Commonwealth Numbered Regulations

1995 No. 159 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 29

29.1 After Division 5.5, insert:

"Division 5.6-Existing personal superannuation members Interpretation

"5.19. In this Division:
'existing personal superannuation member' means a member of a regulated
superannuation fund who:

   (a)  joined the fund before 1 July 1995; and

   (b)  at the time he or she joined the fund, was not a person in respect of
        whom there was in effect a contribution arrangement of the kind
        referred to in subsection 16 (5) of the Act (which deals with the
        definition of 'standard employer-sponsored member').

Operating standards-existing personal superannuation members

"5.20. For the purposes of subsection 31 (1) of the Act, a requirement set out
in this Division is a standard applicable to the operation of regulated
superannuation funds.

Trustee may offer election to existing personal superannuation members

"5.21. (1) The trustee of a regulated superannuation fund that has existing
personal superannuation members may offer in writing to each of those members
the right to elect never to be treated by the fund as if he or she were a
protected member.

"(2) If the trustee offers a member the right to elect never to be treated as
a protected member, the trustee:

   (a)  must also offer the member the right to elect to have the member's
        benefits paid to an entity of the member's choice; and

   (b)  may also offer the member the right to elect to have the member's
        benefits paid in any other way. (NOTE: The trustee also has the power,
        under Part 24 of the Act, to pay benefits to an
        eligible rollover fund.)

"(3) The trustee may specify an entity (in this regulation called 'the default
entity') that will be taken to be the member's choice of entity if:

   (a)  a member elects to have benefits paid to another entity but does not
        specify the entity; or

   (b)  a member elects to have benefits paid to another entity but that other
        entity refuses to accept the benefits.

"(4) The default entity must be:

   (a)  an entity to which the member-protection standards relating to the
        protection of protected members apply; or

   (b)  an eligible rollover fund.

"(5) A member to whom a trustee offers the right to make an election under
subregulations (1) and (2) is not obliged to elect in favour of any of the
courses set out in that subregulation.

"(6) For the purposes of this Division, if:

   (a)  a member specifies an entity to which his or her benefits are to be
        paid, but that entity refuses to accept the payment; or

   (b)  the member elects to have his or her benefits paid to another entity,
        but does not specify the entity; the member is taken to have elected
        to have his or her benefits paid to the default entity.

"(7) If a trustee offers members of the fund the right to make an election,
the trustee must provide each member to whom the election is offered with the
following information:

   (a)  the contact details (within the meaning of Part 2) of the default
        entity, if any;

   (b)  a statement that:

        (i)    states that a member is not obliged to make an election in
               favour of any of the courses offered; and

        (ii)   sets out the effect of not making an election; and

        (iii)  sets out the effect of making an election in favour of each of
               the courses offered; and

        (iv)   sets out the circumstances in which the member will be taken to
               have elected to have his or her benefits paid to the default
               entity;

   (c)  the amount, or, subject to subregulation (8), the approximate amount,
        of the member's benefits in the fund.

"(8) A fund may inform a member under paragraph (7) (c) of the approximate
amount of the member's benefits if, at the time the information is to be
given, the trustee of the fund cannot determine the exact amount of the
member's benefits in the fund.

What happens if the member waives member protection?

"5.22. (1) If under regulation 5.21 a member of a fund elects to waive member
protection, the member-protection standards have only lost-member operation in
relation to the member:

   (a)  if the waiver takes place before 1 October 1995-from 1 July 1995; or

   (b)  in any other case-from the date of the waiver. (NOTE: See
        subregulation 5.17 (5A) in regard to the end of the last relevant
        member reporting period in this case.)

"(2) If under regulation 5.21 a member of a fund elects to waive member
protection, the waiver ceases to have effect when the member ceases to be a
member of the fund.

What happens if the member elects to have benefits paid out of the fund?

"5.23. If a member of a fund elects to have his or her benefits paid out of
the fund under this Division, and the payment takes place before 1 October
1995, the member-protection standards are taken never to have applied in
relation to the member's membership of the fund.

What happens if the trustee pays benefits paid out of the fund?

"5.24. If:

   (a)  the trustee of a fund has written to a member offering the right to
        elect under regulation 5.21; and

   (b)  the member does not elect to waive member protection; and

   (c)  the trustee pays benefits of the member out of the fund; the trustee
        must not charge an exit fee in respect of the payment.".