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FAMILY LAW (SUPERANNUATION) AMENDMENT REGULATIONS 2004 (NO. 1) 2004 NO. 290

EXPLANATORY STATEMENT

STATUTORY RULES 2004 No. 290

ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL

FAMILY LAW ACT 1975

FAMILY LAW (SUPERANNUATION) AMENDMENT REGULATIONS 2004 (No. 1)

Subsection 125(1) of the Family Law Act 1975 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Part VIIIB of the Act provides for the division of superannuation between parties to a marriage on marriage breakdown or divorce.

The Family Law (Superannuation) Regulations 2001 (the Principal Regulations) contain much of the detail of the legislative scheme for the division of superannuation on marriage breakdown or divorce, including provisions for the method for valuing superannuation interests, the entitlement of parties when superannuation is divided and the provision of information before and after division occurs.

The purpose of the Regulations is to ensure that the Principal Regulations cater for new types of superannuation products which were introduced on 20 September 2004 and to make technical amendments to overcome deficiencies.

In particular, the Regulations:

•       provide for methods for valuing a defined benefit superannuation interest held by a party to a marriage as a result of employment in which he or she is no longer engaged and which will pay benefits in the future;

•       make consequential adjustments to the information that must be provided about such an interest before division;

•       make the necessary provision under the Principal Regulations on matters of valuation, entitlement and information where a superannuation interest pays benefits as a market linked pension;

•       extend the definition of a partially vested accumulation interest;

•       include powers for the Minister to determine the information to be provided to an applicant for information under section 90MZB of the Act about a superannuation interest that is a partially vested accumulation interest or is paying a lifetime pension for which an alternative valuation method has been approved;

•       to give the trustee of a superannuation fund an option to provide an applicant for information under section 90MZB of the Act about a partially vested accumulation interest for which an alternative valuation method has been approved with the gross value of the interest determined in accordance with that method; and

•       make some drafting and other corrections to the Principal Regulations.

Details of the Regulations are as follows:

Regulation 1 is formal.

Regulation 2 provides for the commencement of the Regulations.

The amendments to the Principal Regulations by Schedule 1, and the formal and commencement provisions in regulations 1 to 3 of the Regulations, commenced on 7 September 2004, the date of their notification in the Gazette.

The amendments to the Principal Regulations by Schedule 2 relating to superannuation interests that pay benefits as a market linked pension commenced on 20 September 2004, the date of commencement of the Schedule 3 of the Superannuation Industry (Supervision) Amendment Regulations 2004 (No. 4) and Schedule 3 of the Retirement Savings Accounts Amendment Regulations 2004 (No. 2). From 20 September 2004 market linked pensions offered by superannuation funds and retirement savings account providers that comply with the Commonwealth's regulatory regime for the superannuation industry receive concessional tax treatment.

Regulation 3 provides for the amendment of the Principal Regulations by Schedule 1 and Schedule 2.

Schedule 1: Amendments commencing on gazettal

Item 1 of Schedule 1: Regulation 9

Item 1 of Schedule 1 replaces the definition of the term 'partially vested accumulation interest' in regulation 9 of the Principal Regulations. New subregulation 9(1) provides that a certain interest is a partially vested accumulation interest if subregulation (2) or (3) applies in relation to the interest.

The former definition of the term in the Principal Regulations is reproduced as new subregulation 9(2). New subregulation 9(3) extends the definition to include an interest where the benefits payable to the member spouse may include an additional benefit that is calculated by reference to the contributions that have been made by or in respect of that spouse. In such cases there may not have been any periodic allocation of that additional benefit to the member spouse where it is payable only when he or she reaches a particular age or completes a particular period of membership with the fund in which the interest is held.

Item 2 of Schedule 1: Subregulation 14F(4)

Item 2 of Schedule 1 replaces subregulation 14F(4) of the Principal Regulations, which provides for the definition of the terms 'payment split provisions of the RSA Regulations' and 'payment split provisions of the SIS Regulations' that are used in regulation 14F.

The revised definitions of those terms in new subregulation 14F(4) correct a drafting error in each definition by excluding:

•       Division 4A.4 of the Retirement Savings Account Regulations 1997 (the RSA Regulations) from the definition of the term 'payment split provisions of the RSA Regulations'; and

•       Division 7A.3 of the Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations) from the definition of the term 'payment split provisions of the SIS Regulations'.

Regulation 14F of the Principal Regulations is one of a number of provisions in Division 2.2 of the Principal Regulations which provide for particular circumstances in which payments in respect of a superannuation interest of a member spouse, to which a splitting order or a superannuation or flag lifting agreement applies, are not splittable payments for the purpose of applying Part VIIIB of the Act to the order or agreement. The scheme of Division 2.2 is that such payments are not splittable for that purpose, effectively bringing to an end the operation of the splitting order or agreement, where the non-member spouse's entitlement under the order or agreement has been satisfied in some other way.

Operating standards that apply to:

•       providers of retirement savings accounts under the Retirement Savings Accounts Act 1997 (and regulations made under that Act); and

•       regulated superannuation funds under the Superannuation Industry (Supervision) Act 1993 (and regulations made under that Act);

require in particular circumstances a non-member spouse's entitlement under a splitting order or a superannuation or flag lifting agreement to be satisfied by:

•       payment to the non-member spouse of his or her entitlement;

•       the transfer or roll-over of an amount equal to that entitlement at that time to a superannuation fund or a retirement savings account to be held for the benefit of the non-member spouse;

•       (in the case of the provider of a retirement savings account) the opening of a new retirement savings account for the non-member spouse with benefits to the value of that entitlement; or

•       (in the case of a regulated superannuation fund) the creation of a new interest for the non-member spouse in the fund with benefits to the value of that entitlement.

Where one of those operating standards requirements has been complied with, the non-member spouse's entitlement under the order or agreement will have been satisfied.

Reflecting this, regulation 14F provides in these circumstances for payments in respect of the superannuation interest of a member spouse to be not splittable payments for the purpose of applying Part VIIIB of the Act to the order or agreement.

However, in doing so, regulation 14F was drawn too broadly as it referred to any payment, transfer or roll-over, opening of a new account or creation of a new interest that is done 'under the payment split provisions of the RSA Regulations' or 'under the payment split provisions of the SIS Regulations'.

Regulation 14F should not have extended to where that action was taken under Division 4A.4 of the RSA Regulations or under Division 7A.3 of the SIS Regulations.

Those Divisions of the RSA Regulations and the SIS Regulations provide for the preservation within the superannuation system, in accordance with the Government's retirement income policy, of a non-member spouse's entitlement under an order or agreement where that entitlement is being satisfied progressively out of splittable payments that have commenced to be paid to the member spouse.

It would have defeated the effect of an order or agreement if, after a first payment to the non-member spouse (or into a superannuation or similar interest to be held for his or her benefit), its operation was effectively brought to an end.

Item 3 of Schedule 1: Paragraph 14N(6)(b)

Item 3 of Schedule 1 corrects an oversight in regulation 14N of the Principal Regulations, another of the provisions in Division 2.2 of the Principal Regulations providing for the operation of a order or agreement under Part VIIIB of the Act splitting future payments in respect of a superannuation interest of a member spouse to, effectively, be brought to an end where the non-member spouse's entitlement under the order or agreement has been satisfied in some other way.

As mentioned in relation to Item 2 of Schedule 1, Division 2.2 provides for particular circumstances in which payments in respect of a superannuation interest of a member spouse, to which a splitting order or a superannuation or flag lifting agreement applies, are not splittable payments for the purpose of applying Part VIIIB of the Act to the order or agreement.

Under regulation 14N of the Principal Regulations, which applies to a superannuation interest that is a percentage-only interest in a superannuation fund or an approved deposit fund, one of the conditions which must be satisfied before future payments are not splittable is that the governing rules of the fund in which the member spouse's superannuation interest is held must not provide for the reduction of the benefit payable to any other member of the fund other than the member spouse.

Item 3 of Schedule 1 amends regulation 14N to permit a reduction of the benefit payable to a reversionary beneficiary of the member spouse.

This correction provides for the application of the additional category in regulation 14N of payments which are not splittable to a superannuation interest that pays entitlements to a reversionary beneficiary (for example, to a surviving spouse or child) on the death of the member spouse.

Item 4 of Schedule 1: Subregulation 63(2)

Item 4 of Schedule 1 makes a drafting change to subregulation 63(2) of the Principal Regulation consequential on the insertion of new subregulations 63(6A), (6B) and (6C) by Item 8 of Schedule 1.

Items 5 to 7 of Schedule 1: After paragraph 63(4A)(a), Subparagraph 63(6)(d)(iii), After paragraph 63(6)(d)

These items amend regulation 63 of the Principal Regulations, which provides for the content of information to be given by a trustee in response to an application by a spouse or non-member spouse under section 90MZB of the Act for information about a superannuation interest, other than a percentage-only interest or an interest in a self managed superannuation fund, that is an accumulation interest.

These items insert new paragraphs 63(4A)(aa) and 63(6)(e) to give the option to the trustee, where:

•       the application relates to such an interest that is a partially vested accumulation interest; and

•       an alternative method or factors have been approved by the Minister under regulation 38 to determine its gross value;

to provide the applicant with the gross value of the interest determined in accordance with that method or factors.

Item 8 of Schedule 1: After subregulation 63(6)

Item 8 of Schedule 1 inserts new subregulations 63(6A), (6B) and (6C) to give the Minister the power to determine the items of information that a trustee must provide in response to an application by a spouse or non-member spouse under section 90MZB of the Act for information about:

•       a superannuation interest or a component of such an interest, that is a partially vested accumulation interest and in the growth phase, for which the Minister has approved an alternative valuation method or factors under regulation 38 of the Principal Regulations; and

•       an interest in the payment phase that is paying a lifetime pension to the member spouse for which the Minister has approved an alternative valuation method or factors under regulation 43A of the Principal Regulations.

In some cases it will not be possible for an applicant to determine the value of an interest in accordance with a method that has been approved by the Minister unless information that is additional to that set out in subregulations 63(2), (3) or (4A) of the Principal Regulations is known.

Also, some of the information in those subregulations that is, in the absence of any alternative method having been approved, necessary to know to be able to determine the value of an interest in accordance with:

•       the method under paragraph 32(4)(b) of the Principal Regulations for valuing a partially vested accumulation interest; or

•       the method under paragraph 42(2)(b) of the Principal Regulations for valuing an interest in the payment phase that is paying a lifetime pension to the member spouse;

may not be necessary to value an interest in accordance with an approved alternative method.

A determination by the Minister under new subregulations 63(6A) or (6B) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Item 9 of Schedule 1: Subregulation 64(2)

Item 9 of Schedule 1 makes a drafting change to subregulation 64(2) of the Principal Regulation consequential on the insertion of new subregulations 64(7A) and (7B) by Item 16 of Schedule 1.

Item 10 of Schedule 1: Paragraph 64(2)(e)

Item 10 of Schedule 1 would amend regulation 64 of the Principal Regulations, including the insertion of new paragraph 64(2)(eaa), consequential on the insertion of proposed new subregulation 64(4A) by Item 12 of Schedule 1.

Item 11 of Schedule 1: Paragraph 64(4)(d)

Item 11 of Schedule 1 replaces paragraph 64(4)(d) of the Principal Regulations with a new paragraph 64(4)(d) and a new paragraph 64(4)(da). The new paragraphs should have been inserted into regulation 64 as a consequence of the replacement, by the Family Law (Superannuation) Amendment Regulations 2003 (No. 2) in September 2003, of clause 29 of Part 4 of Schedule 2 of the Principal Regulations with new clauses 29 and 29A of that Part of Schedule 2. The new paragraphs bring into line the information that is given by a trustee, in response to an application by a spouse or non-member spouse under section 90MZB of the Act for information about a defined benefit interest that will pay benefits either as a lump sum, a pension, or a combination of lump sum and pension, with the methods in Part 4 of Schedule 2 for determining the gross value of such an interest.

Item 12 of Schedule 1: After subregulation 64(4)

Item 12 of Schedule 1 inserts a new subregulation 64(4A) consequential on the insertion of new Parts 5, 6 and 7 of Schedule 2 of the Principal Regulations by Item 26 of Schedule 1 providing methods for determining the gross value of a defined benefit interest held by a member spouse as a result of employment in which he or she is no longer engaged at the time of valuation, and which will pay benefits in the future.

These consequential amendments to regulation 64 provide for the trustee of a fund, in response to an application by a spouse or non-member spouse under section 90MZB of the Family Law Act for information about such a defined benefit interest, to give the applicant the necessary information to enable the interest to be valued in accordance with whichever method in Parts 5, 6 or 7 of Schedule 2 will be applicable.

Item 13 of Schedule 1: Subregulations 64(6A) to (6D)

Item 13 of Schedule 1 replaces subregulations 64(6A), (6B), (6C ) and (6D) with new subregulations 64(6A) and (6B).

The provisions set out a procedure enabling an applicant under section 90MZB of the Act, where the trustee has earlier provided to the applicant, without providing other information, the gross value of a superannuation interest determined in accordance with:

•       a method in Schedule 2 of the Principal Regulations; or

•       a method approved by the Minister under regulation 38 of the Principal Regulations;

to request further information to enable him or her to check whether the trustee has correctly calculated the gross value of the interest in accordance with the method.

The new provisions remove an unintended effect of the procedure not being available where the trustee had earlier provided to an applicant the gross value of a superannuation interest determined in accordance with a method approved by the Minister under regulation 38 and information to enabling the interest to be valued in accordance with a method in Schedule 2 of the Principal Regulations.

Items 14 and 15 of Schedule 1: Subregulation 64(7): Paragraph 64(7)(a)

Subregulation 64(7) of the Principal Regulations provides a power for the Minister to determine the items of information that a trustee must provide in response to an application by a spouse or non-member spouse under section 90MZB of the Act for information about a defined benefit superannuation interest for which the Minister has approved an alternative valuation method or factors under regulation 38.

Under subregulation 64(7), the Minister may determine that:

•       the trustee is not required to provide information about the interest mentioned in one or more paragraphs of subregulation 64(4) (paragraph 64(7)(a) of the Principal Regulations); and

•       the trustee must provide other information, specified in the determination, about the interest (paragraph 64(7)(b) of the Principal Regulations).

Provision to an applicant under section 90MZB of the information specified in the determination made by the Minister will enable a spouse to value the superannuation interest in accordance with the alternative method that has been approved.

In many cases, some of the information which would otherwise be required to be provided in response to an application under section 90MZB, relating to valuation of the interest in accordance with the particular method under the Principal Regulations that the approved method replaces, will not be relevant to the alternative method that has been approved.

However, depending on that alternative method, it is possible in some cases that:

•       the information that is required to value an interest in accordance with the method which the approved method replaces; and

•       information additional to that information;

will be required to value the interest in accordance with the approved method.

Items 14 and 15 of Schedule 1 amend subregulation 64(7) to provide that the Minister may make a determination about either one or both of the matters about which he can make determination under paragraphs 64(7)(a) or (b) of the Principal Regulations.

Item 16 of Schedule 1: After subregulation 64(7)

Item 16 of Schedule 1 inserts new subregulation 64(7A) to give the Minister the power to determine the items of information that a trustee must provide in response to an application by a spouse or non-member spouse under section 90MZB of the Family Law Act for information about:

•       a superannuation interest that is in the growth phase and made up of a component that is a defined benefit interest and a component that is a partially vested accumulation interest, for which the Minister has approved an alternative valuation method or factors under regulation 38 of the Principal Regulations; and

•       a defined benefit interest that is in the payment phase and is paying a lifetime pension to the member spouse for which the Minister has approved an alternative valuation method or factors under regulation 43A of the Principal Regulations.

In some cases it will not be possible for an applicant to determine the value of an interest in accordance with a method that has been approved by the Minister unless information that is additional to that set out in subregulations 63(4A) or 64(2), (3) or (4) of the Principal Regulations is known.

Also, some of the information in those subregulations that is, in the absence of any alternative method having been approved, necessary to know to be able to determine the value of an interest in accordance with:

•       the method under paragraph 29(4)(b) of the Principal Regulations for valuing a defined benefit interest;

•       the method under paragraph 32(4)(b) of the Principal Regulations for valuing a partially vested accumulation interest; or

•       the method under paragraph 42(2)(b) of the Principal Regulations for valuing an interest in the payment phase that is paying a lifetime pension to the member spouse;

may not be necessary to value an interest in accordance with an approved alternative method.

Item 17 of Schedule 1: Subregulation 64(8)

Item 17 of Schedule 1 amends subregulation 64(8) of the Principal Regulations to provide for a determination by the Minister under new subregulations 64(7A) or (7B) (inserted by Item 16 of Schedule 1) to be a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

Item 18 of Schedule 1: Paragraph 71(2)(c)

Item 18 of Schedule 1 replaces the reference to regulation 38 in paragraph 71(2)(c) of the Principal Regulations with a reference to Division 6.1A of the Principal Regulations.

Regulation 48, which provided for the interest rate that applies for the adjustment of a base amount where a superannuation interest is subject to a base amount payment split (one of the two kinds of payment splits that can be made under Part VIIIB of the Act of most superannuation interests), was omitted by Family Law (Superannuation) Amendment Regulations 2002 (No. 2) in December 2002, when the provisions for the adjustment of base amounts were moved to new Division 6.1A.

Item 19 of Schedule 1: Schedule 2, clause 2

Item 19 of Schedule 1 replaces clause 2 of Schedule 2 of the Principal Regulations consequential on the insertion of new Parts 5, 6 and 7 of Schedule 2 of the Principal Regulations by Item 26 of Schedule 1 providing methods for determining the gross value of a defined benefit interest held by a member spouse as a result of employment in which he or she is no longer engaged at the time of valuation, and which will pay benefits in the future.

Items 20 and 21 of Schedule 1: Schedule 2, Part 2, heading, Schedule 2, subclause 3(1)

Items 20 and 21 of Schedule 1 replace the heading of Part 2 of Schedule 2, and the introductory words in subclause 3(1) of Schedule 2, of the Principal Regulations consequential on the insertion of new clause 2 of Schedule 2 of the Principal Regulations by Item 19 of Schedule 1.

Items 22 and 23 of Schedule 1: Schedule 2, Part 3, heading, Schedule 2, subclause 5(1)

Items 22 and 23 of Schedule 1 replace the heading of Part 3 of Schedule 2, and the introductory words in subclause 5(1) of Schedule 2, of the Principal Regulations consequential on the insertion of new clause 2 of Schedule 2 of the Principal Regulations by Item 19 of Schedule 1.

Items 24 and 25 of Schedule 1: Schedule 2, Part 4, heading, Schedule 2, clause 27

Items 24 and 25 of Schedule 1 replace the heading of Part 4 of Schedule 2 and omit clause 27 of the Principal Regulations consequential on the insertion of new clause 2 of Schedule 2 of the Principal Regulations by Item 19 of Schedule 1.

Item 26 of Schedule 1: Schedule 2, after Part 4

Item 26 of Schedule 1 inserts new Parts 5, 6 and 7 of Schedule 2 providing methods for determining the gross value of a defined benefit interest held by a member spouse as a result of employment in which he or she is no longer engaged at the time of valuation, and which will pay benefits in the future.

Item 27 of Schedule 1: Schedule 7, heading

Item 27 of Schedule 1 corrects the reference in the heading to Schedule 7 of the Principal Regulations to the subregulation in regulation 46 providing for that Schedule to set out the modifications of Division 6.2 of Part 6 that will apply when determining the entitlement of a second or subsequent non-member spouse under a second or later base amount payment split of a superannuation interest of a member spouse made or ordered when the interest was in the growth phase.

Schedule 2

Item 1 of Schedule 2: Regulation 3, after definition of Judges Pensions Act Scheme

Item 1 of Schedule 2 inserts a definition of market linked pension in regulation 3 of the Principal Regulations.

Item 2 of Schedule 2: Regulation 14G(1)

Item 2 of Schedule 2 amends subregulation 14G(1) of the Principal Regulations to make it clear that regulation 14N, another of the provisions in Division 2.2 providing for the operation of an order or agreement under Part VIIIB of the Act to be brought to an end where the non-member spouse's entitlement under it has been satisfied in some other way, applies to an interest in respect of which benefits are payable as a market linked pension.

Item 3 of Schedule 2: Subregulation 42(3)

Item 3 of Schedule 2 amends subregulation 42(3) of the Principal Regulations consequential on the insertion of new subregulation 42(5) by Item 4 of Schedule 2.

Item 4 of Schedule 2: After subregulation 42(4)

Item 4 of Schedule 2 inserts new subregulation 42(5) to provide that the gross value of a superannuation pension paying a market linked pension is the market linked pension account balance at the relevant date.

Items 5 to 7 of Schedule 2: Paragraph 52(1)(a), Paragraph 53(1)(a), Paragraph 54(1)(a)

Items 5, 6, and 7 of Schedule 2 amend paragraphs 52(1)(a), 53(1)(a) and 54(1)(a) of the Principal Regulations consequential on the amendment of regulation 54A by Item 8 of Schedule 2.

Item 8 of Schedule 2: Regulation 54A

Regulation 54A of the Principal Regulations provides for the entitlement of a non-member spouse under a base amount payment split of a superannuation interest in respect of which benefits are payable as an allocated pension that is made or ordered in the growth phase.

Item 8 of Schedule 2 replaces regulation 54A with a new regulation 54A to amend the former provision to provide for the entitlement of a non-member spouse under such a base amount payment split of a superannuation interest in respect of which benefits are payable as a market linked pension.

The entitlement will differ depending on whether or not any part of the benefits in respect of the interest is also payable as an allocated pension.

Where no part of the benefits in respect of the interest is also payable as an allocated pension, the non-member spouse is entitled, at the time that a splittable payment becomes payable in respect of the interest, to be paid the adjusted base amount applicable to him or her at that time out of the lump sum from which the market linked pension is payable.

If the lump sum from which the market linked pension is payable is less than the adjusted base amount applicable to the non-member spouse, the non-member spouse is entitled to be paid the lump sum and, in addition, the proportion of every future splittable payment in respect of the interest that the remaining adjusted base amount bears to the value of the interest after he or she has been paid the lump sum from which the market linked pension is payable.

Where a part of the benefits in respect of the interest is also payable as an allocated pension, the non-member spouse is entitled, at the time that a splittable payment becomes payable in respect of the interest, to be paid:

•       the adjusted base amount applicable to him or her at that time out of the lump sum from which the allocated pension is payable; and

•       if the lump sum from which the allocated pension is payable is less than that adjusted base amount, so much of the lump sum from which the market linked pension is payable as is needed to pay the balance of the adjusted base amount.

If the total of the lump sums from which the allocated pension and the market linked pension are payable is less than the adjusted base amount applicable to the non-member spouse, the non-member spouse is entitled to be paid the lump sums from which each pension is payable and, in addition, the proportion of every future splittable payment in respect of the interest that the remaining adjusted base amount bears to the value of the interest after he or she has been paid the lump sums from which the allocated pension and the market linked pension are payable.

Items 9 and 10 of Schedule 2: Paragraph 56(1)(a), Paragraph 57(1)(a)

Items 9 and 10 of Schedule 2 amend paragraphs 56(1)(a) and 57(1)(a) of the Principal Regulations consequential on the amendment of regulation 58A by Item 11 of Schedule 2.

Item 11 of Schedule 2: Regulation 58A

Regulation 58A of the Principal Regulations provides for the entitlement of a non-member spouse under a base amount payment split of a superannuation interest in respect of which benefits are payable as an allocated pension that is made or ordered in the payment phase, where that payment split is the first or only payment split that has been made in respect of the interest.

Item 11 of Schedule 2 replaces regulation 58A with a new regulation 58A to amend the former provision to provide for the entitlement of a non-member spouse under such a base amount payment split of a superannuation interest in respect of which benefits are payable as a market linked pension.

The entitlement will differ depending on whether or not any part of the benefits in respect of the interest is also payable as an allocated pension.

Where no part of the benefits in respect of the interest is also payable as an allocated pension, the non-member spouse is entitled, at the time that a splittable payment becomes payable in respect of the interest, to be paid the base amount allocated to him or her out of the lump sum from which the market linked pension is payable.

If the lump sum from which the market linked pension is payable is less than the base amount allocated to the non-member spouse, the non-member spouse is entitled to be paid the lump sum and, in addition, the proportion of every future splittable payment in respect of the interest that the remaining base amount bears to the value of the interest after he or she has been paid the lump sum from which the market linked pension is payable.

Where a part of the benefits in respect of the interest is also payable as an allocated pension, the non-member spouse is entitled, at the time that a splittable payment becomes payable in respect of the interest, to be paid:

•       the base amount allocated to him or her at that time out of the lump sum from which the allocated pension is payable; and

•       if the lump sum from which the allocated pension is payable is less than that base amount, so much of the lump sum from which the market linked pension is payable as is needed to pay the balance of the base amount.

If the total of the lump sums from which the allocated pension and the market linked pension are payable is less than the base amount allocated to the non-member spouse, the non-member spouse is entitled to be paid the lump sums from which each pension is payable and, in addition, the proportion of every future splittable payment in respect of the interest that the remaining base amount bears to the value of the interest after he or she has been paid the lump sums from which the allocated pension and the market linked pension are payable.

Items 12 and 13 of Schedule 2: Paragraph 58C(1)(a), Paragraph 58D(1)(a)

Items 12 and 13 of Schedule 2 amend paragraphs 58C(1)(a) and 58D(1)(a) of the Principal Regulations consequential on the replacement of regulation 58E by Item 14 of Schedule 2.

Item 14 of Schedule 2: Regulation 58E

Regulation 58E of the Principal Regulations provides for the entitlement of a second or subsequent non-member spouse under a second or later base amount payment split of a superannuation interest in respect of which benefits are payable as an allocated pension that is made or ordered in the payment phase.

Item 14 of Schedule 2 replaces regulation 58E of the Principal Regulations with a new regulation 58E so that the provision also provides for that entitlement under such a split of an interest in respect of which benefits are payable as a market linked pension.

Like the former provision, new regulation 58E continues to apply the entitlement provisions that apply under regulation 58A.

Item 15 of Schedule 2: After paragraph 63(3)(a)

Item 15 of Schedule 2 inserts new paragraph 63(3)(aa) to provide for the information that the trustee must provide to an applicant under section 90MZB of the Act about an accumulation interest in the payment phase paying on-going pension payments in respect of a market linked pension. The information that the trustee must provide - the market linked pension account balance at the appropriate date - will enable the applicant to value the interest at that date.

Item 16 of Schedule 2: Paragraph 63(3)(b)

Item 16 of Schedule 2 amends paragraph 63(3)(b) of the Principal Regulations consequential on the insertion of new paragraph 63(3)(aa) by Item 15 of Schedule 2.

Item 17 of Schedule 2: After paragraph 64(3)(a)

Item 17 of Schedule 2 inserts new paragraph 64(3)(aa) to provide for the information that the trustee must provide to an applicant under section 90MZB of the Act about a defined benefit interest in the payment phase paying on-going pension payments in respect of a market linked pension. The information that the trustee must provide - the market linked pension account balance at the appropriate date - will enable the applicant to value the interest at that date.

Item 18 of Schedule 2: Paragraph 64(3)(b)

Item 18 of Schedule 2 amends paragraph 64(3)(b) of the Principal Regulations consequential on the insertion of new paragraph 64(3)(aa) by Item 17 of Schedule 2.

Item 19 of Schedule 2: After paragraph 66(3)(a)

Item 19 of Schedule 2 inserts new paragraph 66(3)(aa) to provide for the information that the trustee must provide to an applicant under section 90MZB of the Act about a percentage-only interest in the payment phase paying on-going pension payments in respect of a market linked pension. The information that the trustee must provide - the market linked pension account balance at the appropriate date - will enable the applicant to value the interest at that date.

Item 20 of Schedule 2: After paragraph 67(3)(a)

Item 20 of Schedule 2 inserts new paragraph 67(3)(aa) to provide for the information that the trustee must provide to an applicant under section 90MZB of the Act about interest in a self managed superannuation fund in the payment phase paying on-going pension payments in respect of a market linked pension. The information that the trustee must provide - the market linked pension account balance at the appropriate date - will enable the applicant to value the interest at that date.


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