Retirement Savings Accounts Regulations (Amendment) 1998 No. 82
EXPLANATORY STATEMENT
STATUTORY RULES 1998 NO. 82
Issued by the authority of the Assistant Treasurer
Retirement Savings Accounts Act 1997
Retirement Savings Accounts Regulations (Amendment)
The Retirement Savings Accounts Act 1997 (the Act) and the Retirement Savings Accounts Regulations (the Principal Regulations) allow banks, building societies, credit unions and life insurance companies to provide superannuation without a trust structure in the form of retirement savings accounts (RSAs), and provide for the functional supervision of RSAs and RSA providers by the Insurance and Superannuation Commission.
Section 200 of the Act provides that the Governor-General may make Regulations for the purposes of the Act.
The purpose of these Regulations is to amend the Principal Regulations to make miscellaneous technical refinements to the operating requirements for RSAs. The amendments have been prepared in light of administrative experience and/or industry representations. All amendments are 'stand alone' and relatively minor in nature. In summary, the Regulations provide that:
RSA providers give a copy of the terms and conditions of the RSA on request to a concerned person or an employer who is contributing to the RSA on behalf of an RSA holder (Regulation 3); and
RSA providers may treat certain benefits as unrestricted non-preserved benefits under the RSA legislation (unrestricted non-preserved benefits are benefits which the RSA holder can access anytime) (Regulations 4, 5 and 6).
The Regulations are described in detail in the Attachment.
The Regulations will commence on gazettal, except for Regulation 6, dealing with part of the second issue above, which will commence on 1 November 1998.
ATTACHMENT
Regulation 1 - Commencement
Regulation 1 provides that Regulation 6 commences on 1 November 1998 while the remainder of the Regulations commence on gazettal.
Regulation 2 - Amendment
The Retirement Savings Accounts Regulations (the Principal Regulations) are amended as set out in these Regulations.
Regulation 3 - Regulation 2.35 (Specific requirements)
At present, regulation 2.35 of the Principal Regulations provides that an RSA provider must, on request, give a copy of the terms and conditions of the RSA to a 'concerned person' (defined in subregulation 2.34(3) as meaning a person who: is, or was within the preceding 12 months, the holder of the RSA; is a legal personal representative of the holder of the RSA; or has a right or claim under the RSA).
As employers contributing to the RSA on behalf of the RSA holder may wish to make a decision as to whether to continue contributing to the RSA, it is reasonable to expect that they have access, on request, to the terms and conditions of the RSA.
Therefore, regulation 2.35 is amended to provide that the above documents be given on request to a concerned person or an employer who makes superannuation contributions to an RSA on behalf of an RSA holder.
Regulation 4 - Regulation 4.01 (Interpretation)
Regulation 4 inserts in subregulation 4.01(2) of the Principal Regulations a definition of 'transitional period' which, in relation to a superannuation fund (within the meaning of the Superannuation (Industry) Supervision Act 1993 (SIS Act)), is a period beginning at the beginning of the fund's 1994-95 year of income and ending, in the case of a public sector scheme, when the scheme became an exempt public sector superannuation scheme, or in the case of other superannuation funds, at the end of the day when the fund trustee lodges a fund's election notice to become regulated under the SIS Act.
The purpose of the transitional period is to limit the application of the provision for treating certain benefits as unrestricted non-preserved benefits, introduced by Regulation 5, to the transitional period only.
Regulation 5 - New Regulation 4.17A
At present, certain benefits which are or were in a fund subject to the Occupational Superannuation Standards legislation (OSS fund), but which could be deemed to be 'unrestricted non-preserved' benefits under the SIS Regulations or RSA Regulations would be treated as restricted non-preserved benefits and cannot be accessed until there is another condition of release (unrestricted non-preserved benefits would have satisfied a condition of release and have a 'nil' cashing restriction, that is the benefits would be accessible at any time by the SIS fund member or RSA holder). This is because there is no category of benefits in the OSS legislation equivalent to 'unrestricted non-preserved' in the SIS Regulations or RSA Regulations. If those benefits in the OSS fund were later rolled over or transferred into an RSA, they would still be treated as restricted non-preserved benefits.
To overcome such cases of inconsistencies which currently arise between the treatment of non-preserved benefits under the OSS legislation and the RSA legislation, an amendment is inserted in the Principal Regulations.
Regulation 4.17A is inserted in the Principal Regulations to provide that the RSA provider may treat benefits rolled over or transferred to an RSA as unrestricted nonpreserved benefits if the RSA provider is reasonably satisfied that if the rollover or transfer is:
a) from a superannuation fund (Fund A) during its transitional period (transitional period defined in subregulation 4.01(2) see Regulation 4 above),:
(i) and during that transitional period there arose, in relation to the benefits, a circumstance that would have resulted in the satisfaction of a condition of release and a 'nil' cashing restriction had the Principal Regulations applied; or
(ii) if the benefits themselves were rolled over to Fund A from a regulated superannuation fund or approved deposit fund, the relevant cashing restriction in respect of the benefits in the regulated superannuation fund or approved deposit fund was nil (that is the benefits have satisfied a condition of release and have no cashing restriction); or
b) from a SIS regulated superannuation fund or approved deposit fund where the benefits originated from another superannuation fund (Fund B) during its transitional period, the conditions and restrictions on benefits in a)(i) or (ii) above applied to the benefits in Fund B as would apply to those in Fund A.
Regulation 6 - Regulation 4.18 (Redistribution of benefits by operation of terms and conditions or action of RSA provider)
Regulation 6 inserts subregulation 4.18(3) in the Principal Regulations to provide that an RSA provider may alter the category of benefits in an RSA from preserved or restricted non-preserved benefits to unrestricted non-preserved benefits for benefits that were subject to similar conditions of release and cashing restriction to those under
regulation 4.17A (inserted by Regulation 5 above) but were rolled over or transferred into the RSA before the commencement of regulation 4.17A.
The Regulation provides an exception to the restriction on RSA providers altering the category of RSA benefits so as to increase the amount of unrestricted non-preserved benefits in an RSA.
The Regulation commences on 1 November 1998 to allow RSA providers approximately six months to make any necessary changes to the preservation status of benefits in RSAs.