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FAMILY LAW (SUPERANNUATION) AMENDMENT REGULATIONS 2003 (NO. 2) 2003 NO. 229
EXPLANATORY STATEMENTSTATUTORY RULES 2003 No. 229
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
FAMILY LAW ACT 1975
FAMILY LAW (SUPERANNUATION) AMENDMENT REGULATIONS 2003 (No. 2)
Subsection 125(1) of the Family Law Act 1975 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Part VIIIB of the Act provides for the division of superannuation between parties to a marriage on marriage breakdown or divorce.
The purpose of the Regulations is to amend the Family Law (Superannuation) Regulations 2001 (the Principal Regulations) to:
• prescribe two further classes of superannuation interests, those held by Queensland judges and by the Governor of the State of Queensland, as 'percentage-only' interests for the purposes of Part VIIIB of the Act (Item 2);
• correct an oversight in the application of one of the categories of payments that are not splittable for the purposes of Part VIIIB of the Act (Item 5);
• extend the power of the Minister to approve a retirement age for members of a superannuation plan so it can be exercised for the purpose of valuing an interest in accordance with a method approved by the Minister (Item 9);
• recast the provisions enabling the Australian Government Actuary to determine the interest rate that is to be periodically applied to a base amount under one of the two ways in which most superannuation interests can be divided under Part VIIIB of the Act (Item 14);
• provide for a procedure enabling spouses to apply for further information to test whether a superannuation fund trustee has correctly calculated the value of a superannuation interest that the trustee has earlier provided (Item 21);
• provide pension valuation factors for valuing superannuation interests in the payment phase paying fixed term pensions indexed at the consumer price index with a cap of 5% (Item 30); and
• make some other technical and drafting changes to the Principal Regulations.
Details of the Regulations are as follows:
Regulation 1 is formal.
Regulation 2 provides for the commencement of the Regulations on gazettal.
Regulation 3 provides for the amendment of the Principal Regulations by Schedule 1.
Schedule 1
Item 1: Subregulation 9A(1)
This item makes a drafting change to the opening words of subregulation 9A(1) of the Principal Regulations, consequential on the amendment of subregulation 9A(2) by Item 3.
Items 2, 3 and 4: After paragraph 9A(1)(c), Subregulation 9A(2), After subregulation 9A(3)
These items amend regulation 9A of the Principal Regulations to prescribe a superannuation interest in:
• the scheme constituted by the Judges (Pensions and Long Leave) Act 1957 (Qld); and
• the scheme constituted by the Governors (Salary and Pensions) Act 2003 (Qld);
as percentage-only interests for the purposes of Part VIIIB of the Family Law Act.
In the case of an interest in the scheme constituted by the Judges (Pensions and Long Leave) Act, the prescription does not include one that is already subject to an order or agreement under Part VIIIB, except in relation to a second or subsequent split of the interest (for example, where the member spouse splits his or her interest a second time following the breakdown of a later marriage).
In this regard, the concept of 'the commencement day' has been included in regulation 9A to provide for any interest in:
• the scheme constituted by the Judges' Contributory Pensions Act 1968 (Tas); or
• the Parliamentary Retiring Benefits Fund of Tasmania
that was subject to an order or agreement under Part VIIIB when an interest in either scheme or fund was prescribed as a percentage-only interest by amendments to the Principal Regulations which commenced on 2 May 2003.
Item 5: Paragraph 14G(7)(b)
This item amends paragraph 14G(7)(b) of the Principal Regulations to make a change to one of the conditions that must be complied with under regulation 14G when:
• a new interest is created for a non-member spouse; or
• an amount is transferred, rolled over or paid to or for the benefit of such a spouse;
before future payments in respect of a superannuation interest of a member spouse to which an order or agreement under Part VIIIB of the Family Law Act 1975 applies will be not splittable for the purposes of applying that Part of the Family Law Act to the order or agreement.
Under the Principal Regulations, one of the conditions which must be satisfied before future payments are not splittable is that the governing rules of the superannuation plan in which the member spouse's superannuation interest is held must not provide for the reduction of the benefit payable to any other member of the plan other than the member spouse.
The change that has been made is to permit a reduction of the benefit payable to a reversionary beneficiary of the member spouse.
This corrects an oversight in the Principal Regulations, thereby providing for the application of this additional category of payments which are not splittable where the superannuation interest that is subject to the order or agreement pays entitlements to a reversionary beneficiary (for example, to a surviving spouse or child) on the death of the member spouse.
Item 6: Subregulation 14G(10), definition of "V"
This item makes a minor correction to the definition of "V" in subregulation 14G(10) of the Principal Regulations in relation to an interest in a self managed superannuation fund.
Items 7 and 8: Paragraph 14G(11)(a), Paragraph 14G(11)(b)
These items make minor corrections to subregulation 14G(11) of the Principal Regulations. The corrections have the effect of requiring the value of a non-member spouse's entitlement, where the superannuation interest that is subject to an order or agreement under Part VIIIB of the Family Law Act is a partially vested accumulation interest, to be determined in accordance with paragraph 14G(11)(a), not paragraph 14G(11)(b).
Item 9: Subregulation 30(1)
This item amends subparagraph 30(1) of the Principal Regulations to extend the power of the Minister to approve an age as a retirement age for all members of a superannuation plan (or of an identifiable class of members of such a plan). The extension is that the power can be exercised for the purpose of determining the gross value of a defined benefit superannuation interest in accordance with a method approved by the Minister under regulation 38 of the Principal Regulations.
Items 10, 11, 12 and 13: Regulation 33, Regulation 34
These items amend regulations 33 and 34 of the Principal Regulations to provide that the method for determining the gross value of a superannuation interest that is:
• in the growth phase; and
• made up of separate defined benefit interest and accumulation interest components
will not apply to a superannuation interest in relation to which a method or factor is approved in any future instrument made under regulation 38 of the Principal Regulations.
It is intended that future approvals under regulation 38 will provide for a method for determining the whole of a superannuation interest, not separate components of such an interest.
Item 14: Subregulations 45D(3) and (4)
Subregulations 45D(3) and (4) of the Principal Regulations provide for the determination by the Australian Government Actuary of the interest rate at which the base amount allocated or specified in an order or agreement is periodically adjusted where the order or agreement applies to a superannuation interest that is a defined benefit interest or an interest in a self managed superannuation fund.
This item replaces subregulation 45D(3) and (4) with new subregulations 45D(3), (4), (5) and (6) which:
• retain the existing structure in the provisions they replace under which the Australian Government Actuary determines a rate that is to apply in a 12 month adjustment period and a method for determining a rate where the adjustment period is less than 12 months;
• provide for an annual series of determinations by the Australian Government Actuary, based on the change in the average weekly ordinary times earnings (AWOTE) figures published by the Australian Bureau of Statistics for the year ending with the February quarter immediately before the base amount is periodically adjusted (subregulation 45D(3) and (4) formerly provided for the Australian Government Actuary to set an interest rate or method based on the AWOTE figures for the quarter ending before the rate or method is set); and
• where an adjustment period traverses two financial years, provide for an appropriate interest rate for the period reflecting the proportions of the period falling within each of the two financial years
Item 15, 16 and 17: Subparagraph 63(3)(b)(v), Subparagraph 64(3)(b)(v), Paragraph 64(4)(i)
These items amend subparagraph 63(3)(b)(v) and 64(3)(b)(v), and also paragraph 64(4)(i), of the Principal Regulations in each case to clarify that the requirement that the trustee provide information relating to on-going pension payments that may become payable to a reversionary beneficiary is limited to payments to such a beneficiary who is a non-member spouse.
Item 18: Paragraph 64(4)(p)
This item makes an editing correction to paragraph 64(4)(p) of the Principal Regulations.
Item 19: Paragraph 64(6)(c)
This item makes a drafting amendment to paragraph 64(6)(c) of the Principal Regulations consequential on new subregulations 64(6A) to (6D) inserted by Item 21.
Item 20: Paragraph 64(6)(d)
This item amends paragraph 64(6)(d) of the Principal Regulations to provide that a trustee is not required to provide to an applicant for information under section 90MZB of the Family Law Act salary or accrued benefit multiple information relating to a member spouse's superannuation interest unless a record of that information is in the trustee's possession, power or control.
Such an applicant may ask for historical information on those matters (that is, for the information as at a date in the past). If the trustee has the information, or can require some other person to provide the information to it, then the information will be required to be provided to an applicant upon request under section 90MZB.
Item 21: After subregulation 64(6)
This item inserts new subregulations 64(6A), (6B), (6C) and (6D). The provisions enable an applicant under section 90MZB of the Family Law Act, where the trustee has earlier provided to the applicant the gross value of a superannuation interest determined in accordance with the method in Schedule 2 or a method approved by the Minister under regulation 38, without providing the applicant with any further information relating to that gross value, to request further specific information to enable the applicant to test whether the trustee has correctly calculated the gross value of the interest in accordance with the method.
Item 22: Subparagraph 66(3)(b)(v)
This item amends subparagraph 66(3)(b)(v) of the Principal Regulations to clarify that the requirement that the trustee provide information in relation to on-going pension payments that may become payable a reversionary beneficiary is limited to payments to such a beneficiary who is a non-member spouse.
Items 23, 24 and 25: Schedule 2, subclause 5(2), definitions of "B" and "Rsa"
These items make drafting amendments to the definitions of "B" and "Rsa" in subclause 5(2) of Schedule 2 of the Principal Regulations consequential on new definition of "r" inserted in clause 5(2) by Item 26.
Item 26: Schedule 2, subclause 5(2), definitions of "r"
This item amends the definition of "r" in subclause 5(2) of Schedule 2 of the Principal Regulations to clarify that the definition refers to the reversionary proportion that a reversionary beneficiary who is a non-member spouse may receive.
Item 27: Schedule 2, clause 28, definitions of "PV1s" and "PVp"
This item makes drafting corrections to the two defined terms in the formula in subclause 28(2) of Schedule 2 of the Principal Regulations.
Item 28: Schedule 2, clause 29
This item replaces clause 29 of Schedule 2 of the Principal Regulations and inserts new clause 29A. New clauses 29 and 29A provide for separate methods for determining the gross value of a defined benefit interest that is in the growth phase in respect of which benefit is payable in a combination of lump sum or pension form and there is a restriction on the proportion of the interest that may be taken in either form.
New clause 29 provides the method that applies where the benefit in respect of the interest is payable as a pension and there is a restriction of the proportion of pension that may be commuted to lump sum.
New clause 29A provides the method that applies where the benefit in respect of the interest is payable as a lump sum and there is a restriction of the amount of lump sum that may be commuted to pension.
Item 29: Schedule 2, subclauses 30(1) and (2)
This item makes amendments to subclauses 30(1) and (2) of Schedule 2 of the Principal Regulations consequential on the insertion of new clause 29A.
Item 30: Schedule 5, clause 3, including the table
This item amends clause 3 of Schedule 5 of the Principal Regulations to insert pension valuation factors for an interest paying a fixed term pension indexed in accordance with the consumer price index with a cap of 5%.