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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994 - NOTES

- made under the Superannuation Industry (Supervision) Act 1993

Statutory Rules 1994 No. 57 as amended

This compilation was prepared on 25 September 2008
taking into account amendments up to SLI 2008 No. 171

This document has been split into two volumes

Volume 1 contains Parts 1--13, and

Volume 2 contains the Schedules and the Notes

Each volume has its own Table of Contents

Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General's Department, Canberra


Contents

Part 1                    Preliminary                                                                 

                    1.01     Name of Regulations [see Note 1]                                   19

                    1.02     Commencement [see Note 1]                                          19

                    1.03     Interpretation                                                                 19

                  1.03A     Lost member                                                                 28

               1.03AA     Defined benefit interest                                                   30

               1.03AB     Meaning of growth phase                                                31

                  1.03B     Meaning of protected member                                         31

                    1.04     Prescribed matters (Act, s 10)                                        32

           1.04AAAA     Interdependency relationships (Act s 10A)                        35

             1.04AAA     Modified meaning of member (Act s 15B) [see Note 2]      37

                  1.04A     Specified body or person (Act s 19)                                 38

               1.04AA     Self managed superannuation funds -- persons not taken to be employees (Act s 17A (8))       38

Part 1A                 Annuities and pensions                                          

Division 1A.1          

                    1.05     Meaning of annuity (Act, s 10)                                         40

                    1.06     Meaning of pension (Act, s 10)                                        61

                    1.07     Periods when beneficiary may not receive benefits            79

                  1.07A     Commutation of allocated annuities and pensions             79

                  1.07B     Commutation of other annuities and pensions                   81

                  1.07C     Commutation of market linked income stream                  83

                  1.07D     Commutation of superannuation income stream                84

Division 1A.2           Operating standards                                                       

                    1.08     Restriction on factors for converting pensions                   86

Part 2                    Information for certain parties                               

Division 2.1             Introductory                                                                    

                    2.01     Interpretation                                                                 87

                    2.02     Scope and application of this Part                                   87

                    2.03     Duties and requirements arising under this Part                88

                    2.04     Reasonable efforts are sufficient                                      89

                    2.05     Charges for information requested                                    89

Division 2.4             Information to be given for each reporting period         

                    2.17     Interpretation                                                                 90

                    2.18     Application                                                                    90

                    2.29     Specific requirements in particular cases                         90

Division 2.5             Information on request                                                   

                    2.30     Application                                                                    91

                    2.31     Documents may be made available for inspection             91

                    2.32     Time for compliance                                                       92

                    2.33     Specific requirements                                                     92

Division 2.5A           Information about superannuation interest subject to payment split       

                  2.36B     Application                                                                    93

                  2.36C     Information to be provided by trustee when interest becomes subject to payment split   93

                  2.36D     Other information to be provided by trustee                       95

                  2.36E     Other information to be given by trustee -- adverse effects on benefits 96

Part 3                    Matters prescribed or specified in relation to public offer entities    

                    3.01     Public offer superannuation fund -- member of a prescribed class       97

                    3.04     Section 54 of the Act -- prescribed percentages               99

                  3.04A     Removal of trustee of public offer entity -- s 60A (2) of the Act            99

                    3.05     Policy committees -- sections 91, 92 and 93 of the Act  100

                    3.06     Policy committees -- functions (paragraphs 91 (3) (b),  92 (3) (b) and 93 (3) (b) of the Act)        102

                    3.07     Definition of policy committee in section 10 of the Act -- matters specified for purposes of paragraph (a)                                                               103

                    3.08     Policy committees -- duties of trustee                           103

                    3.09     Dissolution of policy committees                                   104

                    3.10     Commission and brokerage                                           104

                    3.11     Payment by trustee of a public offer entity of commission or brokerage            105

Part 3A                 Matters prescribed or specified in relation to licensing of trustees and of groups of individual trustees                                

Division 3A.1           Classes of RSE licences                                                 

                  3A.01     Public offer entity licences                                            107

                  3A.02     Non‑public offer entity licences                                      107

                  3A.03     Extended public offer entity licences                              107

               3A.03A     Acting trustee licences                                                 108

Division 3A.2           Grant of RSE licences                                                    

                  3A.04     Capital requirements                                                     108

Division 3A.3           Applying for RSE licences                                              

                  3A.05     Definitions                                                                   110

                  3A.06     Application fees                                                           111

Division 3A.4           Conditions on RSE licences                                           

                  3A.07     Conditions on RSE licences of FHSA providers               115

Part 4                    Management and trusteeship of superannuation entities      

Division 4.1             Prescribed matters                                                         

                    4.01     Covenants in governing rules of a superannuation entity -- prescribed information and documents                                                                                  116

                    4.02     Covenants in governing rules of a superannuation entity -- beneficiary investment choice          116

                    4.03     Trustee of employer‑sponsored fund -- prescribed direction by employer‑sponsor or associate of employer sponsor                                                         118

                    4.04     Governing rules of a superannuation entity -- prescribed exercise of discretion by non‑trustee   119

                    4.05     Governing rules of a superannuation entity -- prescribed circumstances of amendment 120

                    4.06     Removal of member representatives -- prescribed circumstances        121

                    4.07     Removal of independent trustee or independent member -- prescribed circumstances   122

Division 4.1A           Content of risk management strategies and risk management plans      

                  4.07A     Risk management strategies                                         122

                  4.07B     Risk management plans                                               123

Division 4.2             Operating standards                                                       

                    4.08     Operating standard -- voting rule where equal representation applies   125

                  4.08A     Operating standard -- member representation for certain regulated superannuation funds where a declaration under subsection 18 (7) of the Act applies     126

                    4.09     Operating standard -- investment strategy                     127

                    4.10     Operating standard -- investment by non‑complying superannuation funds       128

                  4.10A     Operating standard -- ownership of units in a PST [see Note 2]          128

                    4.11     Operating standard -- investment by non‑complying approved deposit funds     128

                  4.11A     Operating standard -- acceptance of deposits by an approved deposit fund [see Note 2]           128

                    4.12     Operating standard -- acceptance by regulated superannuation and approved deposit funds of rollovers and transfers                                                   129

                    4.13     Operating standard -- lending to members of an approved deposit fund            129

                    4.14     Operating standard -- fitness and propriety of RSE licensee 130

                    4.15     Operating standard -- adequacy of resources of, or available to, trustees of registrable superannuation entities (RSE licensees)                        132

                    4.16     Operating standard -- outsourcing arrangements of RSE licensees     133

                    4.17     Outsourcing arrangements for licensing transition period  136

Part 5                    Benefit protection standards                                

Division 5.1             Preliminary                                                                    

                    5.01     Interpretation                                                                137

                  5.01A     Operating standards -- determination of costs and investment return   141

                  5.01B     Trustee may provide greater protection than this Part requires 142

                    5.02     Determination of costs                                                  142

                  5.02A     Meaning of fair and reasonable                                      143

                  5.02B     Priority in deducting surcharge or instalment                   143

                  5.02C     Refund of costs                                                            144

                    5.03     Investment returns                                                        144

Division 5.2             Minimum benefits                                                          

                    5.04     Minimum benefits -- regulated superannuation funds       144

                    5.05     Mandated employer contributions -- regulated superannuation funds   145

                    5.06     Certain benefits rolled over or transferred to regulated superannuation funds taken to be minimum benefits                                                                       146

                  5.06A     Benefits rolled over or transferred from an RSA to regulated superannuation funds taken to be minimum benefits                                                         147

                  5.06B     Minimum benefits if new interest created, or benefits rolled over or transferred, under Division 7A.2                                                                                  148

                    5.07     Minimum benefits -- approved deposit funds                   148

Division 5.3             Treatment of minimum benefits                                     

                    5.08     How minimum benefits are to be treated                         149

Division 5.5             Member‑protection standards                                        

                    5.12     Interpretation                                                                150

                    5.13     Operating standards -- member protection                     150

                    5.14     Member‑protection standards not to apply to certain funds 150

                    5.15     Member‑protection standards not to apply to certain protected members          152

                  5.15B     Member‑protection standards taken not to have applied to certain members     152

                  5.15C     Member‑protection standards not to apply to pensions    153

                  5.15D     Member‑protection standards not to apply to traditional life insurance policies  153

                    5.16     Application of member‑protection standards to sub‑fund   154

                    5.17     Member‑protection standards                                        154

                    5.18     Costs not to be deferred                                                156

Division 5.6             Existing personal superannuation members                  

                    5.19     Interpretation                                                                157

                    5.20     Operating standards -- existing personal superannuation members     157

                    5.21     Trustee may offer election to existing personal superannuation members         157

                    5.22     What happens if the member waives member protection? 159

                    5.23     What happens if the member elects to have benefits paid out of the fund?        159

                    5.24     What happens if the trustee pays benefits paid out of the fund?           160

Part 6                    Payment standards                                                  

Division 6.1             Introductory                                                                    

                    6.01     Interpretation                                                                161

                  6.01A     Meaning of terminal medical condition                            171

                    6.02     Preserved benefits in regulated superannuation funds -- before 1 July 1999      171

                    6.03     Preserved benefits in regulated superannuation funds -- on and after 1 July 1999          172

                    6.05     Preserved benefits in approved deposit funds                  172

                    6.06     Effect of rollover or transfer on preserved benefits             173

                    6.07     Restricted non‑preserved benefits in regulated superannuation funds -- before 1 July 1999        173

                    6.08     Restricted non‑preserved benefits in regulated superannuation funds -- on and after 1 July 1999                                                                                  175

                    6.09     Effect of rollover or transfer on restricted non‑preserved benefits           176

                    6.10     Unrestricted non‑preserved benefits -- regulated superannuation funds            176

                    6.11     Unrestricted non‑preserved benefits -- approved deposit funds            177

                    6.12     Movement of benefits between categories by satisfaction of conditions of release          179

                    6.13     Effect of rollover or transfer on unrestricted non‑preserved benefits       179

                    6.14     Indexation                                                                    179

                    6.15     Contributions and benefits taken to be preserved benefits 180

                  6.15A     Certain benefits taken to be unrestricted non‑preserved benefits          180

                    6.16     Redistribution of member benefits within a fund in certain circumstances by operation of governing rules or action of trustee                                               182

                  6.16A     When non‑preserved benefits may be reduced                183

Division 6.2             Payment of benefits                                                       

                    6.17     Restriction on payment                                                 184

                  6.17A     Payment of benefit on or after death of member (Act, s 59 (1A))          185

               6.17AA     Payments prevented under Family Law Act 1975             187

                  6.17B     Duty to seek information                                               187

                  6.17C     Payment and commutation of pension in breach of standards  188

Division 6.3             Cashing of benefits                                                        

                    6.18     Voluntary cashing of preserved benefits in regulated superannuation funds       188

                    6.19     Voluntary cashing of restricted non‑preserved benefits in regulated superannuation funds           189

                  6.19A     Release of benefits on compassionate grounds               190

                    6.20     Voluntary cashing of unrestricted non‑preserved benefits in regulated superannuation funds       192

                  6.20A     Compulsory cashing of benefits in a regulated superannuation fund that is not an unfunded public sector superannuation scheme -- temporary residents    192

                  6.20B     Voluntary cashing of benefits in a regulated superannuation fund that is an unfunded public sector superannuation scheme -- temporary residents              194

                    6.21     Compulsory cashing of benefits in regulated superannuation funds       195

                    6.22     Limitation on cashing of benefits in regulated superannuation funds in favour of persons other than members or their legal personal representatives              196

                  6.22A     Priority in cashing benefits in certain cases -- regulated superannuation funds 197

                  6.22B     When benefits in regulated superannuation funds may be cashed in favour of persons except members                                                                     197

                    6.23     Voluntary cashing of preserved benefits in approved deposit funds       198

                    6.24     Voluntary cashing of unrestricted non‑preserved benefits in approved deposit funds       198

                  6.24A     Compulsory cashing of benefits in approved deposit funds -- temporary residents         199

                    6.25     Compulsory cashing of benefits in approved deposit funds 200

                    6.26     Limitation on cashing of benefits in approved de posit funds in favour of persons other than members or their legal personal representatives                             201

                    6.27     Limitation on cashing benefits in approved deposit funds of less than $500       201

                  6.27A     Priority in cashing benefits in certain cases -- approved deposit funds 202

Division 6.4             General rules for rollover and transfer of benefits in regulated superannuation funds and approved deposit funds                                                  

                  6.27B     Definition                                                                     202

                    6.28     Rollover -- regulated superannuation funds and approved deposit funds [see Note 2]     203

                    6.29     Transfer -- funds [see Note 2]                                       203

Division 6.5             Compulsory rollover and transfer of superannuation benefits in regulated superannuation funds and approved deposit funds                                 

                    6.30     Application                                                                  204

                    6.31     Definitions for Division 6.5                                             204

                    6.32     Operating standards                                                     205

                    6.33     Request for rollover or transfer of withdrawal benefit         206

                    6.34     Rollover or transfer of withdrawal benefit                          207

                    6.35     When a trustee may refuse to roll over or transfer an amount 210

                    6.36     Suspension or variation of obligation to roll over or transfer amounts by APRA  211

                    6.37     Suspension or variation of obligation to roll over or transfer amounts by APRA -- application by trustee                                                                        211

                    6.38     Trustee's obligations if APRA suspends or varies obligation to roll over or transfer amounts        212

Division 6.6             Additional standards for eligible rollover funds             

                    6.39     Obligations of trustees                                                  212

Division 6.7             Spouse contributions‑splitting amounts                         

                    6.40     Interpretation                                                                213

                    6.41     Meaning of taxed splittable contribution, untaxed splittable contribution and untaxed splittable employer contribution                                                   214

                    6.42     Meaning of splittable contribution                                  216

                    6.43     Application of Division 6.7                                             217

                    6.44     Application to roll over, transfer or allot an amount of contributions       217

                    6.45     Decision on application                                                 219

                    6.46     Receiving spouse                                                         220

Part 7                    Contribution and benefit accrual standards (regulated superannuation funds)                                                                          

Division 7.1             General                                                                          

                    7.01     Interpretation                                                                221

                    7.02     Application of Division 7.1                                             221

                    7.03     Restriction on accepting contributions or granting benefit accruals       221

                  7.03A     Acceptance of contributions -- registrable superannuation entities [see Note 2]            222

                    7.04     Acceptance of contributions -- regulated superannuation funds           222

                  7.04A     Acceptance of contributions -- public offer superannuation funds         227

                    7.05     Accrual of benefits -- defined benefit funds                     228

Division 7.2             Contributions to be allocated to members -- accumulation funds           

                    7.06     Application of Division 7.2                                             229

                    7.07     Operating standard                                                       229

                    7.08     Contributions to be allocated to members                       229

Division 7.3             Contributions to be allocated to members -- certain other regulated superannuation funds                                                                                       

                    7.09     Application of Division 7.3                                             230

                    7.10     Operating standard                                                       230

                    7.11     Contributions to be allocated to members                       230

Part 7A                 Superannuation interests subject to payment split      

Division 7A.1           General                                                                          

                  7A.01     Purpose of Part 7A                                                       231

               7A.01A     Relevant condition of release                                         231

                  7A.02     Operating standards                                                     231

                  7A.03     Trustee to give payment split notice                               232

Division 7A.1A        Options for trustee in relation to interests                      

               7A.03A     Application of Division 7A.1A                                         233

               7A.03B     Trustee may create a new interest                                 234

               7A.03C     Request to retain a non‑member spouse interest             236

               7A.03D     Request to roll over or transfer benefits                           236

               7A.03E     Request for lump sum payment                                     237

                7A.03F     Requirements for requests                                            237

               7A.03G     Giving effect to a request                                               238

               7A.03H     Trustee's options if no request is received                       239

                 7A.03I     Confirming that the non‑member spouse has an interest in the fund     241

                7A.03J     Rolling over or transferring the non‑member spouse's interest  242

               7A.03K     Paying a lump sum                                                      243

Division 7A.2           Options available for certain superannuation interests  

                  7A.04     Application of Division 7A.2                                           243

                  7A.05     Request for new interest                                               244

                  7A.06     Request for transfer of benefits                                      244

                  7A.07     Request for lump sum payment                                     245

                  7A.08     Requirements for requests                                            245

                  7A.09     Giving effect to request                                                 246

                  7A.10     Trustee options if no request received                             247

                  7A.11     Creating a new interest                                                 248

                  7A.12     Rolling over or transferring transferable benefits               251

                  7A.13     Paying a lump sum                                                      253

Division 7A.3           Splittable payments -- payment standards for non‑member spouse entitlements           

                  7A.14     Application of Division 7A.3                                           256

                  7A.16     Preservation of non‑member spouse entitlements            257

                  7A.17     Payment of non‑member spouse entitlements from pension 259

                  7A.18     Cashing of non‑member spouse entitlements                  260

Division 7A.4           Superannuation interest split under the Family Law (Superannuation) Regulations 2001 

                  7A.19     Application                                                                  262

                  7A.20     Creating a new interest                                                 263

                  7A.21     Rolling over or transferring benefits                                 263

                  7A.22     Paying an amount                                                        264

Part 8                    Financial reporting                                                   

                    8.01     Accounts -- statement of financial position and financial statement     265

                    8.02     Accounts and statements that must be prepared            266

                  8.02A     Period within which an auditor must be appointed (Act s 35C) 266

                    8.03     Period within which audit report must be given                267

                    8.04     Period within which audit report is given to the APRA (Act s 36)          267

Part 9                    Financial management of funds                           

Division 9.1             Introductory                                                                    

                    9.01     Interpretation                                                                268

Division 9.2             Financial position of funds                                             

                    9.02     Application                                                        &nbs