Life Insurance (Prudential Rules)
Prudential Rules No 41 – Approval of Benefit Fund Rules
as amended
made under subsection 252(4) of the
Life Insurance Act 1995
This compilation was prepared on 30 June 2010
taking into account amendments up to Life Insurance (prudential rules) determination No. A2 of 2010
Prepared by Legal Group, APRA, Canberra
I, Graeme John Thompson, a delegate of the Australian Prudential Regulation Authority (“APRA”), under subsection 252(1) of the Life Insurance Act 1995 (the “Act”), MAKE the following Prudential Rules for the purposes of subsection 16Q(2) and paragraph 16Q(4)(b) of the Act:
Application for approval of amendment of approved benefit fund rules
1. An application under subsection 16Q(2) of the Act must: (a) be in writing; and
(b) state the name of the approved benefit fund; and
(c) state that the procedural requirements for the passing of the resolution were met; and
(d) be accompanied by a copy of the resolution made in accordance with Prudential Rules No 39; and
(e) certify that the approved benefit fund rules, as proposed to be amended, comply with the applicable requirements of Prudential Standard LPS 902 Approved Benefit Fund Requirements; and
(f) if applicable, be accompanied by a report by the appointed actuary on the proposed amendment, in accordance with paragraph 17 of Prudential Standard LPS 320 Actuarial and Related Matters; and
(g) be signed by:
(i) the principal executive officer of the company; or
(ii) an officer of the company who has been authorised for that purpose by the principal executive officer, if the principal executive officer has notified APRA in writing of the authorisation.
Notification of amendment to members
2. Subject to rules 3 and 4, if:
(a) the approved benefit fund rules have been amended by a resolution of the board of directors of the friendly society, in accordance with Prudential Rules No 39; and
(b) APRA has approved the amendment under subsection 16Q(3) of the Act; and
(c) the amendment of the approved benefit fund rules approved by APRA has come into force under section 16T of the Act;
the friendly society must give a written notice to its members no later than the day on which notice is given of the next general meeting of the friendly society:
(d) stating the date on which the amendment of the approved benefit fund rules came into force; and
(e) giving the text, or a summary, of the amendment of the approved benefit fund rules.
3. If APRA gives its prior approval, the notice under rule 2 may be given to members by an advertisement published in a newspaper circulating generally in the area of each State or Territory in which the friendly society operates.
4. If the approved benefit fund rules have been amended by a special resolution of the members in accordance with Prudential Rules No 39, there is no requirement to notify the members of the friendly society of the amendment.
5. If the amendment of the approved benefit fund rules is a result of a restructure pursuant to section 52 of the Act or a termination pursuant to section 53 of the Act, notification to members is to be in accordance with Prudential Rule 36 in the case of a restructure, or Prudential Rule 37 in the case of a termination, rather than this Prudential Rule.
This instrument commences on the transfer date (as defined in section 2 of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999).
Notes to Life Insurance (Prudential Rules)
Prudential Rules No 41 – Approval of Benefit Fund Rules
Note 1
Life Insurance (Prudential Rules) – Prudential Rules No 41 – Approval of Benefit Fund Rules (in force under section 252(4) of the Life Insurance Act 1995) as shown in this compilation is amended as indicated in the Tables below.
Table of Instruments
Year and
Number | Date of Gazettal/FRLI registration | Date of
commencement | Application, saving or transitional provisions |
Prudential Rules No. 41 – Approval of Benefit Fund Rules (F2009B00145) | 30 June 1999 (see Gazette 1999, No. GN26) | 1 July 1999 (see Gazette 1999, No. S283) | |
No. A2 of 2010 | 8 July 2010 (see F2010L01879) | 8 July 2010 | — |
| | | |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted |
Provision affected | How affected |
Rule 1.(e)............. | am. No. A2 of 2010 |
Rule 1.(f).............. | am. No. A2 of 2010 |
| |
Overview
The Life Insurance (Prudential Rules) Prudential Rules No 41 – Approval of Benefit Fund Rules, as amended, were made under subsection 252(4) of the Life Insurance Act 1995. These rules address the need for a structured process for approving amendments to the rules governing benefit funds within life insurance companies, ensuring compliance with the applicable prudential standards set by the Australian Prudential Regulation Authority (APRA). Enacted by APRA under the authority delegated by the Commonwealth Parliament, the policy objective of these rules is to maintain the stability and integrity of life insurance benefit funds by ensuring that any amendments to their governing rules are thoroughly reviewed and approved by APRA. These rules mandate that any proposed amendments to benefit fund rules must be submitted in writing, accompanied by necessary documentation and certifications, and that members of the friendly society must be appropriately notified of any approved amendments.
Scope and Application
The Life Insurance (Prudential Rules) Prudential Rules No 41 – Approval of Benefit Fund Rules applies to friendly societies that offer life insurance products in Australia. These rules are made under the Life Insurance Act 1995 and are applicable to the Commonwealth and each state and territory of Australia. The Prudential Rules govern the process by which an approved benefit fund's rules can be amended, and the requirements for notifying members of any changes. The rules apply to any person or entity that is a member of an approved benefit fund. The rules also extend to transactions and conduct that are related to the operation of the approved benefit fund. The rules may be amended by subordinate legislation, and the Life Insurance (Prudential Rules) Determination No A2 of 2010 amended certain provisions of these rules. There are no stated exclusions or exemptions in these rules.
The rules require that any proposed amendments to the approved benefit fund rules be submitted to the Australian Prudential Regulation Authority (APRA) for approval. The application for approval must be in writing and accompanied by a copy of the resolution made in accordance with Prudential Rules No 39. If applicable, the application must also be accompanied by a report by the appointed actuary on the proposed amendment, in accordance with paragraph 17 of Prudential Standard LPS 320 Actuarial and Related Matters. If APRA approves the amendment, the friendly society must give written notice to its members of the amendment. The notice must state the date on which the amendment came into force and give the text, or a summary, of the amendment. If APRA gives its prior approval, the notice under rule 2 may be given to members by an advertisement published in a newspaper circulating generally in the area of each State or Territory in which the friendly society operates. If the approved benefit fund rules have been amended by a special resolution of the members in accordance with Prudential Rules No 39, there is no requirement to notify the members of the friendly society of the amendment.
Key Provisions
The Life Insurance (Prudential Rules) – Prudential Rules No 41, as amended, sets out the requirements for the approval of amendments to the approved benefit fund rules of a friendly society under the Life Insurance Act 1995 (the “Act”). Rule 1 (paragraph 1) specifies the procedure for an application to the Australian Prudential Regulation Authority (APRA) for the approval of an amendment to the approved benefit fund rules. The application must be in writing, state the name of the approved benefit fund, confirm that the procedural requirements for the passing of the resolution were met, be accompanied by a copy of the resolution, certify compliance with Prudential Standard LPS 902, and if applicable, be accompanied by an actuary’s report on the proposed amendment. The application must also be signed by the principal executive officer or an authorised officer of the company.
Friendly societies are obligated under Rule 2 (paragraph 2) to notify their members of any amendments to the approved benefit fund rules that have been approved by APRA. This notification must be in writing and provided no later than the day on which notice is given of the next general meeting of the friendly society. It must include the date on which the amendment came into force and the text or a summary of the amendment. However, Rule 4 (paragraph 4) states that if the amendment was made by a special resolution of the members, there is no requirement to notify the members. Additionally, Rule 5 (paragraph 5) specifies that if the amendment is a result of a restructure or termination, notification to members must follow Prudential Rule 36 or 37, respectively.
The Life Insurance (Prudential Rules) – Prudential Rules No 41 also outlines the consequences for non-compliance. While the legislation does not explicitly state civil or criminal penalties for breach, failure to comply with the requirements for approval of amendments to the approved benefit fund rules may result in the amendment not being approved by APRA, potentially leading to regulatory action against the friendly society. Furthermore, non-compliance with the notification requirements may result in legal action from members who were not properly informed of the changes to the approved benefit fund rules.