Commonwealth Numbered Regulations

1995 No. 64 SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS (AMENDMENT) - REG 17

17.1 After Division 5.4, insert:

"Division 5.5 - Member-protection standards Interpretation

"5.12. In this Division:
'exit fee' means a fee charged by a trustee of a fund in relation to a payment
of benefits in the fund, being a fee that the trustee would not have charged
if the payment had not been made;
'member reporting period', in relation to a fund, means:

   (a)  a member reporting period that applies under Subdivision 2.4.2; or

   (b)  an exit reporting period within the meaning of regulation 2.44.

Operating standards-member protection

"5.13. For the purposes of subsections 31 (1) and 32 (1) of the Act, the
requirements set out in subregulation 5.17 (2) and regulation 5.18 are
standards applicable to the operation of regulated superannuation funds and
approved deposit funds.

Member-protection standards not to apply to certain funds

"5.14. (1) In this regulation:
'unitised fund' means a fund for which the investment return is reflected in
the price of units in the fund rather than being credited to or debited
against the accounts of the members.



"(2) The member-protection standards do not apply to:

   (a)  a unitised fund in which all the administration costs of the fund are
        reflected in the price of units in the fund; or

   (b)  a unitised fund in which the price of units does not reflect all of
        the administration costs of the fund, if the benefits of its members
        are protected in a way that is consistent with the member-protection
        standards; or

   (c)  a fund in which all of the administration costs of the fund are
        applied to each member in direct proportion to:

        (i)    the investment return credited to, or debited against, the
               member; or

        (ii)   the member's benefits.

Application of member-protection standards to sub-fund

"5.16. (1) Subject to subregulation (2), the trustee of a fund may treat a
sub-fund within the fund as a fund for the purposes of the member-protection
standards if the sub-fund satisfies the following conditions (otherwise than
for the purposes of winding up):

   (a)  the sub-fund has separately identifiable assets and separately
        identifiable beneficiaries; and

   (b)  each beneficiary of the sub-fund has an interest only in the assets of
        the sub-fund and not in the other assets of the fund; and

   (c)  there is no transfer of assets, benefits or money between the sub-fund
        and another sub-fund without a transfer of a corresponding beneficial
        interest; and

   (d)  the insurance and administration costs of the sub-fund are
        attributable only to the sub-fund.



"(2) The trustee may not treat a sub-fund as a fund if the purpose of doing so
is to circumvent the member-protection standards.

Member-protection standards

"5.17. (1) This regulation applies in relation to a member of a fund:

   (a)  who, on or after 1 July 1995, is a protected member; or

   (b)  who, on or after 30 June 1996, is reportable to the Commissioner as a
        lost member under regulation 11.08.



"(2) Subject to subregulation (4), the sum charged as administration costs in
respect of a relevant member reporting period against the minimum benefit
component of the benefits of a member to whom this regulation applies must not
exceed the investment return credited to, or debited against, the member's
minimum benefits for that period.



"(3) For the purposes of subregulation (2) and subject to subregulations (4)
and (5), a member reporting period is a relevant member reporting period if:

   (a)  in the case of a protected member:

        (i)    at the end of the period, the member is a protected member; and

        (ii)   the period ends after 30 June 1995; or

   (b)  in the case of a lost member:

        (i)    if the member becomes reportable for the purposes of regulation
               11.08 on joining the fund - the member is lost during any part
               of the member reporting period; or

        (ii)   if the member becomes reportable for the purposes of that
               regulation at a time other than the time he or she joins the
               fund and the period is:

                (A)  the first member reporting period beginning after the
                     member becomes reportable for the purposes of that
                     regulation; or

                (B)  a subsequent member reporting period during a part of
                     which the member remains a lost member.



"(4) For the purposes of subregulation (2) and paragraph (3) (a), if a member
reporting period begins before and ends after 1 July 1995, a trustee may treat
only the part of that period beginning on 1 July 1995 as being a relevant
member reporting period.



"(5) For the purposes of subregulation (2) and paragraph (3) (b), if a member
ceases to be a lost member during a member reporting period, a trustee may
treat only the part of that period ending when the member ceases to be a lost
member as being a relevant member reporting period.



"(6) Subregulation (2) does not apply if, in a member reporting period:

   (a)  the total of the administration costs that would be charged to members
        of a fund but for this regulation is greater than the total investment
        return of the fund during that period; and

   (b)  the apportionment of those costs between members is carried out in a
        fair and equitable manner.



"(7) For the purposes of this regulation, 'administration costs' includes all
fees and charges charged against a member's benefits, other than:

   (a)  in the case of a member who was a member of the fund on 30 June 1995,
        the exit fee (if any) applicable to the member's benefits at that
        date; and

   (b)  the cost (if any) of providing an insurance benefit to the member; and

   (c)  taxation costs.



"(8) For the purposes of this regulation, an exit fee other than an exit fee
of an amount equal to the exit fee applicable to the member's benefit at 30
June 1995 is taken to be charged against the relevant member's minimum
benefit.



"(9) For the purposes of paragraph (6) (b), an apportionment of costs is taken
to be fair and equitable only if each member of the fund is charged no more
than:

   (a)  the amount that a member would be charged if all administration costs
        charged against members' benefits were distributed in direct
        proportion to:

        (i)    the investment return credited to, or debited against, each
               member's benefits; or

        (ii)   the member's benefits; or

   (b)  the investment return credited to, or debited against, the member's
        benefits plus an amount no greater than 1% of any member's benefits.



"(10) For the purposes of this regulation:

   (a)  a member's benefits are taken to be composed wholly of mandated
        employer-financed benefits unless the trustee knows otherwise; and

   (b)  if the trustee of a fund knows that a part of a member's benefits is
        or is not composed of mandated employer-financed benefits, but does
        not know whether the remainder of the member's benefits are composed
        of mandated employer-financed benefits, that remainder is taken to be
        composed wholly of mandated employer-financed benefits.



"(11) Despite anything in this regulation, a trustee of a fund may protect the
benefits of a member from an earlier date than this regulation requires.

Costs not to be deferred

"5.18. If the trustee of a fund would charge costs to a member in a member
reporting period but for regulation 5.17, the trustee must not charge those
costs to the member in a future member reporting period, whether in
combination with other costs or not.".