EXPLANATORY STATEMENT
STATUTORY RULES NO. 275 1990
ISSUED BY AUTHORITY OF THE TREASURER
OCCUPATIONAL SUPERANNUATION STANDARDS ACT 1987
OCCUPATIONAL SUPERANNUATION STANDARDS REGULATIONS (AMENDMENT)
LEGISLATIVE BASIS FOR THE REGULATIONS
The Occupational Superannuation Standards Act 1987 (the Act) provides operational standards and other relevant conditions with which superannuation funds, approved deposit funds and pooled superannuation trusts are required to comply in order to be eligible for taxation concessions under the Income Tax Assessment Act 1936.
Section 22 of the Act provides that the Governor-General may make regulations for the purposes of the Act and, in particular, prescribing fees payable in respect of any natter under the Act..
PURPOSE OF THE REGULATIONS
The regulations amend the Occupational Superannuation Standards Regulations (Principal Regulations) in the light of experience gained since they were introduced on 22 December 1987. In particular, the amendments seek to make the operational standards under the Principal Regulations more practical and easier to comprehend and apply.
The regulations also amend the Principal Regulations to increase, for annual returns lodged after 31 August 1990, the prescribed fee in respect of fund income years ending on or after 30 June 1990, from $30 to $40. This increase is necessary in order to partially recover Insurance and Superannuation Commission costs associated with the supervision of funds.
The amendments (with the exception of those dealing with the prescribed application fee) have been developed in consultation with representatives of the superannuation industry and related professional organisations such as the Institute of Actuaries of Australia.*
The main elements of the amendments to the Principal Regulations are :
(i) Regulation 2 amends Regulation 3 of the Principal Regulations:
to allow the deduction of administrative and other costs from member contributions or from the member’s account;
to make it clear that reference to the net earnings of a superannuation fund includes losses incurred by that fund;
to make it clear that the definition of ‘member-financed benefits’ includes a reasonable share of estimated earnings accruing subsequent to a date at which earnings have been allotted; and
to provide that, where a member of a superannuation fund has agreed to the investment of contributions in particular portfolios or divisions of a fund, the net earnings and costs applicable to the member relate to those portfolios or divisions.
(ii) Regulation 3 inserts new Regulations 3B, 3C and 3D:
Regulation 3B specifies factors that trustees must have regard to in estimating net earnings to be allocated to a member who withdraws from a fund subsequent to a date at which earnings have been allotted.
Regulation 3C provides that the standards prescribed by the Principal Regulations are subject to the effect of any superannuation order made under the Crimes (Superannuation Benefits) hot 1999
Regulation 3D prescribes the age of 65 for the purposes of the definition of superannuation fund in section 3 of the Act.
(iii) Regulation 4 reflects the change of name of two accounting bodies referred to in Regulation 4 of the Principal Regulations.
(iv) Regulation 5 re-words and clarifies Regulation 5 of the Principal Regulations. It also authorises the trustees of a fund to exercise a lien over benefits in respect of a debt by a member to the trustees under arrangements in place prior to the commencement of the Principal Regulations.
(v) Regulation 6 amends Regulation 11 of the Principal Regulations to:
allow a fund member, on change of employment, to use preserved benefits to purchase a non-commutable pension or life annuity.
permit the transfer of preserved superannuation moneys from a deferred annuity issued by one life insurance company to a deferred annuity issued by another life insurance company, or to a superannuation fund or approved deposit fund.
(vi) Regulation 7 amends Regulation 17 of the Principal Regulations so that:
trustees of a superannuation fund may amend governing rules to reduce a member’s accrued benefits, with the approval of the member concerned;
trustees may amend governing rules to reduce accrued benefits, without the approval of members, or the Commissioner, where it is necessary to reduce the benefits because of tax payable, or to comply with the operational standards;
the information with respect to the allotment of net earnings in the annual statement to members of a defined contribution superannuation fund is simplified, and the reasons for any change to the basis of providing such information is required to be specified;
more professional responsibility is placed on the actuary in relation to the matters to be reported in respect of a defined benefit fund; and
the annual statement provided to members of a fund may correspond with the fund’s financial year, rather than the current requirement of a July-June financial year.
(vii) Regulation 8 amends Regulation 21 of the Principal Regulations to permit the transfer of preserved moneys from a deferred annuity issued by one life insurance company to a deferred annuity issued by another life insurance company or to a superannuation fund or approved deposit fund.
(viii) Regulation 9 inserts a new Regulation 23Q which would require the trustees of superannuation funds, approved deposit funds and pooled superannuation trusts to keep records, and to retain these for not less than 5 years, consistent with taxation legislation.
(ix) Regulation 10 amends Regulation 25 of the Principal Regulations to increase, for fund annual returns lodged after 31 August 1990, the prescribed application fee in respect of income years ending on or after 30 June 1990, from $30 to $40.
(x) Regulation 11 inserts a new Regulation 26 which would provide that the payment of tax by a superannuation fund, approved deposit fund or pooled superannuation trust does not affect compliance with the operational standards
(xi) Regulation 12 is a transitional measure to protect liens exercised prior to the introduction of these regulations
The regulations have effect from the day on which they are notified in the Gazette.
Insurance and Superannuation Commission August 1990