SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1995 NO. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1995 NO. 64 - TABLE OF PROVISIONS 1. Commencement 2. Amendment 3. Regulation 1.03 (Interpretation) 4. New regulation 1.03A 5. Regulation 2.05 (Members to whom trustees are not required to give information) 6. Regulation 2.13 (Time for compliance) 7. Regulation 2.14 (Requirement taken to have been met) 8. New regulations 2.26A and 2.26B 9. Regulation 2.42 (Application) 10. New regulation 2.48A 11. New Division 2.7A 12. Part 5 (Minimum benefits standards) 13. New regulation 5.01B 14. Regulation 5.02 (Determination of costs) 15. Regulation 5.03 (Investment returns) 16. New regulation 5.11 17. New Division 5.5 18. New regulation 5.15 19. Regulation 6.01 (Interpretation) 20. Regulation 6.30 (Obligations of trustees) 21. Regulation 10.02 (Eligible rollover funds-prescribed conditions) 22. Regulation 10.05 (Prescribed information to be given to the Commissioner) 23. Regulation 10.06 (Additional operating standards-eligible rollover funds) 24. Regulation 11.08 (Eligible rollover funds) 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 1 1. Commencement 1.1 Regulations 8, 18, 20, 21 and 23 commence on 1 July 1995. (NOTE: The remainder of these Regulations commence on gazettal: see Acts Interpretation Act 1901, s. 48.) 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 2 2. Amendment 2.1 The Superannuation Industry (Supervision) Regulations are amended as set out in these Regulations. 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 3 3. Regulation 1.03 (Interpretation) 3.1 Subregulation 1.03 (1): Insert: "'excluded member' means: (a) a member of a regulated superannuation fund that is an excluded superannuation fund; or (b) a member of a defined benefit fund whose benefits are defined wholly or partly by reference to either or both of: (i) the amount of: (A) the member's salary at a particular date, being either the date of the member's retirement or an earlier date; or (B) the member's salary averaged over a period before retirement; or (ii) a specified amount; "'lost member' has the meaning given by regulation 1.03A; "'member-protection standards' means the standards set out in subregulation 5.17 (2) and regulation 5.18; "'protected member' means a member (other than an excluded member) of a regulated superannuation fund who has withdrawal benefits that: (a) are less than $1,000; and (b) contain, or have contained, benefits that are mandated employer-financed benefits (within the meaning of subregulation 5.01 (1)); "'successor fund', in relation to a transfer of benefits of a member from a fund (called 'the original fund'), means a fund which satisfies the following conditions: (a) the fund confers on the member equivalent rights to the rights that the member had under the original fund in respect of the benefits; (b) before the transfer, the trustee of the fund has agreed with the trustee of the original fund that the fund will confer on the member equivalent rights to the rights that the member had under the original fund in respect of the benefits;". (NOTE: After the inserted definition of "protected member" the following Note should be inserted: "(NOTE: See subregulation (3) as to an assumption that the trustee must make regarding benefits.)".) 3.2 Add at the end: "(3) For the purposes of the definition of "protected member" in subregulation (1), a benefit in a fund is taken to contain or to have contained mandated employer-financed benefits unless the trustee of the fund knows otherwise.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 4 4. New regulation 1.03A 4.1 Insert after regulation 1.03: Lost member "1.03A. (1) A member of a fund is taken to be a lost member at a particular time if: (a) the member is uncontactable, that is, if and only if: (i) the fund has never had an address for him or her; or (ii) 2 written communications have been sent by the fund to the member's last known address and returned unclaimed; or (b) the member is an inactive member, that is, if and only if: (i) he or she has been a member of the fund for longer than 2 years; and (ii) the fund has not received a contribution or rollover in respect of him or her within the last 2 years of his or her membership of the fund; or (c) the member joined the fund from another fund as a lost member; unless: (d) within the last 2 years of the member's membership, the trustee of the fund has verified that the member's address is correct and has no reason to believe that that address is now incorrect; or (e) the member is permanently excluded from being a lost member. "(2) For the purposes of subregulation (1), and subject to subregulation (3), a member of a fund is permanently excluded from being a lost member if: (a) the member is an inactive member who has indicated by a positive act that he or she wishes to continue to be a member of the fund; or (b) the member has contacted the fund at any time after the time at which he or she joined the fund and indicated that he or she wishes to continue being a member of the fund; or (c) the member is a member of an excluded fund. "(3) The trustee of a fund may decide that: (a) a member, a class of members, or all members of the fund cannot be permanently excluded from becoming lost members; or (b) a member who is, a class of members who are, or all members of the fund who are permanently excluded from being lost is or are not to continue being permanently excluded from being lost. (NOTE: The consequences of a member becoming a lost member are: (a) that the trustee of the fund must protect the benefits of the member (see Division 5.5); and (b) that the trustee of the fund must report certain details to the Commissioner (see regulation 11.08); and (c) that if the member is transferred to another fund the trustee of the transferring fund must supply certain information regarding the member to the trustee of the transferee fund (see Division 2.7A). There may also be consequences regarding the information to be supplied to the member (see regulation 2.05).)". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 5 5. Regulation 2.05 (Members to whom trustees are not required to give information) 5.1 Subparagraph 2.05 (1) (a) (i): Omit the subparagraph, substitute: "(i) the trustee is satisfied on reasonable grounds that that address is incorrect; or". 5.2 Subparagraph 2.05 (1) (b): After "the trustee", insert "has no address for the member and". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 6 6. Regulation 2.13 (Time for compliance) 6.1 Omit "The trustee of a fund", substitute "Subject to subregulation (2), the trustee of a fund". 6.2 Add at the end: "(2) If a member leaves a fund before the time at which the trustee of the fund would be required to give the member information under this Division, the trustee need not give the information to the member.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 7 7. Regulation 2.14 (Requirement taken to have been met) 7.1 After subregulation 2.14 (1), insert: "(1A) If the trustee of a fund is required by this Division to give information to each person who becomes a member of the fund, and the trustee, or the trustee of another fund, has given the person the information required by Division 2.2, the first-mentioned trustee does not have to give the person the information required by this Division.". 7.2 Subregulation 2.14 (2): Omit "This exception applies", substitute "The exceptions set out in subregulations (1) and (1A) apply". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 8 8. New regulations 2.26A and 2.26B 8.1 After regulation 2.26, insert in Subdivision 2.4.2: Exception-members subject to compulsory protection of small amounts "2.26A. (1) If, at the end of a member reporting period, a member of a regulated superannuation fund is a protected member, the trustee need give the member only the following information for that member reporting period: (a) the contact details of the fund; and (b) either: (i) the amount of the member's withdrawal benefit at the end of the member reporting period; or (ii) the total of the amounts that have been received by the fund in respect of the member. "(2) If, in relation to a member of a fund, the trustee of the fund takes advantage of regulation 2.26B, the trustee must not, in relation to that member, take advantage of subregulation (1). Exception-members with small amounts that are expected to grow quickly "2.26B. (1) If, at the end of a member reporting period, the trustee of a fund has a reasonable expectation that a particular protected member will have a withdrawal benefit of at least $1,500 within 12 months after the end of that member reporting period, the trustee need not show, in information provided to the member, the effect of the member-protection standards. "(2) For the purposes of subregulation (1), a trustee is not taken to have a reasonable expectation that a member will have a withdrawal benefit of $1,500 within the period of 12 months referred to in that subregulation if termination of the member's employment with a current employer would be likely to result in the member's withdrawal benefit being below $1,500 at the end of that period. "(3) If, at the end of the 12-month period, the member's withdrawal benefit has not reached $1,500, the trustee must show, in information provided to the member for each member reporting period ending on or after the end of the 12-month period, the effect of the member-protection standards.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 9 9. Regulation 2.42 (Application) 9.1 Subregulation 2.42 (2): Omit the subregulation, substitute: "(2) This Division is subject to: (a) the exception concerning an exit reporting period, in the case of certain members who cease to be members of a fund, that is stated in regulation 2.48; and (b) the exception concerning the information to be provided to protected members that is stated in regulation 2.48A.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 10 10. New regulation 2.48A 10.1 After regulation 2.48, insert in Division 2.7: Exception-members subject to compulsory protection of small amounts "2.48A. If a protected member of a fund ceases to be a member of the fund, the trustee need give the member only the following information for the exit reporting period: (a) the contact details of the fund; (b) the amount of the member's withdrawal benefit.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 11 11. New Division 2.7A 11.1 After Division 2.7, insert: "Division 2.7A - Information to be given to other entities on transfer of lost members Application of Division "2.48B. (1) This Division applies in the case of payment of the benefits of a lost member from a regulated superannuation fund or an approved deposit fund to another regulated superannuation fund or approved deposit fund on or after 30 June 1996. "(2) For the purposes of subsections 31 (1) and 32 (1) of the Act, a requirement of this Division is a standard applicable to the operation of a fund that is a regulated superannuation fund or an approved deposit fund. Information to be given on transfer of lost members "2.48C. The trustee of the transferor fund must give to the trustee of the transferee fund the following information and statements in relation to each lost member of the transferor fund whose benefits are to be paid to the transferee fund: (a) a statement that the member is a lost member; (b) if the lost member has specifically asked the transferor fund not to disclose information of a specified kind - a statement to the effect that the member has asked the transferor fund not to disclose information of that kind; (c) all information in the possession of the trustee of the transferor fund that could reasonably help the trustee of the transferee fund to locate or identify the lost member, other than information of a kind that the lost member has specifically requested the trustee of the transferor fund not to disclose.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 12 12. Part 5 (Minimum benefits standards) 12.1 Omit the heading, substitute: "PART 5 - BENEFIT PROTECTION STANDARDS". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 13 13. New regulation 5.01B 13.1 After regulation 5.01A, insert: Trustee may provide greater protection than this Part requires "5.01B. The trustee of a regulated superannuation fund or approved deposit fund has the power, despite anything in the governing rules of the fund, to protect the benefits of members: (a) to a greater degree than is required by this Part; or (b) from an earlier date than is required by this Part; if the trustee does so in a way that is consistent with this Part. "(NOTE: For example, a trustee might choose to protect the benefits of all members with withdrawal benefits less than $1,500, rather than all protected members (i.e., broadly, members with withdrawal benefits less than $1,000) as this Part requires. 'Protected member' is defined in regulation 1.03.)". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 14 14. Regulation 5.02 (Determination of costs) 14.1 Subregulation 5.02 (3): Omit "In determining the costs", substitute "Subject to the member-protection standards and regulation 5.01B, in determining the costs". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 15 15. Regulation 5.03 (Investment returns) 15.1 Subregulation 5.03 (2): Omit "The trustee", substitute "Subject to the member-protection standards and regulation 5.01B, the trustee". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 16 16. New regulation 5.11 16.1 After regulation 5.10, insert in Division 5.4: Inconsistency between this Division and the member-protection standards "5.11. If a provision of this Division is inconsistent with the member-protection standards, the provision of this Division prevails.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 17 17. New Division 5.5 17.1 After Division 5.4, insert: "Division 5.5 - Member-protection standards Interpretation "5.12. In this Division: 'exit fee' means a fee charged by a trustee of a fund in relation to a payment of benefits in the fund, being a fee that the trustee would not have charged if the payment had not been made; 'member reporting period', in relation to a fund, means: (a) a member reporting period that applies under Subdivision 2.4.2; or (b) an exit reporting period within the meaning of regulation 2.44. Operating standards-member protection "5.13. For the purposes of subsections 31 (1) and 32 (1) of the Act, the requirements set out in subregulation 5.17 (2) and regulation 5.18 are standards applicable to the operation of regulated superannuation funds and approved deposit funds. Member-protection standards not to apply to certain funds "5.14. (1) In this regulation: 'unitised fund' means a fund for which the investment return is reflected in the price of units in the fund rather than being credited to or debited against the accounts of the members. "(2) The member-protection standards do not apply to: (a) a unitised fund in which all the administration costs of the fund are reflected in the price of units in the fund; or (b) a unitised fund in which the price of units does not reflect all of the administration costs of the fund, if the benefits of its members are protected in a way that is consistent with the member-protection standards; or (c) a fund in which all of the administration costs of the fund are applied to each member in direct proportion to: (i) the investment return credited to, or debited against, the member; or (ii) the member's benefits. Application of member-protection standards to sub-fund "5.16. (1) Subject to subregulation (2), the trustee of a fund may treat a sub-fund within the fund as a fund for the purposes of the member-protection standards if the sub-fund satisfies the following conditions (otherwise than for the purposes of winding up): (a) the sub-fund has separately identifiable assets and separately identifiable beneficiaries; and (b) each beneficiary of the sub-fund has an interest only in the assets of the sub-fund and not in the other assets of the fund; and (c) there is no transfer of assets, benefits or money between the sub-fund and another sub-fund without a transfer of a corresponding beneficial interest; and (d) the insurance and administration costs of the sub-fund are attributable only to the sub-fund. "(2) The trustee may not treat a sub-fund as a fund if the purpose of doing so is to circumvent the member-protection standards. Member-protection standards "5.17. (1) This regulation applies in relation to a member of a fund: (a) who, on or after 1 July 1995, is a protected member; or (b) who, on or after 30 June 1996, is reportable to the Commissioner as a lost member under regulation 11.08. "(2) Subject to subregulation (4), the sum charged as administration costs in respect of a relevant member reporting period against the minimum benefit component of the benefits of a member to whom this regulation applies must not exceed the investment return credited to, or debited against, the member's minimum benefits for that period. "(3) For the purposes of subregulation (2) and subject to subregulations (4) and (5), a member reporting period is a relevant member reporting period if: (a) in the case of a protected member: (i) at the end of the period, the member is a protected member; and (ii) the period ends after 30 June 1995; or (b) in the case of a lost member: (i) if the member becomes reportable for the purposes of regulation 11.08 on joining the fund - the member is lost during any part of the member reporting period; or (ii) if the member becomes reportable for the purposes of that regulation at a time other than the time he or she joins the fund and the period is: (A) the first member reporting period beginning after the member becomes reportable for the purposes of that regulation; or (B) a subsequent member reporting period during a part of which the member remains a lost member. "(4) For the purposes of subregulation (2) and paragraph (3) (a), if a member reporting period begins before and ends after 1 July 1995, a trustee may treat only the part of that period beginning on 1 July 1995 as being a relevant member reporting period. "(5) For the purposes of subregulation (2) and paragraph (3) (b), if a member ceases to be a lost member during a member reporting period, a trustee may treat only the part of that period ending when the member ceases to be a lost member as being a relevant member reporting period. "(6) Subregulation (2) does not apply if, in a member reporting period: (a) the total of the administration costs that would be charged to members of a fund but for this regulation is greater than the total investment return of the fund during that period; and (b) the apportionment of those costs between members is carried out in a fair and equitable manner. "(7) For the purposes of this regulation, 'administration costs' includes all fees and charges charged against a member's benefits, other than: (a) in the case of a member who was a member of the fund on 30 June 1995, the exit fee (if any) applicable to the member's benefits at that date; and (b) the cost (if any) of providing an insurance benefit to the member; and (c) taxation costs. "(8) For the purposes of this regulation, an exit fee other than an exit fee of an amount equal to the exit fee applicable to the member's benefit at 30 June 1995 is taken to be charged against the relevant member's minimum benefit. "(9) For the purposes of paragraph (6) (b), an apportionment of costs is taken to be fair and equitable only if each member of the fund is charged no more than: (a) the amount that a member would be charged if all administration costs charged against members' benefits were distributed in direct proportion to: (i) the investment return credited to, or debited against, each member's benefits; or (ii) the member's benefits; or (b) the investment return credited to, or debited against, the member's benefits plus an amount no greater than 1% of any member's benefits. "(10) For the purposes of this regulation: (a) a member's benefits are taken to be composed wholly of mandated employer-financed benefits unless the trustee knows otherwise; and (b) if the trustee of a fund knows that a part of a member's benefits is or is not composed of mandated employer-financed benefits, but does not know whether the remainder of the member's benefits are composed of mandated employer-financed benefits, that remainder is taken to be composed wholly of mandated employer-financed benefits. "(11) Despite anything in this regulation, a trustee of a fund may protect the benefits of a member from an earlier date than this regulation requires. Costs not to be deferred "5.18. If the trustee of a fund would charge costs to a member in a member reporting period but for regulation 5.17, the trustee must not charge those costs to the member in a future member reporting period, whether in combination with other costs or not.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 18 18. New regulation 5.15 18.1 After regulation 5.14, insert: Member-protection standards not to apply to certain protected members "5.15. If: (a) a member of a fund is a protected member at the end of a member reporting period; and (b) the trustee of the fund has a reasonable expectation (in accordance with regulation 2.26B) that the member will have a withdrawal benefit of at least $1,500 within 12 months after the end of that member reporting period; and (c) his or her withdrawal benefits reach $1,500 within 12 months after the end of that member reporting period; he or she is taken not to have been subject to the member-protection standards from the beginning of that member reporting period until the end of that period of 12 months. (NOTE: See regulation 2.26B in relation to protected members whose benefits are reasonably expected to reach $1,500 within the period of 12 months after the end of a member reporting period.)". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 19 19. Regulation 6.01 (Interpretation) 19.1 Subregulation 6.01 (2) (definition of "successor fund"): Omit the definition. 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 20 20. Regulation 6.30 (Obligations of trustees) 20.1 Subregulation 6.30 (2): Omit the subregulation. 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 21 21. Regulation 10.02 (Eligible rollover funds-prescribed conditions) 21.1 Omit the regulation. 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 22 22. Regulation 10.05 (Prescribed information to be given to the Commissioner) 22.1 Omit the regulation. 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 23 23. Regulation 10.06 (Additional operating standards-eligible rollover funds) 23.1 Omit the Regulation, substitute: Operating standards-eligible rollover funds "10.06. (1) For the purposes of subsections 31 (1) and 32 (1) of the Act, a requirement of this Division is a standard applicable (in addition to other standards applicable under these Regulations) to the operation of an eligible rollover fund. "(2) The trustee of an eligible rollover fund must accept payment of: (a) benefits (other than pension benefits) paid from a superannuation fund (other than an eligible rollover fund) or an approved deposit fund (other than an eligible rollover fund); and (b) shortfall components. "(3) The trustee of an eligible rollover fund must treat: (a) every member of the fund as a protected member at all times; and (b) the whole of the benefits of every member as minimum benefits at all times.". 1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 24 24. Regulation 11.08 (Eligible rollover funds) 24.1 Omit the regulation, substitute: Information regarding lost members to be provided to Commissioner "11.08. (1) For the purposes of subsections 31 (1) and 32 (1) of the Act the requirement in subregulation (2) is a standard applicable to: (a) regulated superannuation funds; and (b) approved deposit funds. "(2) For the purposes of this regulation, a lost member becomes reportable if: (a) the member is a lost member at the end of a member reporting period ending on or after 30 June 1996 (or an earlier date chosen by the trustee); or (b) the member joins the fund as a lost member on or after 30 June 1996. "(3) The trustee of a fund must give to the Commissioner, within 28 days of the end of each half-year of the fund, a statement setting out the most recent information, of the kinds set out in subregulation (4), that the trustee has regarding: (a) each lost member of the fund who became reportable (unless the member ceased to be a member of the fund within 28 days of becoming reportable, or ceased to be lost) during the half-year; and (b) each member of the fund previously reported under paragraph (a) who ceased to be a lost member of the fund during the half-year. "(4) The information regarding each member is: (a) the member's name, date of birth, contact details and sex; and (b) the fund's name, contact details and fund number; and (c) the name and contact details of the member's employer last known to the trustee; (d) in the case of a member who became reportable during the half year: (i) a statement to the effect that the member has become a lost member; and (ii) a statement of the amount of the member's withdrawal benefits at the date on which he or she became reportable; and (e) in the case of a member who ceased to be a lost member during the half year: (i) a statement to that effect; and (ii) a statement of the amount of the member's withdrawal benefits at the date on which he or she ceased to be a lost member; and (iii) a statement of the amount received for the member since he or she became reportable; and (f) if the Commissioner requests in writing from the fund, in the half-year, information that the Commissioner reasonably believes may assist the Commissioner in administering the register of lost members - that information. "(5) In subregulation (4): 'contact details' means: (a) in relation to the member - details of the person's residential address, postal address (if different) and, where available, telephone number and facsimile (electronic transmission) number; and (b) in relation to the fund or the member's employer - the postal address and, where available, telephone number and facsimile (electronic transmission) number; 'fund number', in relation to a regulated superannuation fund or approved deposit fund, means the number allotted to the fund by the Commissioner. "(6) For the purposes of this regulation, the trustee of an eligible rollover fund must treat a member who joined the fund under Part 24 of the Act before 1 July 1996 as a lost member who became reportable on 30 June 1996, unless the member is not lost. "(7) For the purposes of this regulation, the trustee of an eligible rollover fund may treat a member who joined the fund under Part 24 of the Act as a lost member who became reportable on the date he or she joined the fund. "(8) For the purposes of this regulation, the trustee of a successor fund may treat a member whose benefits have been transferred to the fund as a lost member who became reportable on the date he or she joined the fund. "(9) This regulation does not apply in relation to a half year beginning before 1 January 1996.". - NOTES 1995 No. 64*1* SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS*2* (AMENDMENT) - Dated 4 April 1995. *1* Notified in the Commonwealth of Australia Gazette on 5 April 1995. *2* Statutory Rules 1994 No. 57 as amended by 1994 Nos. 189 and 432; 1995 No. 47.