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Kiwisaver Regulations released

The first batch of KiwiSaver-related regulations is out, with some disquiet on the value of some of the requirements.

Tuesday, November 28th 2006, 6:21AM
Finance Minister Michael Cullen announced the regulations – to take effect from Friday – yesterday, saying this would help providers prepare for the start of KiwiSaver from July 1. The regulations cover:
  • The terms of the Scheme Provider Agreement between providers and the Inland Revenue Department
  • The steps scheme providers must take to verify the identity of a member of a scheme
  • The fees payable to the Government Actuary to process applications for exemptions, conversions, registrations, transfers and other regulatory functions
  • The fees KiwiSaver scheme providers may charge customers; and
  • The statistical annual return scheme providers must submit to the Government Actuary.
The Cabinet paper on the issue indicates broad support within the industry for the proposals – with one exception.

The Association of Superannuation Funds, although supportive of most of the measures, queried the usefulness of the requirement for a statistical annual return.

ASFONZ “suggested that the potential inaccuracies in that return would make the information collected irrelevant. They did not believe, however, that there was any risk with the proposals”.

The matter of the return was the only measure specifically referred to by Cullen, who claims "pprovisions like the statistical annual return will also allow us to obtain accurate and complete information about KiwiSaver, without placing undue costs on providers.

“Having information on participation rates and the relevance and effectiveness of KiwiSaver features will also be valuable."

The Investment Savings and Insurance Association – the other industry body consulted by officials – has not voiced the same concerns.

Chief executive Vance Arkinstall told Good Returns he had not, as of yesterday afternoon, seen the final government announcement but that he was not expecting any surprises.

“We’ve been encouraged by meetings we’ve had with officials and with the Government Actuary,” he says.

On the matter of fees, the regulations simply set a few criteria: they are not to be unreasonable, and the Government Actuary will assess them on the basis of “whether the fee charged is similar to fees charged for like products.”

That means, says Arkinstall, “presumably if people are investing in a fund where there are a higher number of transactions, or the costs are higher, then they can charge higher fees.”

The Government Actuary is to release guidelines before Christmas on how his office plans to carry out these assessments.

« News Round UpSovereign takes regulation bull by the horns »

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