2007 Order in Council gives effect to the annual fee subsidy to be paid to KiwiSaver members and the rules governing the KiwiSaver mortgage diversion facility.
The KiwiSaver Amendment Regulations 2007 amend the KiwiSaver Regulations 2006, and give effect to the annual fee subsidy to be paid to KiwiSaver members and the rules governing the use of the KiwiSaver mortgage diversion facility.
The regulations came into force on 1 July 2007.
Regulation 20 deals with the payment of the fee subsidy. The regulation requires the Ministry of Economic Development to pay a fee subsidy of $40 per annum for each member of a KiwiSaver scheme. The function of paying the fee subsidy has been delegated to Inland Revenue.
The fee subsidy must be paid in instalments twice a year. The first instalment is to be paid on the date on which the $1,000 kick-start contribution is payable for the member. Subsequent instalments are payable on each six-month anniversary of that date, provided the person is still a member of a KiwiSaver scheme and the age of eligibility for fund withdrawal has not been reached (the age of entitlement to New Zealand superannuation or five years of membership, whichever comes later).
Each instalment of the fee subsidy must be paid to the member's KiwiSaver provider at the instalment date. The fee subsidy must be applied on a pro rata basis across the investment products of the scheme to which the member has subscribed or been allocated to. If the member has subscribed, or been allocated to more than one investment product within the KiwiSaver scheme the provider must, to the extent it is practical, credit the subsidy on a pro rata basis across only the investment products that do not contain unvested contributions.
Mortgage diversion facility
Regulations 21 to 29 deal with the mortgage diversion facility.
The regulations enable a facility that allows contributions to be withdrawn from a KiwiSaver scheme to be applied towards amounts that are secured by a mortgage over a member's principal residence, if the provider and the mortgagee choose to participate.
The terms and conditions of the facility are implied in the terms of any trust deed of any scheme that participates in the facility and override any express terms of the trust deed to the contrary.
Participation must be in accordance with the principles in section 229(2) of the KiwiSaver Act. The regulations cover:
- the types of mortgages that qualify for participation in the facility;
- what a KiwiSaver member must do to participate in the facility;
- what the mortgagee must do to participate in the facility;
- what a KiwiSaver member must do after their mortgagee has agreed to participate in the facility;
- what scheme providers must do to participate in the facility; and
- the circumstances upon which the facility is terminated and what happens with the contribution on termination.
KiwiSaver Amendment Regulations 2007 (2007/152)