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Financial Markets Conduct Act 2013

Schedule 3: Schedule 3 schemes

You could also call this:

"Rules for retirement savings plans that help one person"

Illustration for Financial Markets Conduct Act 2013

The Financial Markets Conduct Act 2013 has a part called Schedule 3 schemes. You can think of a scheme like a plan to help people save for retirement. The purpose of Schedule 3 is to recognise single-person self-managed superannuation schemes. This means the scheme is set up to help one person save for retirement.

The Financial Markets Authority (FMA) can approve a scheme as a Schedule 3 scheme if it meets certain criteria, which are set out in clause 3. The scheme must be a trust that follows New Zealand law and its purpose is to provide retirement benefits to the scheme participant. The participant must be living in New Zealand or be a New Zealand citizen.

If a Schedule 3 scheme is approved, the FMA can withdraw the approval if the scheme does not meet the criteria or if the trustees do not follow the rules. The FMA must give the trustees notice and an opportunity to make submissions before withdrawing the approval, as stated in clause 2(1)(b)(i) to (iii). The trustees of an approved Schedule 3 scheme must also provide reports to the FMA at certain times, as required by the regulations.

There are also rules about what happens if a Schedule 3 scheme is wound up. In this case, the approval of the scheme is treated as withdrawn once the assets have been distributed. Additionally, section 14 of the Trusts Act 2019 does not apply to approved Schedule 3 schemes. This means that the sole trustee of a Schedule 3 scheme can also be the sole beneficiary.

The trust deed of a Schedule 3 scheme is treated as containing any provision that is implied into it under the Act. However, if the trust deed contradicts or is inconsistent with any implied provision, it has no effect. You can find more information about the criteria for approving Schedule 3 schemes in clause 3.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4092522.

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3Schedule 3 schemes Empowered by ss 6(1), 596

1Purpose of schedule

  1. The purpose of this schedule is to provide for the statutory recognition of single-person self-managed superannuation schemes.

2Approval of Schedule 3 schemes

  1. The FMA may, by written notice to the trustees of a scheme,—

  2. approve the scheme as a Schedule 3 scheme if it is satisfied the scheme meets the approval criteria set out in clause 3:
    1. withdraw an approval of the scheme if—
      1. it is no longer satisfied that the scheme meets those approval criteria; or
        1. the trustees have contravened the obligations relating to the scheme under this schedule; or
          1. the trustees have contravened the trust deed; or
            1. the trustees apply for the approval to be withdrawn and the FMA is satisfied that the prescribed criteria and requirements (if any) are satisfied.

            2. If a Schedule 3 scheme is wound up, the approval of the scheme must be treated as withdrawn as soon as the distribution of assets has been completed.

            Notes
            • Schedule 3 clause 2(1)(b)(iii): replaced, on , by section 58(1) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).
            • Schedule 3 clause 2(1)(b)(iv): inserted, on , by section 58(1) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).
            • Schedule 3 clause 2(2): inserted, on , by section 58(2) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).

            3Criteria for approving Schedule 3 schemes

            1. A scheme may be approved as a Schedule 3 scheme if—

            2. the scheme meets the following requirements:
              1. it is a trust established and governed by a trust deed that is interpreted and administered in accordance with New Zealand law; and
                1. its purpose is to provide retirement benefits to the scheme participant; and
                  1. participation in the scheme is restricted to persons who meet the New Zealand criteria set out in subclause (2); and
                    1. it is not a defined benefit scheme; and
                    2. the scheme has only 1 scheme participant who is an individual and who meets the New Zealand criteria set out in subclause (2); and
                      1. the scheme participant is either a trustee, or a director of a sole corporate trustee, of the scheme.

                        1. The New Zealand criteria are that the person, at the time of becoming a participant,—

                        2. is, or normally is, living in New Zealand, or is an employee of the State services (within the meaning of the Public Service Act 2020) who is—
                          1. serving outside New Zealand; and
                            1. employed on New Zealand terms and conditions; and
                              1. serving in a jurisdiction where offers of superannuation scheme membership are lawful; and
                              2. is a New Zealand citizen or is entitled, in terms of the Immigration Act 2009, to be in New Zealand indefinitely.

                                Notes
                                • Schedule 3 clause 3(2)(a): amended, on , by section 135 of the Public Service Act 2020 (2020 No 40).

                                4Procedure for exercising powers

                                1. The FMA must not exercise a power under clause 2(1)(b)(i) to (iii), or refuse an application for approval to be withdrawn, unless—

                                2. the FMA gives the trustees no less than 10 working days’ written notice of the following matters before it exercises the power:
                                  1. that the FMA may exercise the power or refuse the application; and
                                    1. the reasons why it may do so; and
                                    2. the FMA gives the trustees or the trustees’ representative an opportunity to make written submissions on the matter within that notice period.

                                      Notes
                                      • Schedule 3 clause 4: replaced, on , by section 58(3) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).

                                      5Notice requirements

                                      1. The notice under clause 2(1)(b) must—

                                      2. state the FMA's reasons for giving the notice; and
                                        1. specify the date on which the withdrawal of the approval takes effect.

                                          1. The FMA must give a copy of the notice to every prescribed person.

                                          Notes
                                          • Schedule 3 clause 5(1): amended, on , by section 58(4) of the Financial Services Legislation Amendment Act 2019 (2019 No 8).

                                          6Reporting obligations for approved Schedule 3 schemes

                                          1. The trustees of an approved Schedule 3 scheme must, at the prescribed times or on the occurrence of the prescribed events and otherwise in the prescribed manner, prepare and provide to the FMA reports that contain the information that is required to be provided by the regulations.

                                          7Implied provisions of trust deed

                                          1. The trust deed of an approved Schedule 3 scheme is treated as containing any provision that is implied into it under this Act.

                                          2. The trust deed has no effect to the extent that it contravenes, or is inconsistent with, any implied provision.

                                          8Application of Trusts Act 2019

                                          1. Section 14 of the Trusts Act 2019 (sole trustee cannot be sole beneficiary) does not apply to—

                                          2. an approved Schedule 3 scheme; or
                                            1. a scheme that has been or will be constituted with the intention that the scheme will be approved as a Schedule 3 scheme.

                                              Notes
                                              • Schedule 3 clause 8: inserted, on , by section 175 of the Trusts Act 2019 (2019 No 38).