Commonwealth Numbered Acts Commonwealth Numbered ActsSuperannuation Industry (Supervision) Act 1993
1 After section 68
Insert:
68AAA Benefits provided by taking out insurance--inactive accounts
(1) Each trustee of a regulated superannuation fund must ensure that a benefit is not provided by the fund to, or in respect of, a member of the fund under a choice product or MySuper product held by the member by taking out or maintaining insurance if:
(a) the member's account is inactive in relation to that product for a continuous period of 16 months; and
(b) the member has not elected under subsection (2) that the benefit will be provided to, or in respect of, the member under the product by taking out or maintaining insurance, even if the member's account is inactive in relation to that product for a continuous period of 16 months.
Note: This section does not apply in relation to regulated superannuation funds with fewer than 5 members (see section 68AAD).
(2) Each trustee of the regulated superannuation fund must ensure that each member of the fund who holds a choice product or MySuper product offered by the fund may elect, in writing, that a benefit specified in the election is to be provided to, or in respect of, the member under the product by taking out or maintaining insurance, even if the member's account is inactive in relation to that product for a continuous period of 16 months.
(3) For the purposes of this section, a member of a regulated superannuation fund has an account that is inactive in relation to a choice product or MySuper product for a period if the trustee, or trustees of the fund, have not received an amount in respect of the member that relates to that product during that period.
(4) The prohibition in subsection (1) ceases to apply to benefits provided to, or in respect of, a member of the fund under a choice product or MySuper product held by the member if the trustee, or trustees of the fund, receive an amount in respect of the member that relates to that product after the account has been inactive in relation to the product for 16 months.
(5) However, the prohibition in subsection (1) applies again if the member's account is again inactive in relation to the product for a period of 16 months.
(6) This section does not apply to:
(a) a defined benefit member; or
(b) an ADF Super member (within the meaning of the Australian Defence Force Superannuation Act 2015 ); or
(c) a person who would be an ADF Super member apart from the fact that the regulated superannuation fund is or was, for the purposes of Part 3A of the Superannuation Guarantee (Administration) Act 1992 , a chosen fund for contributions for the person's superannuation by the Commonwealth; or
(d) a member to whom the employer-sponsor contribution exception applies (see section 68AAE).
(7) Nothing in this section affects a right of a member of a regulated superannuation fund if:
(a) the right relates to insurance cover; and
(b) in compliance with this section, an insurance premium in relation to the member for that insurance cover ceases to be paid; and
(c) the right exists because of insurance premiums paid in relation to the member before insurance premiums cease to be paid as mentioned in paragraph (b).
(8) Nothing in this section affects a right of a member of a regulated superannuation fund if:
(a) the right is a right to insurance cover for a fixed term, subject only to the payment of insurance premiums; and
(b) that fixed term begins before the time at which a trustee of the fund is required under subsection (1) to ensure that a benefit is not provided to, or in respect of, the member under a choice product or MySuper product held by the member by taking out or maintaining insurance.
68AAD Section 68AAA does not apply to funds with fewer than 5 members
Section 68AAA does not apply in relation to regulated superannuation funds with fewer than 5 members.
68AAE Employer-sponsor contribution exception
(1) The employer-sponsor contribution exception applies for a quarter to a member of regulated superannuation fund to, or in respect of, whom a benefit is provided by the fund under a choice product or MySuper product held by the member by taking out or maintaining insurance if:
(a) an employer-sponsor notifies the trustee of the fund in writing that the employer-sponsor will pay insurance fees relating to the benefit for the member; and
(b) the member is:
(i) an employee of the employer-sponsor, or an associate of the employer-sponsor; or
(ii) the relative or dependant of such an employee; and
(c) the quarter ends after the employer-sponsor notifies the trustee under paragraph (a); and
(d) the amount the employer-sponsor contributes to the fund for the quarter exceeds the amount that the employer-sponsor would need to contribute to avoid an individual superannuation guarantee shortfall for the member for the quarter; and
(e) that excess is equal to or greater than the insurance fees relating to the benefit for the quarter.
(2) In this section:
"quarter " means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October.
2 After subsection 68AA(8)
Insert:
Inactive accounts
(8A) This section does not require the provision of death benefit in respect of a MySuper member of a regulated superannuation fund, if death benefit is not to be provided in respect of the MySuper member by taking out or maintaining insurance because of section 68AAA.
(8B) This section does not require the provision of permanent incapacity benefit to a MySuper member of a regulated superannuation fund, if permanent incapacity benefit is not to be provided in respect of the MySuper member by taking out or maintaining insurance because of section 68AAA.
Part 2 -- Application and transitional provisions
3 Application of section 68AAA
(1) Section 68AAA of the Superannuation Industry (Supervision) Act 1993 , as inserted by item 1 of this Schedule, applies on and after 1 July 2019 (the commencement day ).
(2) However, a period during which a member's account is inactive in relation to a choice product or MySuper product offered by a regulated superannuation fund is to be taken into account for the purposes of section 68AAA even if the period begins before the commencement day.
(3) Each trustee of a regulated superannuation fund that offers a choice product or MySuper product under which a benefit may be provided by taking out or maintaining insurance must ensure that:
(a) on 1 April 2019, each member of the fund who has an account in relation to one or more of those products that has been inactive for a continuous period of 6 months before that day is identified; and
(b) on or before 1 May 2019, each of the members of the fund identified under paragraph (a) is given notice in writing in accordance with subitem (4).
(4) The notice must:
(a) state that, on and after 1 July 2019, a benefit will not be provided to the member under the product by taking out or maintaining insurance if:
(i) for a continuous period of 16 months, the member's account is inactive in relation to that product (as defined for the purposes of section 68AAA of the Superannuation Industry (Supervision) Act 1993 ); and
(ii) the member has not elected that the benefit will be provided to, or in respect of, the member under the product by taking out or maintaining insurance, even if the member's account is inactive in relation to that product for a continuous period of 16 months; and
(b) set out the method by which the member can make such an election in writing.
(5) An election made under paragraph (4)(b) before the commencement day has effect on and after the commencement day as if it were an election made under subsection 68AAA(2) of the Superannuation Industry (Supervision) Act 1993 .
(6) Despite subitem (3), a trustee of a regulated superannuation fund that offers a choice product or MySuper product does not have to ensure that a notice is given to a member of the fund to whom it would otherwise be required to be given under that subitem if:
(a) after 8 May 2018 but before 1 April 2019, the member has given the fund notice in writing that the member elects to have one or more benefits provided under the product or the products held by the member by taking out or maintaining insurance; and
(b) the only benefits provided to the member under the product or products held by the member by taking out or maintaining insurance are covered by the election.
The notice mentioned in paragraph (a) has effect on and after the commencement day as if it were an election made under subsection 68AAA(2) of the Superannuation Industry (Supervision) Act 1993 .
6 Administration of the application and transitional provisions
Despite subparagraph 6(1)(a)(iv) of the Superannuation Industry (Supervision) Act 1993 , ASIC not APRA has the general administration of item 3 of this Schedule.