Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1997 NO.415

STATUTORY RULES 1997 No. 415

Issued by the authority of the Assistant 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 and approved deposit funds 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.

At present, certain superannuation benefits are generally required to be 'preserved' in the superannuation system until retirement on or after age 55. However, subject to the governing rules of the superannuation fund, early release of 'preserved' benefits is permitted under the Principal Regulations in certain restricted´ circumstances including 4 severe financial hardship' or 'compassionate' grounds.

An Approved Deposit Fund (ADF) is an indefinitely continuing fund that is maintained by a trustee solely for receiving certain monies on deposit, for example, eligible termination payments under the Income Tax Assessment Act 1936.

The purpose of the Regulations is to ensure that the conditions for the early release of 'preserved' benefits are the same for ADFs as they are for regulated superannuation funds, where applicable. Previous amendments to the Principal Regulations (Statutory Rules No 343 of 1997) amended the conditions of early release for regulated superannuation funds but did not amend the conditions of early release in relation to ADFs.

In particular, previous amendments to the Principal Regulations inserted a new transitional condition for the early release of superannuation benefits into the Principal Regulations. The new condition of release provides that a trustee of a regulated superannuation fund may release 'preserved' benefits on the ground of permanent departure in respect of members who make an application for the release of their superannuation benefits and permanently depart overseas prior to 1 July 1998. Subregulation 2.1 inserts a similar condition of release on the ground of permanent departure in respect of ADFs into the Principal Regulations.

In addition, previous amendments to the Principal Regulations reduced the maximum amount that a trustee of a regulated superannuation fund may release in any year on the ground of 'severe financial hardship' from $15,000 to $10,000. Subregulation 2.2 makes a similar amendment to the maximum amount a trustee of an ADF may release in any year on the ground of 'severe financial hardship'.

Subregulation 3.1 provides that the transitional arrangements put in place in respect of those people who have applied for the release of benefits on the ground of permanent departure from Australia before 1 July 1997 are maintained.

Subregulation 3.2 provides that the amendment made by subregulation 2.2 does not relate to applications made to a trustee of an ADF before the date of gazettal of these Regulations. This amendment will ensure that the Principal Regulations apply in relation to applications for the early release of superannuation benefits on the ground of 'severe financial hardship' received by fund trustees from 1 July 1997 until the date of gazettal of the Regulations.

The Regulations commence on date of gazettal.