EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 197
Subject - Retirement Savings Accounts Act 1997
Retirement Savings Accounts Amendment Regulations 2011 (No. 3)
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), among other things, specify the circumstances under which the benefits of a retirement savings account (RSA) holder can be paid out of their RSA.
These Regulations amend the RSA Regulations to provide for the Chief Executive Medicare to act as the regulator for the purpose of the early release of RSA benefits on compassionate grounds. This formally transfers administration of the function to the Chief Executive Medicare. Prior to the formal transfer, the Chief Executive Medicare administered the function under delegation from the Australian Prudential Regulation Authority (APRA).
Responsibility for the general administration of the early release of superannuation and RSA benefits on compassionate grounds previously resided with APRA (and the Commissioner of Taxation in respect of self managed superannuation funds). The circumstances for early release of benefits on compassionate grounds are set out in regulation 6.19A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations) and regulation 4.22A of the RSA Regulations.
Under the SIS and RSA Regulations, members of superannuation funds and holders of RSAs can apply to APRA for approval to access their benefits on specified compassionate grounds. The final decision on whether a release is permitted rests with the trustees of the applicant’s fund, or the RSA provider.
These Regulations complement the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, which effects the formal transfer of responsibility for the general administration of the early release of superannuation benefits on compassionate grounds from APRA and the Commissioner of Taxation, to the Chief Executive Medicare.
The Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011 amends the RSA Act to provide that the Chief Executive Medicare has responsibility for the general administration of regulations relating to the making of determinations in respect of the release of RSA benefits on compassionate grounds. It also amends the RSA Act to include the Chief Executive Medicare in the definition of Regulator, for the purposes of administrating the function of early release of RSA benefits on compassionate grounds.
However, regulation 4.22A of the RSA Regulations, which sets out the criteria for the release of benefits on compassionate grounds, referred specifically to APRA. These Regulations change all references in regulation 4.22A from ‘APRA’ to ‘the Regulator’.
As these Regulations are consequential to legislation which simply transfers an administrative function from one government agency to another, no consultation was required. This is consistent with paragraph 18(2)(a) of the Legislative Instruments Act 2003 which states that consultation may be unnecessary where an instrument “is of a minor or machinery nature and that does not substantially alter existing arrangements”. The Regulations do not change the conditions of release of RSA benefits.
These Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
These Regulations commence on the commencement of Schedule 1 to the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011.
Authority: Subsection 200(1) of the
Retirement Savings
Accounts Act 1997
ATTACHMENT
Retirement Savings Accounts Amendment Regulations 2011 (No. 3)
Explanation of the amendments
Regulation 1 – specifies the name of the regulations as the Retirement Savings Accounts Amendment Regulations 2011 (No. 3).
Regulation 2 – provides that the Regulations commence on the commencement of Schedule 1 to the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011.
Regulation 3 – provides that Schedule 1 amends the Retirement Savings Accounts Regulations 1997.
Schedule 1 – Amendments
Items 1, 2, 3 and 4 amend regulation 4.22A of the Retirement Savings Accounts Regulations 1997 replacing references to ‘APRA’, with references to ‘the Regulator’ or ‘The Regulator’, depending on the context of the reference.
Overview
The Retirement Savings Accounts Amendment Regulations 2011 (No. 3) were enacted to address the need for formal administrative changes concerning the early release of benefits from retirement savings accounts (RSAs) on compassionate grounds. These Regulations were introduced under the authority of subsection 200(1) of the Retirement Savings Accounts Act 1997 and aim to streamline the administration by transferring the responsibility for the early release of RSA benefits from the Australian Prudential Regulation Authority (APRA) to the Chief Executive Medicare. This transfer was formalised by the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, which amends the RSA Act to reflect the new administrative arrangements. The policy objective of these amendments is to ensure that the regulatory framework is effectively aligned with the legislative changes, thus facilitating smoother administration and compliance with the compassionate release provisions.
Scope and Application
The Retirement Savings Accounts Amendment Regulations 2011 (No. 3) pertain to the Retirement Savings Accounts Act 1997 and serve to amend the Retirement Savings Accounts Regulations 1997 by transferring the responsibility for the general administration of the early release of RSA benefits on compassionate grounds from the Australian Prudential Regulation Authority (APRA) to the Chief Executive Medicare. These Regulations modify the RSA Regulations to reflect this change in administration, updating references from 'APRA' to 'the Regulator' in regulation 4.22A. This legislative adjustment aligns with the broader reforms enacted by the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, which formally assigns the Chief Executive Medicare as the regulator for the compassionate release of RSA benefits, and includes this function within the definition of 'Regulator' under the RSA Act. The Regulations do not alter the substantive conditions for the release of benefits but rather ensure the regulatory framework accurately reflects the new administrative arrangements. These Regulations are consequential in nature and apply nationally, given the Commonwealth scope of the RSA Act.
Key Provisions
The Retirement Savings Accounts Amendment Regulations 2011 (No. 3) amend the Retirement Savings Accounts Regulations 1997 to facilitate the transfer of the responsibility for the general administration of the early release of RSA benefits on compassionate grounds from the Australian Prudential Regulation Authority (APRA) to the Chief Executive Medicare (regulations 2, 3, and 4). These regulations are designed to reflect the changes introduced by the Superannuation Legislation Amendment (Early Release of Superannuation) Act 2011, which transfers the responsibility of administering the early release of RSA benefits on compassionate grounds from APRA to the Chief Executive Medicare (regulation 3). The key amendment involves replacing references to 'APRA' with 'the Regulator' or 'The Regulator' in regulation 4.22A of the RSA Regulations, which sets out the criteria for the release of RSA benefits on compassionate grounds (regulation 4, schedule 1, items 1-4). This change ensures that all regulatory references align with the new administrative function under the Chief Executive Medicare.
These regulations impose specific obligations on RSA providers and holders to ensure compliance with the new administrative framework. RSA providers must now report to the Chief Executive Medicare rather than APRA when a member seeks an early release of benefits on compassionate grounds (regulation 4.22A, schedule 1, item 1). Additionally, RSA holders must submit their applications for early release of benefits to their RSA providers, who are then responsible for forwarding these applications to the Chief Executive Medicare (regulation 4.22A, schedule 1, items 2-4). Failure to comply with these obligations could result in non-compliance with the RSA Act and potential regulatory action against RSA providers.
There are no specific offences, penalties, or civil/criminal consequences outlined in these regulations for breaches of the amended provisions. However, non-compliance with the RSA Act or failure to adhere to the new administrative requirements may lead to regulatory action by the Chief Executive Medicare. This could include fines, corrective measures, or other administrative penalties as deemed appropriate by the Chief Executive Medicare. It is important for RSA providers and holders to be aware of these changes to ensure they meet their obligations under the RSA Act.