Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) 1996 NO.57

STATUTORY RULES 1996 No. 57

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 by allowing trustees of regulated superannuation funds to choose a day (in either the 1996 or 1997 calendar years) on which they will change to the new preservation of benefits requirements. The regulations will require that once a decision has been made by a trustee as to the choice of changeover day, the decision is to be recorded in writing by the trustee. If the trustee makes no decision as to the choice of changeover day before 1 July 1997, the changeover day will be taken to be 1 July 1997.

The purpose of this amendment is to implement Government policy to defer until 1997 the changes to the preservation rules applicable to all regulated superannuation funds throughout 1996. As the trustees of some funds had already begun implementing these changes prior to the deferral announcement, it has become necessary to enable those trustees to retain a changeover day in the 1996 calendar year rather than defer until 1997.

The regulations are described in detail in the attachment.

The regulations commence on gazettal.

ATTACHMENT

Superannuation Industry (Supervision) Regulations (Amendment)

Regulation 1 - Amendment

Regulation 1 provides that the Superannuation Industry (Supervision) Regulations (the Principal Regulations) are amended as set out in these Regulations. These Regulations will commence on gazettal.

Regulation 2 - Regulation 6.01 (Interpretation)

The current definition of "changeover day" means a day in the 1996 calendar year that the trustee of a regulated superannuation fund decides is the changeover day for the purposes of Part 6 of the Regulations, in relation to a member of the fund.

Regulation 2 substitutes a new definition of "changeover day" in subregulation 6.01(2) to mean one of the following:

(a) if the trustee of a regulated superannuation fund fixed a day in the 1996 calendar year (immediately before the commencement of new subregulation (2A))as the changeover day in relation to a member of the fund, and does not fix a day in the 1997 calendar year as the changeover day under subregulation (2A), the changeover day in relation to that member is the day so fixed; or

(b) if the trustee of the fund fixes a day in the 1997 calendar year (under subregulation (2A)) as the changeover day in relation to a member, the changeover day in relation to that member is the day so fixed; or

(c) in any other case the changeover day is 1 July 1997.

After subregulation 6.01(2) new subregulations (2A), (2B) and (2C) are inserted, which collectively enable a trustee of a regulated superannuation fund to exercise the choice of either a day in the 1996 or 1997 calendar years, made available by the new definition of "changeover day".

Subregulation (2A) enables the trustee of a regulated superannuation fluid, before 1 July 1997, to fix a day in the 1997 calendar year as the changeover day in relation to a member of the fund.

Subregulation (2B) allows the trustee of a regulated superannuation fund to fix a day under subregulation (2A), whether or not the, trustee has fixed a day in the 1996 calendar year (or a day so fixed has occurred) before the commencement of subregulation (2A).

Subregulation (2C) provides that upon a day being fixed under subregulation (2A), any day fixed in the 1996 calendar year ceases to be the changeover day, and if it has occurred is taken not to have occurred.

Other amendments are concerned with rectifying an error with the language of subregulation 6.01(3). Paragraph 6.01(3)(b) no longer serves a useful purpose. The requirement that the trustee of a fund "must take reasonable steps to ensure that the changeover day is as early as convenient" is not consistent with the new definition of "changeover day" which effectively allows a choice of changeover day anywhere from 1 January 1996 to 31 December 1997. In addition, the policy intention is to encourage most regulated superannuation funds to defer the changeover day until the 1997 calendar year. Paragraph (b) does not encourage such a choice. It was more relevant when the changeover day was to occur within one calendar year, rather than several.

The second error in subregulation 6.01(3) occurs in paragraph 6.01(3)(c). It is currently unable to be clearly understood. The paragraph states that "in deciding the changeover day in relation to a member, the trustee of the fund must be recorded in writing by the trustee.". It should state clearly that the decision as to the choice of changeover day must be recorded in writing by the trustee. This is to be rectified by substituting paragraph (c) with a new subregulation 6.01(3A). The current subregulation 6.01(3A) will be retained and renamed subregulation (3B) with the phrase "paragraphs (3)(b) and (c)" deleted.

Regulation 3 - Regulation 6.04 (Preserved benefits in regulated superannuation funds rollover or transfer between funds during 1996 or 1997)

As the term "changeover day" is currently used in regulation 6.04 only in respect of the 1996 calendar year, it is necessary to also refer to the 1997 calendar year to be consistent with the new definition of "changeover day".

Regulation 4 - Regulation 6.09 (Restricted non-preserved benefits in regulated superannuation funds -rollover or transfer between funds during 1996 or 1991)

As the term "changeover day" is currently used in regulation 6.09 only in respect of the 1996 calendar year, it is necessary to also refer to the 1997 calendar year to be consistent with the new definition of "changeover day".