemes (consultation draft) Interests in foreign superannuation schemes would no longer be taxable on an accrual basis under the foreign investment fund (FIF) rules. Instead, all pension payments would remain taxable in full on receipt. Lump sum withdrawals or transfers would be partially taxed on receipt. The tax would approximate the amount of tax on investment gains that would ordinarily have accrued during the period that an individual is resident in New Zealand, had the individual transferred the original amount to New Zealand Submissions due by 3 September IRD foreign superannuation scheme proposals