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SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT REGULATIONS 1999 (NO. 1) 1999 NO. 14
EXPLANATORY STATEMENTSTATUTORY RULES NO. 14
Issued by the Authority of the Assistant Treasurer
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Amendment Regulations 1999 (No. 1)
The Superannuation Industry (Supervision) Act 1993 (the Act) and the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations) provide for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.
Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
The Regulations amend the Principal Regulations to implement certain minor amendments to improve the efficiency and effectiveness of the regulatory framework for superannuation. The amendments have been prepared in light of administrative experience and industry representations. The amendments are relatively minor in nature. In summary, the Regulations cover matters related to transfers of superannuation benefits in respect of.
Exempt public sector superannuation schemes (EPSSSs)
These amendments to the Principal Regulations enable superannuation benefit transfers to and from EPSSSs. Those transfers have not been legal under the Principal Regulations because EPSSSs are not included in the current definition of 'transferred' in the Principal Regulations. As EPSSSs are, otherwise, recognised in the Superannuation Industry (Supervision) legislation system, this anomaly is rectified by making amendments to refer to EPSSSs where relevant in the Principal Regulations (All Schedule Items except Items 6, 27 and 36).
Eligible Rollover Funds (ERFs)
This amendment deletes Division 6.4A of the Principal Regulations which requires fund trustees to wait 28 days before transferring benefits of members at 30 June 1995 to ERFs. This requirement was originally -inserted to protect members by providing a period in which to give them information about the provision for trustees to transfer member benefits to a trustee nominated ERF in certain circumstances. With the passage of time that member protection requirement has become cumbersome and inefficient. The information that would have been provided in the 28 day period would have already been given on entry to a fund and in regular annual reports to members after 30 June 1995 (Schedule Item 36).
In addition, some Regulations are of a housekeeping nature to delete a superfluous expression (Schedule Item 6) and redundant regulations (Schedule Item 27).
The Regulations are described in detail in the Attachment.
The Regulations commence on gazettal.
ATTACHMENT
SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT REGULATIONS 1999 (No. 1 )
Regulation 1 - Name of regulations
The name of these regulations is the Superannuation Industry (Supervision) Amendment Regulations 1999 (No. 1).
Regulation 2 - Commencement
Regulation 2 provides that the regulations commence on gazettal.
Regulation 3 - Amendment of Superannuation Industry (Supervision) Regulations 1994
Regulation 3 provides that the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations) are amended as set out in Schedule 1 of these regulations.
Schedule 1 - Amendment of Superannuation Industry (Supervision) Regulations 1994
Item [1] Subregulation 1.03(1), definition of withdrawal benefit, paragraph (b)
Item 1 substitutes a new paragraph (b) in the definition of 'withdrawal benefit' in subregulation 1.03(1) of the Principal Regulations. This new paragraph enables an exempt public sector superannuation scheme (EPSSS) to be a recipient of an amount of superannuation benefits in respect of a member of a superannuation entity, if the member voluntarily ceased to be a member of that superannuation entity and transferred their benefits to an EPSSS.
Item [2] Subregulation 1.03(1)
Item 2 inserts a definition of 'EPSSS' into subregulation 1.03(1) of the Principal Regulations. EPSSS is defined as an 'exempt public sector superannuation scheme'.
Item [3]
Item 3 inserts an Explanatory Note after the definition of 'eligible rollover fund' in subregulation 1.03(1). This Note is intended to direct attention to the provisions of the Act and the Principal Regulations that give meaning to the term' eligible rollover fund, that is, section 242 and regulation 10.01 respectively.
Item [4] Paragraph 1.03A(1)(c)
Item 4 amends paragraph 1.03A(1)(c) of the Principal Regulations dealing with lost members. A 'lost member' of a fund is defined in Regulation 1.03A(1) to be a member who is uncontactable or who is inactive in respect of contributions or rollovers to the fund within the last two years of membership of the fund. Currently a lost member in a regulated superannuation fund or approved deposit fund may join another regulated superannuation fund or approved deposit fund, and be taken to be a lost member in that second fund. This amendment allows a lost member in an EPSSS to join a fund, and be taken to be a lost member in that fund. The definition of lost member was introduced to protect such members.
Item [5]
Item 5 replaces paragraph (c) of the Explanatory Note that follows regulation 1.03A of the Principal Regulations, in order to recognise that members may now be transferred to an EPSSS. Paragraph (c) now provides that if a member is transferred to another fund or an EPSSS, the trustee of the transferring fund must provide the trustee of the transferee fund with certain information about the member (as prescribed in Division 2.7A of the Principal Regulations).
Item [6] Subregulation 2.04(1)
Item 6 amends subregulation 2.04(1) of the Principal Regulations by omitting the redundant expression '(both inclusive)'.
Item [7] Subparagraph 2.05(1)(e)(ii)
Item 7 amends regulation 2.05 of the Principal Regulations by substituting 'person, or' for 'person.' due to the insertion of a new paragraph 2.05(1)(c)(iii) by Item 8.
Item [8] After Subparagraph 2.05(1)(c)(ii)
Item 8 inserts a new subparagraph 2.05 (1)(c)(iii) after Subparagraph 2.05 (1)(c)(ii). Paragraphs 2.05(1)(a) and (b) of the Principal Regulations provide that the trustee of a superannuation entity need not give information to a member if the trustee has either an incorrect address or no address for the member, and the trustee has taken reasonable steps to locate the member but has been unable to do so.
The new subparagraph provides that if the trustee of the EPSSS from which the member has transferred has fulfilled a requirement similar to that set out in paragraph 2.05(1)(a) or (b) in relation to the member, then the trustee of the transferee superannuation entity is not required to give member information as prescribed in Part 2 of the Principal Regulations.
Item [9] Paragraph 2.11A (1)(b)
Item 9 amends paragraph 2.11 A (1)(b) of the Principal Regulations by substituting 'Act; or' for 'Act;' due to the insertion of a new paragraph 2.11A (1)(c) by Item 10.
Item [10] After paragraph 2.11A(1)(b)
Regulation 2.11A of the Principal Regulations requires trustees of an eligible rollover fund (ERF) to ensure that the trustees of the transfer or fund or an RSA provider who transfers a member's benefits into the ERF has been given certain information specified in subregulation 2.11A (2) about the ERF, before a transfer under section 243 of the Act or section 89 of the RSA Act.
Item 10 amends regulation 2.11A of the Principal Regulations by inserting anew paragraph 2.11A (1)(c) to provide that the trustee of an EPSSS who transfers benefits to an ERF, as provided in paragraph 3.09A (1)(b) inserted by Item 22, receives the information about the ERF.
Item [11] Subparagraph 2.12(1)(b)(ii)
Regulation 2.12 of the Principal Regulations lists the types of funds for which Division 2.3 of the Principal Regulations applies. The Division prescribes information to be given by trustees of certain regulated superannuation funds to new members.
Item 11 amends regulation 2.12 of the Principal Regulations to apply the Division to ERFs in the circumstances mentioned in paragraph 3.09A(1)(b) inserted by Item 22. That is, where an ERF issues interests to an EPSSS. The aim of this regulation is to ensure new members of ERFs transferred from an EPSSS be given prescribed information under the Division.
Item [12] Subregulation 2.14(1)
Item [13] Subregulation 2.14(1A)
Regulations 2.14 and 2.14 (1 A) of the Principal Regulations provide that certain information need not be given to a person after joining the fund if the person has already received the relevant information previously, (provided that information is correct in all material respects), either from the trustee of the fund or of another fund.
Items 12 and 13 amend respectively subregulations 2.14 (1) and (1A) to provide for the additional circumstance in which the trustee of an EPSSS has previously provided the relevant information to the aforementioned person. In such circumstances, the trustee of the fund needs not give that information to the person.
Item [14] Subregulation 2.36(3)
Item 14 amends regulation 2.36 of the Principal Regulations by substituting a new subregulation 2.36 (3) which will require the trustee of a transfer or fund to give information to a member in the event of the benefits of the member being transferred to an EPSSS. This is in addition to the events of the member being transferred to a different category of membership in the same fund, to a different fund, or to an RSA (as currently provided).
Item [15] Subregulation 2.36A(1)
Item [16] Subregulation 2.36A(1)
Item [17] Paragraph 2.36A(2)(e)
Item [18] Subregulation 2.36A(4)
Regulation 2.36A of the Principal Regulations requires trustees of regulated superannuation funds and approved deposit funds to give appropriate information relating to the transfer to members who may be transferred to an ERF by default after a specified period. The information will assist members to decide between an ERF, another superannuation entity or an RSA within that period.
Items 15 to 18 amend regulation 2.36A of the Principal Regulations to provide for the above requirement to apply to the additional situation where the member may have the choice of an EPSSS. This is done by replacing entity/entities with 'superannuation entity/entities' where relevant and inserting 'EPSSS' in the appropriate places in the regulation 2.36A.
Item [19] Subparagraph 2.48(3)
Item 120] Subparagraph 2.48(3)(b)(ii)
Item [21] After subparagraph 2.48(3)(b)(ii)
Regulation 2.48(3) of the Principal Regulations provides that where a member is being transferred to another fund or to an RSA, the trustee of the transferring fund need not give to the member information under Division 2.7 (Information when a member leaves a fund) if.
a) the trustee of the transferring fund has given the member sufficient information under subregulation 2.36(3) (Transfer of benefits); or
b) the member is likely to receive from the trustee of the other fund, or the RSA provider, member information that will cover the member's exit reporting period.
Items 19 to 21 amend regulation 2.48 to extend the exception under b) above to cover the case where the member is transferred to an EPSSS and is likely to receive, from the trustee of the EPSSS, member information similar to that under subdivision 2.4.2 of the Principal Regulations in respect of the member's exit reporting period.
Item [22] Regulation 3.09A
3.09A Specified circumstances for issue of superannuation interests (Act, s 153(1)(d))
Regulation 3.09A of the Principal Regulations specifies, for the purposes of paragraph 153(1)(d) of the Act, the circumstances in which an interest in a public offer superannuation entity may be offered without an eligible application. Currently the only circumstance specified is that the interest is issued by the trustee of a successor fund in relation to a transfer of benefits to the fund.
Item 22 amends regulation 3.09A of the Principal Regulations to specify an additional circumstance by substituting a new Regulation 3.09A. The new Regulation 3.09A consists of subregulation (1) which lists circumstances for the issue of superannuation interests in public offer entity without an eligible application. The current circumstance is listed in paragraph (1)(a) and the new circumstance in paragraph (1)(b). Paragraph (1)(b) specifies the circumstance for the transfer of superannuation benefits in accordance with an application made under section 243 of the Act as applied by subregulation (2) of the regulation and that there is an eligible application made by the trustee of the transferor fund to the public offer entity under subsection 153(3) of the Act. Subregulation (2) applies paragraph (1)(b) to the transfer from an EPSSS to an ERF, being a public offer entity.
Item [23] After regulation 3.10
3.10A Specified circumstances for dispensing with giving of information (Act, s157(5))
Item 23 inserts regulation 3.10A in the Principal Regulations to specify a circumstance for the exception provided under subsection 157(5) of the Act from the requirement for a public offer fund to give information to prospective members of the fund.
Regulation 3.10A specifies that circumstance to be the issue of superannuation interest in an ERF to an EPSSS made in accordance with the applied provisions of paragraph 3.09A(1)(b) inserted by Item 22 and that the application is not the first application under those applied provisions. That is, where there is already information given by the trustee of the ERF to the trustee of an EPSSS on the latter's first application. to the ERF under new Regulation 3.09A, there is no requirement to give prescribed information on subsequent applications by the trustees of the EPSSS.
Item [24] Subregulation 4.12 (1)
Regulation 4.12 of the Principal Regulations prescribes that the trustee of a regulated superannuation fund or an approved deposit fund must not accept the transfer of benefits into the fund from another superannuation fund, approved deposit fund or an RSA (transferring entity) if the trustee has not actually received member's or RSA holder's consent for the rollover or transfer of benefits.
Item 24 amends regulation 4.12 to insert an EPSSS as another transferring entity thereby providing for a regulated superannuation fund or an approved deposit fund to accept transfers of benefits from an EPSSS.
Item [25] Subregulation 5.01(1), definition of superannuation system, paragraph (c)
Item 25 amends the definition of 'superannuation system' in paragraph 5.01(1) of the Principal Regulations by substituting 'EPSSSs' for 'exempt public sector superannuation schemes' in paragraph (e) for consistency with the introduction of the definition of 'EPSSSs' in Item 2.
Item [26] Subregulation 5.0, definition of transferred
Item 26 amends the definition of 'transferred' in paragraph 5.01(1) of the Principal Regulations to include an EPSSS as an entity which may receive or be paid member's benefits. This provides for the transfer of benefits from a regulated superannuation fund of approved deposit fund to an EPSSS.
Item [27] Division 5.4
Division 5.4 of the Principal Regulations, in conjunction with the 'Member-protection standards' in Division 5.5, placed restrictions on the charging of exit fees upon the rollover or transfer of benefits out of a superannuation fund (other than an excluded superannuation fund) in certain circumstances. Subregulation 5.09(3) provides that Division 5.4 has no effect after 30 June 1996. Because Division 5.4 is now redundant, Item 27 omits it from the Principal Regulations.
Item [281 Sub-subparagraph 6.21(1A)(a)(iii)(C)
Item [29] After subparagraph 6.21(1A)(a)(iii)(C)
Item [30] Sub-subparagraph 6.21(1A)(b)(iii)(C)
Item [31] After subparagraph 6.21(1A)(b)(iii)(C)
Regulation 6.21 of the Principal Regulations prescribes the events on whose occurrence benefits in regulated superannuation funds must be cashed.
Items 29 and 31 insert after sub-subparagraphs 6.21(1A)(a)(iii)(C) and 6.21(1A)(b)(iii)(C), subsubparagraph '(D) an EPSSS' so that in the event the member has attained age 65 or 70, the member is not gainfully employed and mandated employer contributions have ceased to be made and are not liable to be made in respect of the member, to an EPSSS, the post-65 employer-financed benefits must be cashed out of a regulated superannuation fund.
Items 28 and 30 amend respectively sub-subparagraphs 6.21(1A)(a)(iii)(C) and 6.21(1A)(b)(iii)(C) of the Principal Regulations-by substituting 'RSA; or' for 'RSA;' due to the insertion of new subsubparagraphs (D) by Items 29 and 3 1.
Item [32] Paragraph 6.21(5)(b)
Consequent to amendments made in Items 29 and 3 1, Item 32 amends the interpretation of 'post65 employer-financed benefits' in subregulation 6.21(5) to include mandated employer contributions made to an EPSSS by inserting EPSSS' in paragraph 6.21(5)(b).
Item [33] Paragraph 6.25(3)(a)
Regulation 6.25 of the Principal Regulations prescribes the events on whose occurrence benefits in an approved deposit fund must be cashed. Paragraph 6.25(3)(a) prescribes that instead of being cashed, the benefits can be rolled over as soon as practicable, in the case of a member who is gainfully employed, to a regulated superannuation fund or to an RSA, or for immediate cashing.
Item 33 amends the paragraph to permit roll over to an EPSSS.
Item [34] Subparagraph 6.28(b)(i)
Regulation 6.28 of the Principal Regulations prohibits roll over of benefits from a regulated superannuation fund or approved deposit fund unless the member has given to the fund trustee consent to the rollover or the trustee believes that the trustee of the regulated superannuation fund, approved deposit fund or RSA institution into which the benefits are to be rolled over has received, from the member, consent to the rollover.
Item 34 inserts EPSSS' in subparagraph 6.28(b)(i) to provide the additional condition that the rollover can be made if the trustee of the rolling over fund believes that the trustee of the EPSSS into which benefits are to be rolled over has received the member's consent.
Item [35] Subparagraph 6.29(b)(i)
Regulation 6.29 of the Principal Regulations prohibits transfers from a regulated superannuation fund or approved deposit fund unless the member has given to the fund trustee consent to the rollover or the trustee believes that the trustee of the regulated superannuation fund, approved deposit fund or RSA institution into which the benefits are to be rolled over has received, from the member, consent to the rollover.
Item 35 inserts 'EPSSS' in subparagraph 6.29(b)(i) to provide the additional condition that the rollover can be made if the trustee of the rolling over fund believes that the trustee of the EPSSS into which benefits are to be rolled over has received the member's consent.
Item [36] Division 6.4A
Division 6.4A of the Principal Regulations imposes a requirement on trustees of regulated superannuation funds and approved deposit funds to give certain beneficiaries who were beneficiaries of the fund on 30 June 1995 a minimum of 28 day to nominate an entity before the beneficiary is transferred to an ERF.
In conjunction with this requirement, regulation 2.36A requires that the affected member be given certain prescribed information if the member's benefits are to be transferred to an ERF unless the member chooses another superannuation entity, an EPSSS or an RSA (see Regulations 15 to 18). This information is to help the member decide between the superannuation entity, the EPSSS, or the RSA. The information includes an explanation of why the trustee intends to pay member's benefits to an ERF, the effect of the payment, the contact details of the ERF and the approximate amount of payment.
The purpose of the above Division and regulation is to provide special protection to those existing members at 30 June 1995. At that time, existing members would not have received adequate protection in the form of information disclosure in respect of transfer of benefits to an ERF under the newly introduced SIS legislation
With the passage of time that member protection requirement has become cumbersome and inefficient. The protection to members of funds in the form of provision of information about the effect of transfer is provided in regulation 2.36A and information that would have been provided in the 28 day period would have already been given on fund entry and in regular annual reports and to members after 30 June 1995.
In any case, particularly in cases of transfer to ERFs, if the trustee does not have a correct address for the member and has not been able to locate the member after reasonable effort, under regulation 2.05, the requisite information need not be given.
Item 36 deletes Division 6.4A of the SIS Regulations. This amendment improves efficiency for funds and provides equal treatment for all fund members in respect of the provision of transfers to ERFs.
Item [37] Additional amendments
Item [38] Additional amendments
Items 37 and 38 amend regulation 6.07 and 6.08 of the Principal Regulations to refer to 'EPSSS' in lieu of exempt public sector superannuation scheme' or 'scheme' for consistency with the use of 'EPSSS' in the Principal Regulations as introduced by subregulation 4.2.