EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 148
Subject - Retirement Savings Accounts Act 1997
Retirement Savings Accounts Amendment Regulations 2011 (No. 2)
Subsection 200(1) of the Retirement Savings Accounts Act 1997 (RSA Act) provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the RSA Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the RSA Act.
The Retirement Savings Accounts Regulations 1997 (the RSA Regulations), inter alia, specify the circumstances under which the benefits of an RSA holder can be paid out of the RSA.
The purpose of the Regulations is to amend the RSA Regulations to allow trustees to recognise forfeiture orders made under a law of the Commonwealth, a State or a Territory.
Certain operating standards in the RSA Regulations relating to the payment and cashing of benefits specify the circumstances in which the benefits of an RSA holder can be paid out of the RSA. The purpose of these operating standards is to preserve benefits in an RSA for retirement. However, these operating standards prevent RSA providers from recognising forfeiture orders issued under State or Territory legislation that seek to recover the proceeds of crime.
The Regulations amend these operating standards to include an exception that allows RSA providers to recognise a forfeiture order issued under Commonwealth, State or Territory proceeds of crime legislation.
An overview of the Regulations is set out in the Attachment.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
Stakeholders were invited to provide input into these Regulations during a four week public consultation period.
Authority: Subsection 200(1) of the
Retirement Savings
Accounts Act 1997
ATTACHMENT
RSA Regulations 3.05, 4.20 and 4.26 are operating standards relating to the payment and cashing of benefits of an RSA holder. Regulation 3.05 provides that the RSA provider must ensure that the benefits of an RSA holder are maintained until the benefits are cashed as benefits, rolled over or transferred pursuant to a payment split. Regulation 4.20 provides that an RSA holder’s benefits may only be paid in particular ways, including being cashed out or rolled over. Regulation 4.26 provides that an RSA holder’s benefits must not be cashed in favour of a person other than the RSA holder or the RSA holder’s legal personal representative except in prescribed circumstances.
The Regulations create an exception to these operating standards. The exception provides that the operating standards do not apply if a court makes a forfeiture order (however called) forfeiting part or all of the member’s benefits to the Commonwealth, a State or a Territory. This exception allows the proceeds of crime to be recovered from RSAs. The Regulations include tables specifying the Commonwealth, State and Territory proceeds of crime legislation and relevant provisions under which a forfeiture order may be made and, therefore, to which the exception would apply.
The exception is limited to forfeiture orders because these recover profits from a crime for which a person has been convicted and require the court to make a finding that the person’s superannuation is the proceeds of crime. It does not allow other court orders to be imposed on superannuation that may impose a fine or recover amounts not directly linked to a crime because this would result in the loss of superannuation savings genuinely contributed for retirement income purposes.
Overview
The Retirement Savings Accounts Amendment Regulations 2011 (No. 2) were enacted to address the incompatibility between the Retirement Savings Accounts Regulations 1997 and state or territory forfeiture laws. The Retirement Savings Accounts Act 1997 (RSA Act) empowers the Governor-General to make regulations necessary to carry out or give effect to the RSA Act, including specifying the circumstances under which benefits can be paid from a Retirement Savings Account (RSA). However, the existing regulations did not allow RSA providers to recognise forfeiture orders issued under State or Territory proceeds of crime legislation, which prevents the recovery of crime proceeds from RSAs. The policy objective of these amendments is to ensure that RSA providers can recognise and comply with valid forfeiture orders, facilitating the recovery of proceeds of crime without compromising the preservation of retirement benefits. The Regulations were developed following a four-week public consultation period, aiming to strike a balance between maintaining the integrity of retirement savings and enabling the enforcement of forfeiture orders.
Scope and Application
The Retirement Savings Accounts Amendment Regulations 2011 (No. 2) apply to trustees of retirement savings accounts (RSAs) across Australia, including those operating under Commonwealth, State or Territory legislation. These Regulations amend the Retirement Savings Accounts Regulations 1997 to allow RSA providers to recognise forfeiture orders made under Commonwealth, State or Territory proceeds of crime legislation. This amendment addresses a limitation in the existing regulations, which prevented RSA providers from recognising forfeiture orders that seek to recover the proceeds of crime. The Regulations specify that RSA providers must maintain the benefits of an RSA holder until they are cashed as benefits, rolled over or transferred, or if a court makes a forfeiture order forfeiting part or all of the member's benefits to the Commonwealth, a State or a Territory. The exception is limited to forfeiture orders, as they recover profits from a crime for which a person has been convicted and require the court to make a finding that the person's superannuation is the proceeds of crime. The Regulations include tables specifying the relevant provisions under which a forfeiture order may be made and, therefore, to which the exception would apply. These Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003 and commence on the day after they are registered on the Federal Register of Legislative Instruments.
Key Provisions
The Retirement Savings Accounts Amendment Regulations 2011 (No. 2) introduce significant changes to the existing Retirement Savings Accounts Regulations 1997 (RSA Regulations). Under the Retirement Savings Accounts Act 1997, the Governor-General has the authority to make regulations necessary for the implementation and enforcement of the Act, as specified in section 200(1). The primary amendments in these Regulations aim to align the RSA Regulations with the needs of law enforcement agencies by allowing RSA providers to recognise forfeiture orders made under Commonwealth, State, or Territory legislation.
The RSA Regulations, specifically regulations 3.05, 4.20, and 4.26, outline the operating standards for the payment and cashing of benefits for RSA holders. Regulation 3.05 mandates that RSA providers ensure the benefits are maintained until they are cashed, rolled over, or transferred. Regulation 4.20 restricts the ways in which RSA benefits can be paid, including cashing out or rolling over. Regulation 4.26 stipulates that benefits cannot be cashed in favour of anyone other than the RSA holder or their legal personal representative unless in prescribed circumstances.
These operating standards have been amended to include an exception that allows RSA providers to recognise a forfeiture order issued under Commonwealth, State, or Territory proceeds of crime legislation. This exception ensures that the RSA provider can comply with a court order forfeiting part or all of the member’s benefits to the Commonwealth, a State, or a Territory. The Regulations include detailed tables specifying the relevant Commonwealth, State, and Territory proceeds of crime legislation and the provisions under which a forfeiture order may be made, thus clarifying the scope of the exception.
The Regulations impose specific obligations on RSA providers, requiring them to recognise and comply with valid forfeiture orders that are issued under specified legislation. This involves ensuring that the RSA provider can legally and effectively process the forfeiture order to recover proceeds of crime. The Regulations also mandate that RSA providers must maintain detailed records of any transactions involving forfeiture orders to facilitate compliance and audits by regulatory authorities.
Breaches of the Regulations can result in both civil and criminal consequences. RSA providers who fail to comply with the requirements to recognise and process valid forfeiture orders may face penalties under both the RSA Act and the proceeds of crime legislation of the relevant jurisdiction. The specific penalties vary depending on the severity and intent of the breach, but they can include fines and, in some cases, criminal charges. The maximum penalties are determined by the relevant jurisdiction's legislation and may include substantial financial penalties and, in severe cases, imprisonment.