Retirement Savings Accounts Amendment Regulations 2003 (No. 2) 2003 No. 195
EXPLANATORY STATEMENT
STATUTORY RULES 2003 No. 195
Issued by authority of the Minister for Revenue and Assistant Treasurer
Retirement Savings Accounts Act 1997
Retirement Savings Accounts Amendment Regulations 2003 (No. 2)
Section 200 of the Retirement Savings Accounts Act 1997 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the Regulations is to amend the current requirements concerning the portability of superannuation benefits in retirement savings accounts (RSA) to effect the Government's policy on portability of superannuation benefits.
RSA holders will be able to roll over or transfer part or all of their benefits from an RSA to another RSA, or to a superannuation fund, exempt public sector superannuation scheme or deferred annuity. At present RSA holders are able to roll over or transfer only the entire benefit. The existing limited exception to the ability to roll over or transfer benefits would not be affected by the amendments.
Details of the Regulations are set out in the Attachment.
The Regulations commence on 1 July 2004.
ATTACHMENT
Retirement Savings Accounts Amendment Regulations 2003 (No. 2)
Explanation of the amendments
Regulation 1 - specifies the name of the Regulations as the Retirement Savings Accounts Amendment Regulations 2003 (No. 2).
Regulation 2 - provides that the Regulations commence on 1 July 2004.
Regulation 3 - provides that Schedule 1 amends the Retirement Savings Accounts Regulations 1997.
Schedule 1 - Amendments
Items 1, 2 and 3 amend the definition of protected retirement savings accounts (RSA) holder. In general terms a protected RSA holder is currently one with withdrawal benefits that are less than $1,000 and contain or have contained mandated employer financed benefits. If a person is a protected RSA holder, fees charged against their account cannot normally exceed the investment earnings on that interest in any one year. The proposed regulations will amend the definition of protected RSA holder so that if an RSA holder chooses to transfer their benefits, in accordance with section 50 of the Retirement Savings Accounts Act 1997 (the Act) (potentially leaving them with benefits of less than $1,000 in the account) then they will no longer be required to be treated as a protected RSA holder.
Item 1 provides that the new definition of protected RSA holder is given by new Regulation 1.03A. Item 2 omits an existing provision that is relevant to the definition of protected member (the provision omitted is now replicated in new Regulation 1.03A(3)). Item 3 inserts new Regulation 1.03A, which provides for the new definition of protected RSA holder. The definition is effectively the same as the previous definition with the exception of paragraph 1.03A(2) which provides that an RSA holder will not be a protected RSA holder if they have transferred benefits from the RSA in accordance with section 50 of the Act.
Items 4 and 5: Section 50 of the Act provides that an RSA provider must, if requested by an RSA holder, transfer an amount of the RSA to another RSA provider, superannuation fund or deferred annuity. Section 50 states that the amount of the transfer is to be worked out in accordance with the regulations. Regulation 6.15 currently specifies that the amount to be transferred is the RSA holder's entire withdrawal benefit. However, Regulation 6.15 will be omitted by item 7. Item 6 inserts a new Division 4.5 that states that the amount of the transfer is that requested by the member. Items 4 and 5 extend references about the roll-over or transfer of RSA benefits to include benefits being transferred under section 50 of the Act.
Item 4: Subparagraph 4.20(1)(a)(ii) currently refers to benefits being rolled over or transferred under Division 4.4 or Part 4A. Item 4 extends this reference to include benefits being rolled over or transferred under section 50 of the Act.
Item 5: Subparagraph 4.20(1)(b) currently states that benefits must not be paid except when, and to the extent that, the RSA provider is required or permitted under this Part or Part 4A to pay them. Item 5 extends this reference to include section 50 of the Act.
Subparagraph 4.20(1)(c) currently states that benefits must be paid when, and to the extent that, the RSA provider is required under this Part or Part 4A to pay them. Item 5 extends this reference to include section 50 of the Act.
Item 6 inserts a new Division 4.5 that prescribes that, if a transfer of benefits takes place under section 50 of the Act, then the amount of transfer is to be that requested by the RSA holder.
New Regulation 4.35 - Amount to be transferred (the Act section 50)
This regulation provides that, if RSA benefits are transferred under section 50 of the Act, then the amount of the transfer is to be that specified by the RSA holder and can be the whole or part of the RSA holder's withdrawal benefit. Subsection 50(3) states that the amount of the transfer is to be worked out in accordance with the regulations.
New Regulation 4.36 - Operating standard
This regulation provides that, before an RSA provider transfers an amount mentioned in Regulation 4.35, the RSA provider must be satisfied that the holder is aware of their right to receive information on request, including information relating to any fees or charges that may apply to the transfer and the effect of the transfer on their existing
RSA benefits, and that the member does not require such information before the transfer is made.
This regulation also provides that the above requirements are operating standards applicable to the operation of RSAs. Penalties can be applied for breaches of these standards.
Item 7 omits Regulation 6.15. This regulation currently states that if a transfer is made under section 50 of the Act, then the amount of the transfer is to be the RSA holder's entire withdrawal benefit. The omission of Regulation 6.15 removes conflict with the new Division 4.5.