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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1999 (NO. 3) 1999 NO. 115
EXPLANATORY STATEMENTStatutory Rules 1999 No. 115
Issued by the Authority of the Minister for Financial Services and Regulation
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations (Amendment) 1999 (No. 3)
Section 353 of the Superannuation Industry (Supervision) Act 1993 (the Act) provides that the GovernorGeneral may make regulations for the purposes of the Act.
The Act and the Superannuation Industry (Supervision) Regulations (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.
The purpose of the regulations is to make various miscellaneous amendments to the Principal Regulations which are consequential to the Superannuation Legislation Amendment Act 1999 including amendment to:
* the definition of a sub-fund to reflect the fact that beneficiaries do not have a direct interest in
the assets of a sub-fund;
* put in place administrative controls governing the acceptance of binding death benefit notices
including
- amending the disclosure requirements in the Principal Regulations to require trustees of
relevant funds to notify members of their death benefit notices in annual statements and
enable them to confirm or update their notices as necessary to protect fund members
whose domestic circumstances change; and
- amending the Principal Regulations to automatically invalidate a death benefit notice
after three years.
* the regulations concerning application money held on trust to recognise that the applicant in
relation to a superannuation interest is not necessarily the person on whose behalf the money
is received; and
* the operating standards restricting loans and investments of superannuation entities to clarify
that the standards apply to the application of all of the assets of a superannuation entity for the
purpose of gaining interest, income or profit and not just the application of money.
Details of the regulations appear in the Attachment.
Regulations 1, 2 and 3 and Schedule 1 of the proposed regulation amendments commence on gazettal. Schedule 2 commences on the same day as Part 2 of Schedule 2 to the Superannuation Legislation Amendment Act 1999. Schedule 3 commences on 1 July 1999.
Authority: Section 353 of the
Superannuation Industry (Supervision) Act 1993.
ATTACHMENT
Superannuation Industry (Supervision) Regulations Amendment
Regulation 1
Regulation 1 provides that these regulations are the Superannuation Industry (Supervision) Amendment Regulations 1999 (No. 3).
Regulation 2 - Commencement
Subregulation 1 provides that Regulations 1, 2 and 3 and Schedule 1 commence on gazettal.
Subregulation 2 provides that Schedule 2 commences on the same day as Part 2 of Schedule 2 to the
Superannuation Legislation Amendment Act 1999.
Subregulation 3 provides that Schedule 3 commences 1 July 1999.
Regulation 3 - Amendment
Regulation 3 provides that the Superannuation Industry (Supervision) Regulations (the Principal Regulations) are amended as set out in Schedules 1, 2 and 3.
Schedule 1
Item [1] - New regulation 2.24C (Information if trustee required to provide benefits)
Item 1 inserts regulation 2.24C to prescribe information to be included in the annual member report where the member has given the trustee a notice under subregulation 6.17A(4) (binding death benefit notice). Subregulation 2.24C (1) requires the annual member report to include the following information in respect of a notice:
* The name of each person, persons or class, or classes of persons nominated in the notice, and
the proportion of benefit to be paid to each nominee, or how that proportion is to be
determined, as stated by the member in the notice;
* a statement explaining the effect of making the notice;
* a statement that the member may confirm, amend or revoke the notice in accordance with
subregulation 6.17A(5) of the regulations; and
* the date that the notice ceases to have effect under paragraph 6.17A(7)(a) or (b) of the
regulations.
Subregulation 2.24C(2) requires the trustee to give the member a form to confirm, amend or revoke the notice concurrently with the annual member report to that member.
Subregulation 2.24C(3) provides that a reference in the regulation to a notice includes a reference to a notice as confirmed or amended under subregulation 6.17A(5).
Item [2] - New regulations 6.17A (Payment of benefit on or after death of member) and 6.17B (Duty to seek information)
Subsection 59(1A) of the Superannuation Industry (Supervision) Act 1993 as inserted by the Superannuation Legislation Amendment Act 1999 enables conditions in relation to the acceptance of binding death benefit notices to be prescribed by regulation.
Regulation 6.17A prescribes conditions for the payment of death benefits where the governing rules of a superannuation entity permit the acceptance of binding death benefit notices from members.
This regulation contains the following subregulations:
* Subregulation 6.17A(1) prescribes the standard set out in subregulation 6.17A(4) as an
operating standard for the purposes of the Superannuation Industry (Supervision) Act 1993.
* Subregulation 6.17(A)(2) provides that the governing rules of a fund may permit the
acceptance of a binding death benefit notice from a member provided the information
required under subregulation 6.17A(3) has been given to the member.
* Subregulation 6.17A(3) provides that, in order for a binding death benefit notice to be
accepted under subregulation 6.17A(2), the trustee must give a member information to enable
an informed decision on the making of a binding death benefit notice.
Subregulation 6.17A(4) prescribes that, subject to regulation 6.17B, a death benefit notice will
be binding if it satisfies the following conditions:
(a) each death benefit nominee is a legal personal representative or dependent of the member;
and
(b) the allocation of the death benefit amongst nominees is clear; and
(c) the notice conforms with subregulation 6.17A(6); and
(d) the notice is in effect.
Subregulation 6.17A(5) enables a member who gives a binding death benefit notice to:
(a) confirm the notice by giving to the trustee a written notice, signed and dated by the
member; or
(b) amend or revoke the notice by giving the trustee notice in accordance with subregulation
6.17A(6).
Subregulation 6.17A(6) prescribes that a death benefit notice, or a notice revoking or
amending a death benefit notice, must be in writing and signed and dated by the member in
the presence of two adult witnesses, neither of whom is a nominee under the notice. The
notice must also contain a declaration, signed and dated by the witnesses, stating that the
member signed the notice in their presence.
Subregulation 6.17A(7) prescribes that a binding death benefit notice ceases to have effect
three years from the day it was first signed, last confirmed or amended by the member, or at
the end of such shorter period as fixed by the fund's governing rules.
Item 2 also inserts new regulation 6.17B to prescribe that where an item of information contained in a death benefit notice given by a member is not sufficiently clear to allow the trustee to pay the benefit, it is the duty of the trustee to seek a written statement from the member to clarify the item as soon as practicable after the trustee receives the notice. An example of the application of regulation 6.17B would be where the proportion of the death benefit to be paid to nominees is not certain or readily ascertainable from the notice.
Schedule 2
Items [1] and [2] - Paragraph 3.12(a) and Subparagraphs 3.12(b)(i) and (ii)
Item 1 amends paragraph 3.12(a) of the Principal Regulations and item 2 amends subparagraphs 3.12(b)(i) and (ii) of the Principal Regulations to ensure that where application money is received by the trustee of a public offer entity, but a superannuation interest is not issued immediately, the money is held on trust for the person on whose behalf the money was received. The amendments recognise that the applicant, in relation to the superannuation interest, is not necessarily the person on whose behalf the money is received. For example, an employer may apply for a superannuation interest on behalf of an employee. The amendments are consistent with amendments to subsection 169(1) of the Superannuation Industry (Supervision) Act 1993 made by the Superannuation Legislation Amendment Act 1999.
Item [3] - Subregulation 13.17(1)
Item 3 amends subregulation 13.17(1) of the Principal Regulations to clarify that the restrictions on loans and investments applies to the application of all assets of approved deposit funds for the purposes of gaining interest, income or profit, and not just to the application of money.
Item [4] - Subregulation 13.17A(1)
Item 4 amends subregulation 13.17A(1) of the Principal Regulations to clarify that the restrictions on loans and investments applies to the application of all assets of public offer superannuation funds for the purposes of gaining interest, income or profit, and not just to the application of money.
Schedule 3
Item [1] - Regulation 2.01 (definition of sub-fund, paragraph (b))
Item 1 amends the definition of a sub-fund in subregulation 2.01(1) of the Principal Regulations. Paragraph (b) of the definition of sub-fund is technically incorrect, as beneficiaries do not have a direct interest in the assets of the sub-fund. The amended paragraph requires the interest of each beneficiary of the sub-fund to be determined by reference only to the conditions governing that subfund. The amendment is consistent with section 69A of the Superannuation Industry (Supervision) Act 1993 as inserted by the Superannuation Legislation Amendment Act 1999.
Item [2] - Paragraph 5.16(1)(b)
Item 2 amends paragraph 5.16(1)(b) of the Principal Regulations. The requirement in paragraph 5.16(1)(b) is technically incorrect, as beneficiaries do not have a direct interest in the assets of the sub-fund. The amended paragraph requires the interest of each beneficiary of the sub-fund to be determined by reference only to the conditions governing that sub-fund. The amendment is consistent with section 69A of the Superannuation Industry (Supervision) Act 1993 as inserted by the Superannuation Legislation Amendment Act 1999.