Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]


SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT REGULATIONS 2011 (NO. 3) (SLI NO 146 OF 2011)

EXPLANATORY STATEMENT

 

Select Legislative Instrument 2011 No. 146

 

Subject -              Superannuation Industry (Supervision) Act 1993

 

Superannuation Industry (Supervision) Amendment Regulations 2011 (No. 3)

 

Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (SIS Act) provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the SIS Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the SIS Act.

 

The Superannuation Industry (Supervision) Regulations 1994 (the SIS Regulations):

                specify public sector superannuation schemes that are exempt public sector superannuation schemes (EPSSS);

                allow beneficiaries to give directions to trustees regarding investment strategies; and

                specify the circumstances under which benefits can be paid out of or transferred within the superannuation system.

 

The purpose of the Regulations is to amend the SIS Regulations to:

                update the list of schemes that are EPSSS;

                include a note outlining that information regarding investment strategies is usually provided to beneficiaries in a Product Disclosure Statement (PDS) but that information may be incorporated in the PDS by reference to another document; and

                allow trustees to recognise forfeiture orders made under a law of the Commonwealth, a State or a Territory.

 

An overview of the Regulations is set out in Attachment A and details are set out in Attachment B.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.

 

Stakeholders were invited to provide input into these Regulations during a four week public consultation period.

 

 

                                                                  Authority:  Subsection 353(1) of the Superannuation Industry

                                                                                                 (Supervision) Act 1993


 

ATTACHMENT A

 

EPSSS

 

EPSSS are public sector superannuation schemes that are exempt from regulation under the SIS Act and the Superannuation (Resolution of Complaints) Act 1993, in recognition that they are already subject to regulation under their enabling legislation.  To be an EPSSS, a scheme must be listed in Schedule 1AA of the SIS Regulations.  An EPSSS may choose to be regulated by the Australian Prudential Regulation Authority (APRA), in which case it would cease to be an EPSSS. 

 

The Regulations remove a number of schemes that have chosen to become APRA-regulated from the EPSSS list in Schedule 1AA.  Also, the Regulations amend some legislative references to ensure that schemes remain EPSSS where their enabling legislation has been amended.  Three schemes are added to the list because they have been mistakenly omitted from the list in the past.

 

The Regulations also insert a new subregulation into the SIS Regulations to specify that a scheme ceases to be an EPSSS at the time it is registered as a registrable superannuation entity and, therefore, becomes APRA-regulated.  This subregulation clarifies that these schemes are subject to regulation under the SIS Act regardless of whether Schedule 1AA has been amended to remove them from the list of EPSSS.

 

Information Provided in a PDS

 

Trustees of superannuation funds and approved deposit funds generally must not be subject to direction.  One exception is that members may choose an investment strategy for their interest in the fund, provided that the trustee has provided the member with certain information as required by the SIS Regulations.  This information is usually provided in the PDS.

 

The Corporation Regulations 2001 were amended in 2010 to introduce a shorter PDS regime governing some regulated superannuation products that allows the PDS to incorporate information by reference.  The Regulations insert a note into the SIS Regulations to explain that information trustees are required to give members regarding investment strategies may be incorporated in the shorter PDS by reference.

 

Proceeds of Crime

 

Certain operating standards in the SIS Regulations relating to the payment and cashing of benefits specify the circumstances in which superannuation benefits can be paid out of or transferred within the superannuation system.  Section 34 of the SIS Act provides that compliance with such standards is mandatory, and that intentional or reckless contravention by a trustee is an offence.  The purpose of these operating standards is to ensure that superannuation benefits are preserved for retirement.  However, these operating standards prevent superannuation trustees from recognising forfeiture orders issued under State or Territory legislation that seek to recover the proceeds of crime. 

 

The Regulations amend these operating standards to include an exception that allows trustees to recognise a forfeiture order issued under Commonwealth, State or Territory proceeds of crime legislation.


 

ATTACHMENT B

 

Details of Superannuation Industry (Supervision) Amendment Regulations 2011 (No. 3)

 

Regulation 1 specify the name of the Regulations as the Superannuation Industry (Supervision) Amendment Regulations 2011 (No. 3).

 

Regulation 2 provide that the Regulations commence on the day after they are registered.

 

Regulation 3 provide that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994.

 

Schedule 1 Amendments

 

Item 1 

 

Subregulation 1.04(4A) specifies that an exempt public sector superannuation scheme (EPSSS) is a scheme listed in Schedule 1AA.  The Regulations insert a new subregulation after subregulation 1.04(4A) specifying that a scheme listed in Schedule 1AA ceases to be an EPSSS at the time it is registered as a registrable superannuation entity. 

 

Item 2

 

Subregulation 4.02(2) specifies the information that a trustee must give a member in order for the member's investment choice to be valid.  The Regulations insert a note that explains that this information is generally provided in a Product Disclosure Statement (PDS), but the information may be incorporated in the shorter PDS by reference, as permitted by Part 5B of Schedule 10A to the Corporations Regulations 2001.

 

Items 3, 4, 5 and 6

 

Regulations 5.08, 6.17 and 6.22 are operating standards relating to the payment and cashing of members' benefits.  Regulation 5.08 provides that the trustee of a fund must ensure that a member's minimum benefits are maintained in the fund until the benefits are cashed as benefits, rolled over or transferred pursuant to the superannuation splitting arrangements.  Regulation 6.17 provides that a member's benefits in a fund may only be paid in particular ways, including being cashed out or rolled over.  Regulation 6.22 provides that a member's benefits in a fund must not be cashed in favour of a person other than the member or the member's legal personal representative except in certain prescribed circumstances.

The Regulations create an exception to these operating standards.  The exception provides that the operating standards do not apply if a court makes a forfeiture order (however called) forfeiting part or all of the member's benefits to the Commonwealth, a State or a Territory.  Forfeiture orders include confiscation orders.  This exception allows the proceeds of crime to be recovered from superannuation.  The Regulations include tables specifying the Commonwealth, State and Territory proceeds of crime legislation and relevant provisions under which a forfeiture order may be made and, therefore, to which the exception would apply.

 

The exception is limited to forfeiture orders because these recover profits from a crime for which a person has been convicted and require the court to make a finding that the person's superannuation is the proceeds of crime.  It does not allow other court orders to be imposed on superannuation that may impose a fine or recover amounts not directly linked to a crime because this would result in the loss of superannuation savings genuinely contributed for retirement income purposes. 

 

Items 7, 8, 9, 10, 11, 12, 13 and 14

 

Schedule 1AA lists schemes that are EPSSS and are, therefore, exempt from regulation under the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Superannuation (Resolution of Complaints) Act 1993 (SRC Act).  The Regulations remove schemes from the list that have chosen to be regulated by the Australian Prudential Regulation Authority (APRA) and are no longer exempt from regulation under the SIS Act and SRC Act.

 

The Regulations also amend references to enabling legislation of EPSSS where there have been amendments to the title of the legislation.  This ensures that these schemes remain EPSSS.

 

Two references to Victorian legislation are inserted into the list.  These references were previously deleted by mistake.  The schemes operated under this legislation have never ceased to be EPSSS.  In addition, a reference to the Federal Magistrates Act 1999 (Cwth) is inserted to ensure that the death and disability arrangements for Federal Magistrates are treated as an EPSSS.  The death and disability arrangements commenced in 2007 but the Federal Magistrates Act 1999 was mistakenly not added to the EPSSS list at the time.


AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback