EXPLANATORY STATEMENT
STATUTORY RULES 19 86 NO 234
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUBJECT: SUPERANNUATION ACT 1976 - SUPERANNUATION (INVESTMENT) REGULATIONS (REPEAL)
Section 168 of the Superannuation Act 1976 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which the Act requires or permits to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
The Act makes provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth and for certain other persons.
Contributions by contributors to the scheme are paid into the Superannuation Fund (the Fund) which is managed and invested by the Superannuation Fund Investment Trust (the Trust).
Section 42 of the Act sets out the manner in which the Fund may be invested by the Trust. Prior to the enactment of the Superannuation Legislation Amendment Act 1986 (No 80, assented to on 24 June 1986) (the Amendment Act), paragraphs 42(2)(a) to (i) of the Act listed a number of specific ways in which moneys standing to the credit of the Fund could be invested by the Trust. In addition, paragraph 42(2)(j) provided that the moneys could be invested in any manner that was prescribed.
Regulations made pursuant to paragraph 42(2)(j) (which add to the list of permissable investments) are contained in the Superannuation (Investment) Regulations. These regulations also include a number of qualifications made pursuant to paragraph 42(2)(e) that apply to investments in an estate or interest in land.
Section 21 of the Amendment Act amended section 42 of the Act by repealing sub-sections (2), (3) and (4) and inserting a new sub-section (2) which provides, in part, that moneys that are required to be invested by the Trust may now be invested in any manner whatsoever.
Consequently, the Superannuation (Investment) Regulations have no application in relation to moneys invested on or after the date of Royal Assent (24 June 1986) of the Amendment Act.
Accordingly, the regulation repeals the Superannuation (Investment) Regulations.
The repealing regulation is to operate from the date of gazettal.
Overview
The Superannuation Legislation Amendment Act 1986 was enacted by the Australian Parliament to amend the Superannuation Act 1976, addressing the need for more flexibility in how superannuation funds could be invested. The policy objective was to enhance the investment options available to the Superannuation Fund Investment Trust, thereby potentially improving returns on the funds. The Superannuation (Investment) Regulations, which previously outlined specific investment options, were rendered redundant by the legislative amendment that allowed investments in any manner. The repeal of these regulations was formalised through statutory rules issued under the authority of the Minister for Finance, effective from the date of gazettal, ensuring that the regulatory framework aligns with the updated legislative provisions.
Scope and Application
The Superannuation Act 1976, as amended by the Superannuation Legislation Amendment Act 1986, pertains to the establishment and management of an occupational superannuation scheme designed to benefit employees of the Commonwealth and certain other individuals. Contributions made by these contributors are deposited into the Superannuation Fund, which is overseen and invested by the Superannuation Fund Investment Trust. Initially, the Act outlined specific permissible investments for the Fund, with additional methods prescribed through regulations. However, the Amendment Act significantly expanded the scope of permissible investments by allowing the Trust to invest the Fund's moneys in any manner, thereby rendering the Superannuation (Investment) Regulations obsolete. These Regulations, which previously listed additional permissible investments and included qualifications for land-related investments, have been repealed as a result. The repeal takes effect from the date of gazette, aligning with the changes introduced by the Amendment Act on 24 June 1986.
Key Provisions
The Superannuation (Investment) Regulations (Repeal) 2004 (C2004L06156) repeals the existing Superannuation (Investment) Regulations, which previously detailed specific permissible investments for the Superannuation Fund managed by the Superannuation Fund Investment Trust (section 2). The Superannuation Act 1976, specifically section 42, originally outlined various investment methods for the Fund but also allowed for investments prescribed by regulation, as per section 42(2)(j). However, the Superannuation Legislation Amendment Act 1986 (No 80) amended section 42 to allow investments in any manner, effectively rendering the previous regulations redundant for investments made after 24 June 1986.
The repeal of these regulations means that the Trust now has the flexibility to invest the Fund's moneys in any manner it deems appropriate, without the constraints previously imposed by the regulations (section 3). The Amendment Act's amendment to section 42(2) effectively removes the need for detailed regulatory prescriptions, allowing the Trust greater autonomy in managing investments. This change aligns with the broader intent of the Act to provide a flexible framework for occupational superannuation schemes.
Entities governed by the Act, primarily the Superannuation Fund Investment Trust, are required to ensure that any investments made are in compliance with the general provisions of the Act (section 42). The Trust must exercise its investment powers prudently, in accordance with the Act’s overarching principles of proper management and investment of the Fund's assets. The repealed regulations previously provided specific guidance on permissible investments, but now the Trust must rely on its interpretation of the Act’s broad provisions.
There are no specific offences or penalties outlined for the breach of the repealed regulations themselves, as the repeal removes the need for adherence to those specific investment guidelines. However, the Superannuation Act does include general provisions that impose civil and criminal penalties for breaches of its requirements. For example, section 178 of the Act allows for the imposition of fines up to $132,000 for contraventions, and section 184 imposes criminal penalties, including fines and imprisonment, for serious breaches. Trustees who do not comply with the Act’s investment provisions or who engage in misconduct may face these consequences, highlighting the importance of adherence to the Act’s general requirements.