Superannuation Industry (Supervision) modification declaration No. 1 of 2013
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Superannuation Industry (Supervision) Act 1993, section 335
Under section 332 of the Superannuation Industry (Supervision) Act 1993 (the Act), APRA has the power to declare that a modifiable provision is to have effect as if it were specified in the declaration. The ‘modifiable provisions’ are identified in section 327 of the Act.
Under section 335 of the Act, APRA has the power to revoke declarations made under section 332 of the Act.
On 28 June 2013, APRA made Superannuation Industry (Supervision) modification declaration No. 1 of 2013 under section 335 of the Act (the instrument). The instrument revokes Superannuation Industry (Supervision) Act 1993 Modification Declaration No. 23 (Modification Declaration No. 23) which was made under section 332 of the Act on 12 January 1999 and subsequently amended on 18 October 2000 and 25 January 2001.
The instrument commences on 1 July 2013.
- Background
Modification Declaration No. 23 set prudential requirements relating to fund solvency for trustees of defined benefit funds that paid a defined benefit pension. It did this by modifying the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations). In particular, Modification Declaration No. 23 inserted a definition of ‘defined benefit pension’ in the SIS Regulations and a modified definition of ‘defined benefit member’ which, for the purposes of certain provisions, included a member in receipt of a defined benefit pension. The purpose of this was to ensure that provisions relating to the actuarial investigation of defined benefit funds (or defined benefit sub-funds) in Part 9 of the SIS Regulations would apply, as modified, to funds paying such a pension (even if they were otherwise not treated as defined benefit funds). Annual actuarial investigation and reporting requirements replaced the established triennial requirement for trustees of such funds, although the Modification Declaration No. 23 provided for trustees of funds with more than four members to apply to APRA for relief from the annual requirement. Small APRA funds and self-managed superannuation funds regulated by the Australian Taxation Office were subject to the annual requirements.
Two changes, each of which takes effect on 1 July 2013, necessitate the revocation of Modification Declaration No. 23.
Firstly, APRA determined Prudential Standard SPS 160 Defined Benefit Matters (SPS 160) on 28 June 2013. SPS 160 will apply to APRA-regulated defined benefit funds, and where applicable, defined benefit sub-funds in relation to actuarial investigations of the kind that prior to 1 July 2013 have been covered by Division 9.5 of the SIS Regulations as modified by Modification Declaration No. 23.
Secondly, Superannuation Legislation Amendment (MySuper Measures) Regulation 2013, will (among other things) amend Division 9.5 of the SIS Regulations to confine the scope of its application to defined benefit funds that are self-managed superannuation funds and to make amendments incorporating modifications that have been in Modification Declaration No.23, such as regulation 9.29A. In addition, the amendments will insert new definitions of ‘defined benefit member’, ‘defined benefit pension’, ‘defined benefit sub-fund’ and ‘defined benefit fund’ in the SIS Regulations, which will be similar to the terms in Modification Declaration No. 23.
2. Purpose and operation of the instrument
The purpose of the instrument is to revoke Modification Declaration No. 23. The determination of SPS 160 and Superannuation Legislation Amendment (MySuper Measures) Regulation 2013, make Modification Declaration No. 23 redundant.
3. Consultation
Section 17 of the Legislative Instruments Act 2003 (LIA) imposes consultation obligations on the makers of legislative instruments, particularly where the proposed instrument is likely to have a direct, or a substantial indirect, effect on business, or to restrict competition.
Section 18 of the LIA sets out circumstances where consultation may be unnecessary or inappropriate. They include the circumstance that the legislative instrument is of a minor or machinery nature and does not substantially alter existing arrangements (paragraph 18(2)(a)).
In the present case, the instrument revokes a modification declaration that has been made redundant because its provisions have been replicated in SPS 160 and the amended SIS Regulations. This approach was canvassed during the consultation process for SPS 160 and the amendments to the SIS Regulations and therefore further consultation for the instrument is not warranted.
4. Regulation Impact Statement
The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required for the instrument.
5. Statement of compatibility prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
A Statement of Compatibility with Human Rights prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 is provided at Attachment A to this Explanatory Statement.
ATTACHMENT A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation Industry (Supervision) modification declaration No. 1 of 2013
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).
Overview of the Legislative Instrument
This Legislative Instrument revokes Superannuation Industry (Supervision) Act 1993 Modification Declaration No. 23 (Modification Declaration No. 23), under section 335 of the Superannuation Industry (Supervision) Act 1993 (SIS Act).
Modification Declaration No. 23 has no present practical effect and is redundant. Modification Declaration No.23 set prudential requirements relating to fund solvency for trustees of defined benefit funds that paid a defined benefit pension. The prudential requirements set by Modification Declaration 23 have now been replicated in Prudential Standard SPS 160 Defined Benefit Matters and in Division 9.5 of the Superannuation Industry (Supervision) Regulations 1994 as amended by the Superannuation Legislation Amendment (MySuper Measures) Regulation 2013.
Human rights implications
APRA has assessed this Legislative Instrument against the international instruments listed in section 3 of the HRPS Act and determined that it does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.