Superannuation Industry (Supervision) Act 1993 modification declaration No. 23 (Cth)

Superannuation Industry (Supervision) Act 1993

MODIFICATION DECLARATION No 23

I, Thomas Karp, a delegate of the Australian Prudential Regulation Authority, under section
332 of the Superannuation Industry (Supervision) Act 1993 (the “Act”), DECLARE that:

1.       Regulations 2.29, 5.08, 7.03, 9.08, 9.09, 9.17, 9.23, 9.24, 9.25, 9.29 and 9.30 of the Superannuation Industry (Supervision) Regulations (the “Regulations”), (being operating standards for the purposes of Part 3 of the Act); and

2. Regulations 1.03, 5.01, 5.04, 7.05, 9.01, 9.05, 9.06, 9.07, 9.10, 9.11, 9.12, 9.13, 9.14, 9.16, 9.18, 9.19, 9.20, 9.21, 9.22, 9.26, 9.27, 9.28 and 9.31, but only to the extent that they were made for the purposes of Part 3 of the Act,

shall have effect, in relation to trustees and members of superannuation entities (other than public sector superannuation schemes), as if the following regulations were modified:

a. By omitting the definition of “defined benefit fund” in subregulation 1.03(1) and
substituting:

“ “defined benefit fund” means:

(a)     a public sector superannuation scheme that:

(i)      is a regulated superannuation fund; and

(ii)      has at least 1 defined benefit member; or

(b)     a regulated superannuation fund (other than a public sector superannuation scheme) that has at least 1 defined benefit member;”

b. By omitting the definition of “defined benefit member” in subregulation 1.03(1) and substituting:

“ “defined benefit member” means a member (which, in this definition, has the same meaning as “member” in subregulation 2.01(2)):

(a)     entitled, on retirement or termination of his or her employment, to be paid a benefit defined, wholly or in part, by reference to either or both of the following:

(i)      the amount of:

(A)    the member’s salary at a particular date, being the date of the termination of the member’s employment or 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; or

(b)     for the purposes of determining the meaning of “defined benefit fund” in regulations 2.29, 5.01, 5.04 and 7.05, Divisions 9.3 and 9.4 of Part 9, and regulations 9.26, 9.27, 9.28, 9.29, 9.29A and 9.30, who is being paid a defined benefit pension;”

c. By inserting the following definition into subregulation 1.03(1):

“ “defined benefit pension” means a pension under section 10 of the Act other
than:

(a)     a pension wholly determined by reference to policies of life assurance purchased or obtained by the trustee of a regulated superannuation fund solely for the purposes of providing benefits to members of that fund; or

(b)     a pension that is provided under rules to which subregulation 1.06(4) applies (an allocated pension);”

d. By inserting the following definition into regulation 9.01:

“ “defined benefit sub-fund” means a segment of a regulated superannuation fund (other than a public sector superannuation scheme) that has the following characteristics:

(a)     the segment has at least 1 defined benefit member who is being paid a defined benefit pension from the fund; and

(b)     the segment has separately identifiable assets and separately identifiable beneficiaries; and

(c)     each beneficial interest in the segment is an interest only in the assets of
the segment and not in any other assets of the regulated superannuation fund; and

(d)     there is no transfer of assets, benefits or money between the segment and any other part of the regulated superannuation fund without a transfer of a corresponding beneficial interest; and

(e)     the insurance and administration costs of the segment are attributable
only to that segment.

[Note: Paragraph (c) of this definition does not prevent a beneficiary having more than one beneficial interest in one segment or more than one beneficial interest in one regulated superannuation fund.]”

e. By inserting after “regulation 9.29” in the definition of “valuation date” in regulation 9.27:

“ or regulation 9.29A”

f. By inserting after “regulations 9.29” in regulation 9.28:

“ , 9.29A”

g. By adding after regulation 9.29:

“9.29A(1)   From the date of commencement of this Modification Declaration:

(a)     regulation 9.29 ceases to apply to trustees of defined benefit funds which have at least 1 defined benefit member who is being paid a defined benefit pension from the fund; and

(b)     those trustees are required to comply with subregulations (2) and (3).

9.29A(2)Subject to subregulation (3), a trustee of a defined benefit fund which has at least 1 defined benefit member who is being paid a defined benefit pension from the fund, must require an actuarial investigation to be made in relation to the fund:

First actuarial investigation after the commencement of this Modification Declaration

(a)     if that fund is paying a defined benefit pension immediately before the commencement of this Modification Declaration, then:

(i)      in the case of a fund in respect of which an actuarial investigation under regulation 9.29 has been made, as at the date at which the next actuarial investigation would have been required under regulation 9.29, had regulation 9.29 not ceased to apply under
paragraph 9.29A(1)(a); and

(ii)      in all other cases, as at a date not later than 30 June 1999; and

(b)     if that fund first pays a defined benefit pension after the commencement of this Modification Declaration:

(i)      as at a date not later than 1 year; or

(ii)      where that fund is not an excluded fund, as at a date otherwise determined in writing (if any) by the Chief Executive Officer of APRA in relation to the particular fund, which is not less than 1
year and not more than 3 years;

after the commencement day of that defined benefit pension;

Second and further actuarial investigations after the commencement of this Modification Declaration

and, in all cases, further regular actuarial investigations must be made:

(c)     for a regulated superannuation fund which has at least 1 defined benefit member who is being paid a defined benefit pension from the fund and which is not an excluded fund, as at a date:

(i)      not later than 1 year; or

(ii)      otherwise determined in writing (if any) by the Chief Executive Officer of APRA in relation to the particular fund which is not less than 1 year and not more than 3 years; and

(d)     in all other cases, as at a date not later than 1 year;

after the date on which the last actuarial investigation was made.

9.29A(3)   With respect to a regulated superannuation fund which has a defined benefit
sub-fund, subregulation (2):

(a)     applies to the defined benefit sub-fund; and

(b)     does not apply to require actuarial investigation in accordance with subregulation (2) into other segments of that regulated superannuation
fund, unless those other segments are also defined benefit sub-funds.”

h. By inserting after “regulation 9.29” in subregulation 9.30(1):

“ or regulation 9.29A”

i. By inserting after paragraph 9.31(1)(b):

“ (ba)for a regulated superannuation fund which has at least 1 defined benefit member who is being paid a defined benefit pension from the fund, a statement of the actuary’s opinion on whether, at the valuation date, there
is a reasonable degree of probability that the fund will be able to pay the pension as required under the fund’s governing rules; and”.

This declaration commences to have effect on the date that it is signed.

Dated 12  January 1999

[signed]

..................................…….

Tom Karp

Executive General Manager

Insurance and Superannuation Division