Superannuation Industry (Supervision) Regulations (Amendment) 1997 No. 153
EXPLANATORY STATEMENT
Statutory Rules 1997 No. 153
Issued by the authority of the Assistant Treasurer
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations (Amendment)
The Superannuation Industry (Supervision) Act 1993 (the Act) and the Superannuation Industry (Supervision) Regulations (the Principal Regulations) provide for the prudent management of certain superannuation funds, approved deposit funds and pooled superannuation trusts and for their supervision by the Insurance and Superannuation Commissioner.
Section 353 of the Act provides that the Governor-General may make Regulations for the purposes of the Act
At present, superannuation benefits are generally required to be 'preserved' in the superannuation system until retirement on or after age 55. However, subject to the governing rules of the superannuation fund, early release of 'preserved' benefits is permitted under the Principal Regulations in certain restricted circumstances including permanent departure from Australia, severe financial hardship or compassionate grounds or where, on termination of gainful employment, the amount subject to preservation is less than $500.
It was announced in the 1997-98 Budget that the current arrangements for early release of superannuation benefits would be reformed. In particular, it was announced that the 'permanent departure from Australia' condition of release would be removed.
The removal of the 'permanent departure from Australia' condition of release is based on a number of reasons, including that there is anecdotal evidence that this condition has been abused by people providing inconclusive or false evidence to trustees of their proposed permanent departure. In addition, removal of this condition will bring Australian arrangements more into line with overseas practice and make it easier for the Government to negotiate reciprocal social security agreements with other countries.
Under regulations 6.18, 6.19 and 6.23 of the Principal Regulations, a person's preserved benefits and restricted nonpreserved benefits in a regulated superannuation fund and approved deposit fund (ADF) may be cashed on or after the satisfaction by the person of a condition of release- Pans 1 and 2 of Schedule 1 to the Principal Regulations specify 'permanent departure from Australia' as a condition of release. Subregulation 6.01(2) of the Principal Regulations defines 'permanent departure from Australia' as a departure by the person from Australia where the trustee is reasonably satisfied that it is for the purpose of permanent residence outside Australia.
The Regulations amend the Principal Regulations by:
* omitting the definition of 'permanent departure from Australia' from subregulation 6.01(2) of the Principal Regulations;
* Omitting item 104 from Part 1 of Schedule 1 to the Principal Regulations which removes 'permanent departure from Australia' as a condition of release in relation to regulated superannuation funds ; and
* omitting item 204 from Part 2 of Schedule 1 to the Principal Regulations which removes 'permanent departure from Australia' as a condition of release in relation to ADFs.
Therefore, a person who permanently departs from Australia will only be able to access preserved and restricted non-preserved benefits at retirement on or after age 55 or under other conditions of release.
A transitional provision is inserted to enable trustees to release amounts on the grounds of permanent departure overseas after 30 June 1997 where a member has made a written request to the trustee on or before 30 June 1997 for release of benefits on those grounds. In these circumstances, the trustee must deal with the written request as if the amendments to remove 'permanent departure overseas' as a condition of release had not been made.
The Regulations will commence on 1 July 1997.
The Office of Regulation and Review have advised that a Regulation Impact Statement is not necessary in respect of the Regulations.
Overview
The Superannuation Industry (Supervision) Regulations (Amendment) 1997 No. 153 was introduced to amend the Superannuation Industry (Supervision) Regulations 1994, which operate under the Superannuation Industry (Supervision) Act 1993. This amendment primarily addressed the issue of the 'permanent departure from Australia' condition for the early release of superannuation benefits. The problem this amendment aimed to resolve was the perceived misuse and abuse of this condition, as well as the desire to align Australian superannuation practices more closely with international standards and facilitate negotiations for reciprocal social security agreements with other countries. The amendment was enacted by the Assistant Treasurer under the authority of the Act and was intended to provide a more robust and equitable framework for superannuation fund management and benefit access. The policy objective behind the amendment was to ensure the integrity of the superannuation system while offering flexibility to those genuinely in need of early access to their superannuation funds.
Scope and Application
The Superannuation Industry (Supervision) Regulations (Amendment) 1997 No. 153 applies to trustees of regulated superannuation funds and approved deposit funds in Australia, including their members, as well as to the Insurance and Superannuation Commissioner who supervises these funds. The regulations are made under the Superannuation Industry (Supervision) Act 1993, which governs the prudent management and supervision of superannuation funds, approved deposit funds, and pooled superannuation trusts. The amendment removes the condition of 'permanent departure from Australia' as a permissible reason for the early release of preserved superannuation benefits. This change affects individuals who have previously used this condition to access their superannuation funds before reaching the age of 55. The regulations apply nationally across Australia, and they do not introduce any new exclusions or exemptions beyond what is already specified in the Principal Regulations. The amendment will be effective from 1 July 1997, with a transitional provision allowing for the processing of written requests made before 30 June 1997 under the old conditions.
Key Provisions
The Superannuation Industry (Supervision) Regulations (Amendment) 1997 No. 153, issued under section 353 of the Superannuation Industry (Supervision) Act 1993, primarily address the conditions under which early release of preserved superannuation benefits is permitted. The key amendments (regulations 6.01, 6.18, 6.19, 6.23 and Schedule 1, items 104 and 204) involve the removal of 'permanent departure from Australia' as a condition for early release of these benefits. This change aligns with the announcement in the 1997-98 Budget, where the government sought to reform the current arrangements for early release, citing reasons such as the abuse of this condition and the desire to bring Australian practices more in line with international standards.
The amendments impose specific obligations on trustees of superannuation funds and approved deposit funds (ADFs). Trustees are required to cease considering 'permanent departure from Australia' as a condition of release under the regulations. They must also adhere to a transitional provision that allows for the release of benefits on the grounds of permanent departure from Australia for requests made on or before 30 June 1997. This transitional measure ensures that individuals who had already made written requests for benefit release based on permanent departure can still be considered, provided the request was submitted before the amendments took effect on 1 July 1997.
The Act does not explicitly state offences, penalties, or civil/criminal consequences for breach in the explanatory statement provided. However, the amendments are framed within the broader regulatory framework of the Superannuation Industry (Supervision) Act 1993, which implies that non-compliance with these regulations could result in enforcement actions by the Insurance and Superannuation Commissioner. Such actions may include penalties for trustees who fail to comply with the new conditions of release, although specific penalties are not detailed in the provided explanatory statement. The overarching regulatory framework suggests that breaches could lead to financial penalties, corrective actions, or other enforcement measures as deemed appropriate by the Commissioner.