Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1995 NO. 142

STATUTORY RULES 1995 No. 142

Issued by the authority of the Treasurer

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) Regulations (Amendment)

The Superannuation Industry (Supervision) Act 1993 (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 Insurance and Superannuation Commissioner.

Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.

These Regulations amend the Principal Regulations to:

•       allow the trustee of a regulated superannuation fund or approved deposit fund to rollover or transfer a member's benefits without having received member consent, if the trustee has reasonable grounds for believing that the member has given such consent to the trustee of the fund into which the benefits will be rolled over or transferred; and

•       ensure that such a rollover or transfer does not actually occur without the member having consented to it, by imposing a requirement on the trustee of the fund receiving such a rollover or transfer that it must not accept the benefit if it does not have consent and knows the benefit is being rolled over or transferred on a belief that the trustee does have consent.

One effect of the regulations is that they will facilitate the operation of the 'transfer protocol' arrangements referred to-by the Treasurer in his statement of 28 June 1994 (page 9 of the Treasurer's statement entitled "Superannuation Policy - Statement of Measures"). The Treasurer stated that the protocol would establish standard procedures by which, upon being joined to a new fund, employees would be asked whether they had benefits in another fund or funds and, if so, whether they wished to have those benefits rolled into the new fund.

The regulations are described in detail in the attachment.

The regulations commence on 1 July 1995.

ATTACHMENT

Superannuation Industry (Supervision) Regulations (Amendment)

Regulation 1 - Commencement

The regulations will commence on 1 July 1995.

Regulation 2 - Amendment

Regulation 2 provides that the Superannuation Industry (Supervision) Regulations (the Principal Regulations) are amended as set out in these Regulations.

Regulation 3 - New Regulation 4.12

Regulation 3 inserts a new regulation, 4.12, into the Principal Regulations.

New regulation 4.12 is an operating standard for regulated superannuation funds and approved deposit funds (ADFs). The standard prescribes that the trustee of a regulated superannuation fund or ADF must not accept a rollover or transfer into the fund if:

•       the trustee has reasonable grounds to believe that the benefit being rolled over or transferred is being rolled over or transferred on the basis of a belief that the trustee has received the member's written consent to the rollover or transfer; and

•       the trustee has not in fact received that consent.

This new regulation is closely related to regulations 6.28 and 6.29.

Under regulations 6.28 and 6.29 a fund trustee ('Trustee A') will be able to rollover or transfer a member's benefits from the fund if the trustee has reasonable grounds to believe that the trustee of the fund into which the benefits will be rolled over or transferred ('Trustee W) has received written consent to the rollover or transfer from the member. In this scenario the importance of new regulation 4.12 is that if Trustee B has reasonable grounds to believe that Trustee A is rolling over or transferring the benefit on the basis of a belief that Trustee B has consent, then new regulation 4.12 will prevent Trustee B from accepting that rollover or transfer unless Trustee B does, in fact, have that consent.

As a result, new regulation 4.12 will help preserve the requirement that a member's benefits cannot normally be rolled over or transferred to another fund without the member's consent.

Regulation 4 - Regulation 6.21 (Rollover - regulated superannuation funds and approved deposit funds)

Regulation 6.28 of the Principal Regulations currently requires that the trustee of a regulated superannuation fund or ADF must have a member's written consent before they can rollover that member's benefits to another fund.

Regulation 4 omits the existing regulation 6.28 of the Principal Regulations and replaces it with a new regulation 6.28.

New regulation 6.28 prescribes that the trustee of a regulated superannuation fund or ADF ('Trustee A') cannot rollover a member's benefit from the fund unless:

•       Trustee A has the member's written consent to the rollover; or

•       Trustee A has reasonable grounds to believe that the trustee of the fund into which the benefits are to be rolled over ('Trustee B') has that consent.

It is intended that the circumstances in which Trustee A would have reasonable grounds for believing Trustee B has consent would include:

•       circumstances where Trustee B advises Trustee A that they have consent; and

•       circumstances where Trustee B may not formally advise Trustee A that they have consent, but where Trustee B initiates a request (which may be by electronic means) for a rollover of the member's benefits in a manner which Trustee A considers shows that Trustee B has the member's written consent.

Regulation 5 - regulation 6.29 (Transfer - regulated superannuation funds)

Regulation 6.29 of the Principal Regulations currently requires that the trustee of a regulated superannuation fund must have a member's written consent before they can transfer the member's benefits to another fund (unless the transfer is to a successor fund).

Regulation 5 omits the existing regulation 6.29 of the Principal Regulations and replaces it with a new regulation 6.29.

New regulation 6.29 prescribes that the trustee of a regulated superannuation fund ('Trustee A') must not transfer a member's benefits out of the fund unless:

•       Trustee A has received the member's written consent to the transfer or the transfer is to a successor fund; or

•       Trustee A has reasonable grounds to believe that the trustee of the fund into which the benefits are to be transferred ('Trustee B') has that consent.

It is intended that the circumstances in which Trustee A would have reasonable grounds for believing Trustee B has consent would include:

•        Circumstances where Trustee B advises Trustee A that they have consent; and

•       circumstances where Trustee B may not formally advise Trustee A that they have consent, but where Trustee B initiates a request (which may be by electronic means) for a transfer of the member's benefits in a manner which Trustee A considers shows that Trustee B has the member's written consent.