FMA grants disclosure and reporting relief for restricted schemes

Following consultation with the FSC Workplace Savings Committee the Financial Markets Authority (FMA) has granted exemption relief:

• for restricted defined benefit retirement schemes in respect of annual fund updates and confirmation information; and
• for all restricted retirement schemes in respect of quarterly reporting to the FMA.

The Exemption Notice takes effect on 31 August 2022 and grants the following class relief for 5 years (i.e. until the close of 30 August 2027).

Fund updates exemption

A defined benefit scheme is exempted from the annual fund update requirement triggered by having had during the scheme year:

• members who would still qualify when leaving service only for an interest-based withdrawal benefit; and/or
• members with voluntary contribution accounts.

The exemption is unconditional unless at the year-end there are still members in either category, in which case certain statements and information are required in (or with) the scheme’s annual report.

Quarterly reports exemption

A restricted scheme is exempted from the requirements in the Financial Markets Conduct Regulations 2014 (FMCR):

• to provide quarterly reports to the FMA on SIPO limit breaks, if there have been no limit breaks during the quarter; and
• to provide quarterly reports to the FMA on related party transaction certificates given, if no such certificates were required during the quarter.

Additionally, if a quarterly report is required (due to limit breaks occurring or related party transaction certificates being given) the exempted scheme’s reporting deadline is extended from 10 to 15 working days following the quarter-end.

Trustees must still supply limit break and related party transaction reports to the FMA annually within 15 working days after the exempt scheme’s balance date. However (subject to conditions) those reports need not repeat any information already supplied.

Confirmation information (member statements) exemption

Defined benefit schemes (for which the standard confirmation information requirements in the FMCR are not fit for purpose) are exempted from those standard requirements.

Instead the exempt schemes’ annual member statements are required to include (as applicable) the benefits-based information set out in the Exemption Notice.

FSC comments

FSC Workplace Savings Committee member Mike Woodbury (Chapman Tripp) commends the FMA “for pursuing these welcome exemption initiatives, which give further common sense-based recognition to the differing risk and design characteristics of restricted retirement schemes”.