Robert Burns BA (Hons), FCCA , Cert PFS

Director

Premier Pension Solutions SL

Subscribe to my blog

By Robert Burns BA (Hons), FCCA , Cert PFS - Tue 13th Sep 2011

 

Tumbit Approved Partner

Financial institutions in New Zealand are now subject to the rules of the newly created Financial Markets Authority (FMA), and as such the FMA has taken over the authorisation and supervision of New Zealand pension schemes.

Last week the FMA published The Financial Markets Conduct Bill, a draft bill for consultation. The draft Bill runs to 400 pages so is quite a hefty read.

Tucked away in a section that relates to New Zealand pension schemes is a provision that NZ pension schemes may only be open to New Zealand residents. This, obviously, unless amended (and there is plenty of opportunity for this to happen), is quite a problem for New Zealand as a QROPS jurisdiction in the future.

There are no apparent transitional provisions specifically associated with this proposed change to deal with existing superannuation schemes where membership is open to any ‘natural person’, and of course existing non-New Zealand resident members of New Zealand pension schemes.

The proposals as they stand fly in the face of the upcoming tax free treatment of New Zealand superannuation funds for non New Zealand residents which is in its final stages of parliamentary scrutiny before passing into law in the coming weeks. So we could have a highly attractive jurisdiction for long term pension fund investment, which attracts many members into superannuation schemes registered as QROPS, whilst on the other hand the draft Financial Markets Conduct Bill will not permit such membership once enacted as it currently stands.

This is clearly a dilemma that the legislators will need to resolve, perhaps by creating a specific exemption associated with schemes which are, or become, registered as QROPS. Lobbying to change the draft Bill is already under way. Fortunately there is plenty of time to seek and achieve change.

THE TIMESCALE

The timescale that is likely with regard to the Bill is:

• The consultation period lasts until 6 September.

• The Government then wants to introduce the Bill to Parliament before the New Zealand general election at the end of November. This will allow only a first reading of the Bill as time cannot possibly permit more than that.

• The Bill will then be further considered when the newly elected Parliament sits from January 2012.

• The Bill will then be subject to some months of scrutiny in particular through the committee stage.

• Implementation of the Bill will require subsequent regulations and transitional provisions, which are largely absent in the draft.

Sources in New Zealand do not expect the Bill to pass into law for at least 12 months and possibly much longer than that.

We and others will be responding to the draft Bill and making representations to the FMA and to Ministers at this and every ongoing stage pressing for change so as to enable New Zealand to continue to benefit from its participation in a multibillion pound QROPS market.

TIME TO ACT

A New Zealand industry source has said, “There’s a general uproar here with these proposals”. However, if these changes are to take effect in roughly 12 months time, then anyone wishing to access the capital in their UK pension fund should not delay.

For further information about QROPS and Pension Planning opportunities please contact us today via clicking the link Here and leaving a few basic details on the form at the foot of the page.