RETIREMENT SAVINGS ACCOUNTS AMENDMENT REGULATIONS 2002 (NO. 5) 2002 NO. 352

Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]

RETIREMENT SAVINGS ACCOUNTS AMENDMENT REGULATIONS 2002 (NO. 5) 2002 NO. 352

EXPLANATORY STATEMENT

STATUTORY RULES 2002 No. 352

Issued by the Authority of the Minister for Revenue and Assistant Treasurer

Retirement Savings Accounts Act 1997

Retirement Savings Accounts Amendment Regulations 2002 (No. 5)

Subsection 200(1) of the Retirement Savings Accounts Act 1997 (the RSA Act) provides that the Governor General may make regulations prescribing matters required or permitted by the RSA Act to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the RSA Act.

The purpose of the Regulations is to provide options to facilitate the splitting of a Retirement Savings Account (RSA) interest between a person who holds an RSA interest (the member spouse) and their spouse (the non-member spouse) upon their separation.

The Regulations are consequential to Part VIIIB of the Family Law Act 1975, inserted by the Family Law Legislation Amendment (Superannuation) Act 2001. Part VIIIB allows the member spouse to make an agreement with his or her non-member spouse to split the member spouse's RSA interest between them upon separation. In the event that the parties are unable to agree, the Family Court will be able to order that the RSA interest be split between them. A superannuation payment that is liable to be split is referred to as a splittable payment.

The Regulations:

• introduce new definitions and modify others contained in the Retirement Savings Accounts Regulations 1997 in order to conform with the Family Law Legislation Amendment (Superannuation) Act 2001; require the RSA provider to give notice to the member spouse and non-member spouse that the member spouse's RSA interest is subject to a payment split;

• allow the non-member spouse to either request the RSA provider to open a new RSA on his or her behalf or transfer the entitlement to a regulated superannuation fund, Approved Deposit Fund (ADF), RSA or Exempt Public Sector Superannuation Scheme nominated by the non member spouse or, if the non-member spouse has met a condition of release, request the lump sum payment of his or her entitlement;

• allow the RSA provider, if no request is received from the non-member spouse, to roll over or transfer the non-member spouse's entitlement to another regulated superannuation fund, ADF, RSA or Eligible Rollover Fund (ERF);

• ensure that unrestricted non-preserved, restricted non-preserved and preserved benefits are shared between the parties on an equal basis in proportion to their share of overall benefits;

• introduce information and disclosure requirements that must be provided by the RSA provider to the non-member spouse before the non-member spouse has an interest created and on-going information where an interest has not been created or transferred.

The Regulations commenced on commencement of the Family Law Legislation Amendment (Superannuation) Act 2001, which was 28 December 2002.

Details of the Regulations are in the Attachment.

ATTACHMENT

RETIREMENT SAVINGS ACCOUNTS AMENDMENT REGULATIONS 2002

EXPLANATION OF PROVISIONS

Regulation 1- Name of Regulations

This clause is a formal provision specifying the mode of citation of the Regulations.

Regulation 2 - Commencement

The Regulations will commence on the commencement of the Family Law Legislation Amendment (Superannuation) Act 2001. The Family Law Legislation Amendment (Superannuation) Act 2001 commences on proclamation, but if not proclaimed, commencement will be 18 months from the date the Act received Royal Assent, which was 28 June 2001.

Regulation 3 - Amendment of Retirement Savings Accounts Regulations 1997

This clause provides that the Retirement Savings Accounts Regulations 1997 (the RSA Regulations) are amended as set out in Schedule 1.

SCHEDULE 1- AMENDMENTS

ITEMS 1 TO 13 - DEFINITIONS

Regulation 1.03 (1) of the RSA Regulations defines the terms used in the Regulations. Items 1 to 13 will introduce a number of new definitions and modify others contained in the RSA Regulations in order to conform with the requirements of the Family Law Legislation Amendment (Superannuation) Act 2001. Where relevant, these terms will have the same meaning under both the Family Law Legislation Amendment (Superannuation) Act 2001 and the RSA Regulations.

Item 1 defines adjusted base amount according to Division 6.1A of the Family Law (Superannuation) Regulations 2001.

Item 2 defines allocated pension and base amount payment split. An allocated pension is a pension that meets the standards prescribed in Subregulation 1.07(2). A base amount payment split is a payment split under which the non-member spouse is allocated a base amount (within the meaning of Part VIIIB of the Family Law Act 1975).

Item 3 defines eligible application as an eligible application within the meaning of either section 51 of the RSA Act or subsection 1016A (1) of the Corporations Act 2001, depending on which applies to the Retirement Savings Account (RSA) in question.

Item 4 defines flag lifting agreement and FSR commencement. A flag lifting agreement is an agreement between separating spouses to lift a flag that applies to a superannuation interest held by one of the spouses. The FSR commencement is the commencement of the new disclosure regime for financial products under the Financial Services Reform Act 2001.

Item 5 defines growth phase according to the definition in Regulation 1.05A (see item 14).

Item 6 defines member spouse according to Part VIIIB of the Family Law Act 1975.

Item 7 defines old Regulations and operative time. The old Regulations are the RSA Regulations as they were in force immediately before the FSR commencement. Some provisions in the old Regulations continue to apply to certain RSAs under the transitional provisions for the FSR disclosure regime. The operative time for a payment split is the time at which the payment split becomes operative under Part VIIIB of the Family Law Act 1975.

Item 8 provides for definitions of payment split notice and percentage payment split. A payment split notice is a notice that an RSA provider is required to give to a non-member spouse and a member spouse after an RSA becomes subject to a payment split ("payment split" is already defined under Subregulation 1.03(1)). The requirements for a payment split notice are set out in Regulation 4A.03 (see item 22). A percentage payment split is a payment split under which the non-member spouse's entitlement is calculated according to a percentage specified in a superannuation agreement, flag lifting agreement or court order.

Item 9 extends the definition of reviewable decision to ensure that, for the purposes of rolling over or transferring a non-member spouse's entitlements under Regulation 4A.27(8)(b), decisions by the Regulator to allow forms of consent other than written consent are decisions that are reviewable by the Administrative Appeals Tribunal.

Item 10 defines splittable payment, splitting order and superannuation agreement according to Part VIIIB of the Family Law Act 1975.

Item 11 defines transferable benefits. A non-member spouse's transferable benefits are an amount equal to the non-member spouse's base amount or adjusted base amount, or a percentage of the member spouse's original interest, whichever is applicable, less the amount of any fees payable by the non-member spouse in respect of the payment split. In the case of a percentage payment split, the amount of the original interest is determined by one of two ways:

• If the interest is in the growth phase, it is the amount stated in a statement issued by the RSA provider as to the value of the benefits that would have been payable had the member spouse voluntary closed the RSA on the relevant date.

• In respect of any other interest, the amount is calculated using the relevant method in Part 5 of the Family Law (Superannuation) Regulations.

Item 12 and item 13 extend the definition of withdrawal benefit to ensure that benefits that are payable to a non-member spouse as a result of a payment split are counted as withdrawal benefits of the RSA holder (i.e. for the purposes of determining the member spouse's benefits on leaving an RSA or on meeting a condition of release).

Item 14 defines growth phase. An RSA is in the growth phase if:

• the RSA holder has not satisfied a relevant condition of release; or

• the RSA holder has satisfied a relevant condition of release but has not received a payment as a result; or

• the RSA holder has satisfied a relevant condition of release and has received a benefit (other than a pension) as a result, but the RSA holder is entitled to further benefits as a result of satisfying the condition of release and has not received any of those further benefits.

The relevant conditions of release are contained in Schedule 2 of the RSA Regulations and relate to release on the condition of retirement, death, permanent incapacity, attaining age 65 or terminating employment with an employer who had contributed to the RSA in relation to the RSA holder.

ITEM 15

Subregulation 1.07(2) sets out the minimum standards for pensions paid by RSAs. Under these standards, a benefit provided by an RSA is taken to be a pension if payments are made at least annually and, with the exception of a payment by way of commutation, are within maximum and minimum limits calculated in accordance with Schedule 1 of the RSA Regulations. Item 15 inserts a new subregulation to Regulation 1.07 to ensure that a benefit provided under an RSA does not cease to be a pension if the only reason that the terms and conditions of the RSA do not meet the standards of Subregulation 1.07(2) is because of a payment split in respect of the RSA.

ITEM 16 - INFORMATION ABOUT AN RSA INTEREST THAT IS SUBJECT TO A PAYMENT SPLIT

Item 16 inserts a new Division, Division 2.3A, which requires an RSA provider to give certain information in respect of an RSA interest that is subject to a payment split. Division 2.3A only applies to RSAs that have not changed over to the new disclosure regime established by the Financial Services Reform Act 2001, during the transitional period for that regime, which runs for two years from 11 March 2002. [Reg 2.18A]

The requirements in this Division represent operating standards for the purposes of subsection 38(1) of the RSA Act. [Reg 2.18B]

If an RSA is in the growth phase and is subject to abase amount payment split, the RSA provider must comply with certain periodic reporting requirements. These requirements do not apply if the RSA provider has split the interest as a result of a payment split.

At the end of each reporting period, the RSA provider must notify both the member spouse and non-member spouse of the non-member spouse's adjusted base amount, the amount of the adjustment in the reporting period and the method used to calculate the adjustment. This information must be provided to the non-member spouse as soon as practicable after the end of the reporting period. In the case of the member spouse, the information must be given at the same time as the other information that must be given in respect of each reporting period under Division 2.3 of the old regulations. Division 2.3 of the old regulations has been repealed but continues to apply to RSAs for which a transitional period applies under the Financial Services Reform Act 2001 disclosure regime. [Reg 2.18C]

An RSA provider must also give the non-member spouse information about any event that the RSA provider reasonably believes is likely to have a material effect on the non-member spouse's benefit entitlements, if the effect of the event may be adverse. This information must be given before, or as soon as practicable after, the occurrence of the event. [Reg 2.18D]

ITEMS 17 TO 28 - PAYMENT OF BENEFITS

Item 17 amends Regulation 3.05 to ensure that an RSA provider can cash, roll over or transfer benefits in accordance with Part 4A without infringing the operating standards for the treatment of minimum benefits in an RSA.

Item 19 corrects a spelling mistake in paragraph 4.24(5)(b).

Items 18 and 20 to 22 amend certain provisions contained in Divisions 4.2 and 4.3 of the RSA Regulations in order to facilitate the payment of benefits to a non-member spouse in accordance with Part 4A. These provisions concern the payment of benefits to an RSA holder and the cashing of benefits by an RSA holder.

Regulation 4.20 imposes restrictions on when an RSA provider may cash an RSA holder's benefits and also provides for when those benefits must be cashed. Item 18 ensures that the payment of benefits under Part 4A does not contravene Regulation 4.20. This item also ensures that, if an RSA provider refrains from cashing an RSA holder's benefits because the RSA is subject to a payment flag, the RSA provider will not have contravened Regulation 4.20. Under Part VIIIB of the Family Law Act 1975, the Family Court or the separating parties may impose a payment flag on an RSA. If a splittable payment becomes payable from the RSA, the RSA provider is prohibited from making the payment and must notify the parties or the Court (as applicable) that the payment is payable.

Regulation 4.26 provides that, subject to certain exceptions, an RSA provider must not cash the benefits in an RSA in favour of any person other than the RSA holder or his or her legal personal representative. Item 20 ensures that paying or cashing an amount to a non-member spouse to give effect to an interest split under Part 4A (see item 23) does not contravene Regulation 4.26.

Regulation 4.28 deals with the effect of cashing the benefits of an RSA holder to a person other than the RSA holder or a legal representative of the RSA holder. Items 21 and 22 ensure that if the benefits of an RSA holder have been cashed in accordance with Regulations 4A.24 or 4A.28 (or 4.26 or 4.27 as currently provided) the RSA provider is discharged from any further liability in respect of the benefits cashed and the benefits do not form part of the estate of the RSA holder.

ITEM 23 - PART 4A - RSA INTERESTS SUBJECT TO PAYMENT SPLIT

Item 23 inserts a new part, Part 4A, into the RSA Regulations.

The purpose of Part 4A is to:

• facilitate the payment splitting arrangements established under Part VIIIB of the Family Law Act 1975; and

• provide for additional options that may be exercised in relation to a superannuation interest that is subject to a payment split under that Act. [Reg 4A. 01]

Specifically, Part 4A provides:

• rules for payment split notices;

• options for the non-member spouse and the RSA provider in respect of an RSA interest that is in the growth phase (i.e. the interest is not in the payment phase) and subject to a payment split;

• options for the non-member spouse and the RSA provider in respect of an RSA interest that is being paid as an allocated pension and is subject to a payment split; and

• payment standards for non-member spouse entitlements that have become payable.

The options in Divisions 4A.2 and 4A.3 allow the RSA provider to split an interest before a payment becomes payable from the RSA. The standards in Division 4A.4 apply when a splittable payment becomes payable, if the interest has not previously been split.

The standards set out in Part 4A are operating standards for the purposes of subsection 38(1) of the RSA Act. [Reg 4A.02]

Payment split notice

An RSA provider must give a payment split notice to both the member spouse and the non-member spouse when an RSA becomes subject to a payment split. The notice must be given within 28 days after the operative time for the payment split. In most cases, the operative time is the beginning of the fourth business day after the agreement is served on the RSA provider, or the time specified in the court order, whichever is applicable. If the payment split is made under a court order and the RSA provider receives a copy of the court order after the operative time, then the notice must be given within 28 days after the RSA provider receives a copy of the court order. The payment split notice must be in writing and state the date on which it is given (this would normally be the date that it is posted).

An RSA provider is not required to give a payment split notice to the member spouse and the non-member spouse if the RSA ceases to be subject to the payment split before the specified period for giving notice has expired. Despite this, the payment split notice would still be required if the RSA provider had created a non-member spouse interest under Regulation 4A.05 (see below). [Reg 4A. 03]

Options for an allocated pension that is subject to a payment split

Division 4A.2 provides options for an RSA provider in relation to an allocated pension that is being paid from an RSA that is subject to a payment split. However, if the RSA provider has received a request from the non-member spouse to split the RSA interest under Division 4A.3, these options are not available. In addition, if the RSA provider has split the interest under Regulation 4A.21 (in the absence of any request from the non-member spouse), the options in Division 4A.2 are not available to the RSA provider. [Reg 4A. 04]

At or after the operative time for a payment split, the RSA provider may reduce the benefits held for the member spouse in the original interest and open a new RSA to hold the non-member spouse's entitlement under the payment split. If the RSA provider does so, then Division 4A.3 ceases to apply to the original interest. However, the non-member spouse will continue to be referred to as a "non-member spouse" until the RSA provider has finalised the interest split in accordance with Division 4A.2.

In the case of a base amount payment split, the value of the interest must be equal to the non-member spouse's base amount at the time the new interest is created. Base amounts are not adjusted in relation to allocated pensions. If the payment split is a percentage payment split, the amount of the non-member spouse's interest must be equal to the amount of the member spouse's interest at the time the new interest is created multiplied by the percentage applying under the superannuation agreement, flag-lifting agreement or court order. The amount of the member spouse's interest is determined in accordance with the relevant method in Part 5 of the Family Law (Superannuation) Regulations. The RSA provider may reduce the amount of the new interest by the amount of any fees payable by the non-member spouse in respect of the payment split.

The RSA provider must notify the member spouse and the non-member spouse that the new RSA has been opened and the amount in the new RSA. This notice must be given at the same time as the RSA provider issues a payment split notice under Regulation 4A.03, or in any event within 28 days. [Reg 4A.05]

The non-member spouse may request the RSA provider to retain the non-member spouse's benefits in an RSA provided by the RSA provider. [Reg 4A.06]

The non-member spouse may request the RSA provider to roll over or transfer the non-member spouse's withdrawal benefit to an RSA provided by another RSA provider, or to a regulated superannuation fund, Approved Deposit Fund (ADF) or Exempt Public Sector Superannuation Scheme (EPSSS) nominated by the non-member spouse. [Reg 4A.07]

The non-member spouse may request the RSA provider to pay the withdrawal benefit to the non-member spouse as a lump sum. [Reg 4A.08]

A request must be in writing, be signed by the non-member spouse and state the date on which it is given to the trustee. The request must include the non-member spouse's name, date of birth and postal address. The request must be received by the RSA provider within 28 days after the RSA provider gives the payment split notice to the member spouse and the non-member spouse. However, the RSA provider may allow a period longer than 28 days for such a request to be made. Once made, the RSA provider may allow the request to be withdrawn. A request to retain the non-member spouse's benefits in an RSA provided by the RSA provider must be accompanied by such other information as the RSA provider requires. [Reg 4A.09]

The RSA provider must give effect to a request received under Division 4A.2 within the time allowed. However, it may not be possible for the RSA provider to give effect to the request: For instance, the terms and conditions of the RSA may prevent the RSA provider from retaining the non-member spouse's benefits in an RSA as requested. Alternatively, the RSA provider, regulated superannuation fund, ADF or EPSSS nominated by the non-member spouse may not accept the transfer or rollover of the non-member spouse's benefits. If this occurs, the RSA provider may transfer the withdrawal benefits into an eligible rollover fund (ERF). The RSA provider may choose instead to ask the non-member spouse to nominate an RSA provided by another RSA provider, or a regulated superannuation fund, ADF or EPSSS into which his or her entitlements can be transferred. On receipt of such a nomination, the RSA provider may rollover or transfer the withdrawal benefits into the nominated fund. The RSA provider must notify the non-member spouse if the RSA provider has transferred the non-member spouse's entitlement into an ERF. If the RSA provider has already received an earlier request under Division 4A.2 that has not been withdrawn, then the RSA provider may ignore any later request. [Reg 4A.10]

If the RSA provider does not receive a request under Division 4A.2 within the time allowed, the RSA provider may give the non-member spouse a written notice confirming that the non-member spouse's benefits will remain in an RSA provided by the RSA provider. In this situation, the non-member spouse's RSA will no longer be a "non-member spouse interest' 'but will be treated in the same way as other RSAs. Alternatively, the RSA provider may write to the non-member spouse requesting that the non-member spouse nominate an RSA provided by another RSA provider, or a regulated superannuation fund, ADF or EPSSS to which to roll over or transfer the withdrawal benefit in the non-member spouse interest. This notice may identify an ERF to which the RSA provider will roll over or transfer the withdrawal benefit if the non-member spouse does not make such a nomination. The RSA provider may then follow the nomination or, if no nomination is received within a further 28 days, roll over transfer the withdrawal benefit to the ERF. The RSA provider must have confirmed the interest or transferred or rolled it over to another fund within 6 months after the operative time for the payment split. [Reg 4A.11]

If the non-member spouse makes a valid request for the RSA provider to keep the non-member spouse's benefits in the RSA, the RSA provider must give a written notice to the non-member spouse confirming that the non-member spouse has the RSA and informing the non-member spouse of the relevant cooling-off arrangements. This is sufficient to discharge the RSA provider's obligations under this Division and the non-member spouse will, from that point onwards, be treated in the same way as any other RSA holder. Note that, under Regulation 4A.10, the RSA provider is not required to comply with the non-member spouse's request if the RSA provider is not otherwise permitted to do so. [Reg 4A.12]

If the non-member spouse makes a valid request for the RSA provider to roll over or transfer the withdrawal benefit in the non-member spouse interest, the RSA provider must comply with the request within 90 days of receiving it, or any longer period allowed by the Regulator. However, if the rollover or transfer is done at the RSA provider's initiative under Regulation 4A.11 and the non-member spouse has nominated an RSA provided by another RSA provider, or a regulated superannuation fund, ADF or EPSSS to which to roll over or transfer the non-member spouse's benefits, it must be done within 90 days after the non-member spouse submitted the nomination. If the rollover or transfer is to an ERF under Regulation 4A.11, it must be done within 90 days after the expiry of the 28-day period within which the non-member spouse may make the nomination. After rolling over or transferring the amount, the RSA provider must inform the non-member spouse of the amount that has been rolled over or transferred and, if the rollover or transfer was to an ERF, the name and contact details of the ERF. [Reg 4A.13]

If the non-member spouse makes a valid request for the RSA provider to pay the withdrawal benefit from the non-member spouse interest as a lump sum, the RSA provider must pay the lump sum to the non-member spouse within 90 days, or any longer period allowed by the Regulator. After paying the lump sum, the RSA provider must notify the non-member spouse of the amount that was paid. This information may be given at the same time as the RSA provider fulfils other relevant ETP reporting obligations. [Reg 4A.14]

Options for an interest that is in the growth phase and subject to a payment split and an allocated pension that is subject to a payment split

Division 4A.3 provides options for an RSA interest that is subject to a payment split, if the interest is in the growth phase or an allocated pension is paid in respect of the interest. However, Division 4A.3 ceases to apply if the RSA provider creates a non-member spouse interest under Division 4A.2. Division 4A.3 does not apply to an RSA interest that is determined by reference to a policy of life insurance mentioned in Regulation 3.11. [Reg 4A.15]

The non-member spouse may, if the RSA provider is an RSA institution, request the RSA provider to open a new RSA for the non-member spouse in the non-member spouse's name. [Reg 4A.16] Alternatively, the non-member spouse may request the RSA provider to transfer his or her entitlement to an RSA provided by another RSA provider, or to a regulated superannuation fund, ADF or EPSSS to be held for the benefit of the non-member spouse. [Reg 4A.17]

If the non-member spouse has satisfied a condition of release at the operative time, the non-member spouse may also request the payment of his or her entitlement as a lump sum. The relevant conditions of release are contained in Schedule 2 of the RSA Regulations and relate to release on the condition of retirement, death, permanent incapacity or attaining age 65. The non-member spouse may also request a lump sum if an allocated pension is being paid in respect of the original interest or the original interest comprises only unrestricted non-preserved benefits. [Reg 4A.18]

The RSA provider must give effect to a request received under Division 4A.3 within the time allowed. However, it may not be possible for the RSA provider to give effect to the request. For instance, the terms and conditions of the RSA may prevent the RSA provider from opening a new RSA for the non-member spouse as requested. Alternatively, the RSA provider, regulated superannuation fund, ADF or EPSSS nominated by the non-member spouse may not accept the transfer or rollover of the non-member spouse's entitlement. If this occurs, the RSA provider may transfer the withdrawal benefits into an eligible rollover fund (ERF). The RSA provider may choose instead to ask the non-member spouse to nominate another RSA, regulated superannuation fund, ADF or EPSSS into which his or her entitlements can be transferred and, on receipt of a nomination, roll over or transfer the non-member spouse's entitlements into the nominated fund. The RSA provider must notify the non-member spouse if the RSA provider has transferred the non-member spouse's entitlement into an ERF. [Reg 4A.20]

If the RSA provider does not receive a request from the non-member spouse within 28 days or such longer period allowed by the RSA provider, the RSA provider may write to the non-member spouse requesting that the non-member spouse nominate another RSA, regulated superannuation fund, ADF or EPSSS to which to roll over or transfer the non-member spouse's benefits. This notice may identify an ERF to which the RSA provider will transfer or roll over the non-member spouse's entitlement if the non-member spouse does not make a nomination. The RSA provider may then follow the non-member spouse's nomination, if received, or otherwise roll over or transfer the non-member spouse's entitlement to the ERF. [Reg 4A.21]

If the RSA provider opens a new RSA in the non-member spouse's name to give effect to a request under Regulation 4A.16, and the payment split is a base amount payment split, the value of the interest must be equal to the non-member spouse's adjusted base amount (or base amount, as applicable) at the time the new interest is created. If the payment split is a percentage payment split, the amount of the non-member spouse's interest must be equal to the amount of the original interest at the time the new interest is created multiplied by the percentage applying in the superannuation agreement, flag-lifting agreement or court order. In the case of a percentage payment split, the amount of the original interest is determined by one of two ways:

• In respect of any other interest, the amount is calculated using the relevant method in Part 5 of the Family Law (Superannuation) Regulations.

The RSA provider may reduce the amount of the new interest by the amount of any fees payable by the non-member spouse in respect of the payment split.

In opening a new RSA for the non-member spouse, amounts must be taken proportionately from the member spouse's unrestricted non-preserved benefits, restricted non-preserved benefits and preserved benefits. They will have the same character in the non-member spouse's new interest.

At the time the RSA in the non-member spouse's name is opened, the member spouse's benefits in the RSA must be reduced by the amount of the non-member spouse's interest and the amount of any fees payable by the non-member spouse in respect of the payment split. In the case of a base amount payment split, if a splittable payment becomes payable from the member spouse's interest before the non-member spouse's RSA is opened, the amount of the non-member spouse's benefits in the new RSA will be reduced by the amount that is payable to the non-member spouse out of the splittable payment prior to the RSA being opened.

The non-member spouse's RSA is taken to be opened on the day when the RSA provider receives the request and eligible application from the non-member spouse. The RSA provider has 28 days after the new interest has been created to notify the non-member spouse that the new RSA has been opened and, in the case of a base amount payment split, the amount of any adjustment to the base amount. [Reg 4A.22]

A non-member spouse may apply to have his or her entitlements rolled over or transferred to an RSA provided by another RSA provider, or to a regulated superannuation fund, ADF or EPSSS nominated by the non-member spouse. A non-member spouse's entitlement can also be rolled over or transferred to another regulated superannuation fund at the RSA provider's initiative if the RSA provider has not received a request under Regulations 4A.16, 4A.17 or 4A.18.

If the RSA provider rolls over or transfers a non-member spouse's entitlement (the non-member spouse's transferable benefits), the amount of the member spouse's benefits in the RSA must be reduced by the amount of the transferable benefits and the amount of any fees payable by the non-member spouse in respect of the payment split. The non-member spouse's benefits must be taken proportionately from the member spouse's unrestricted non-preserved benefits, restricted non-preserved benefits and preserved benefits. They will have the same character in the non-member spouse's new interest. In the case of a base amount payment split, if a splittable payment becomes payable from the member spouse's interest before the non-member spouse's benefits are rolled over or transferred, the amount that is rolled over or transferred will be reduced by the amount that is payable to the non-member spouse out of the splittable payment prior to the RSA being opened.

The RSA provider is required to give effect to the rollover or transfer within a specified timeframe.

• In the case of a rollover or transfer at the request of the non-member spouse under Regulation 4A.17, the non-member spouse's entitlements must be rolled over or transferred within 90 days of receiving the request, or a longer period if allowed by the Regulator.

• In the case of a rollover or transfer at the RSA provider's initiative under paragraph 4A.21(1)(a), the non-member spouse's entitlements must be rolled over or transferred within 90 days of receiving a fund nomination form from the non-member spouse.

• In the case of a rollover or transfer to an ERF at the RSA provider's initiative under paragraph 4A.21(1)(b), the non-member spouse's entitlement must be rolled over or transferred within 90 days after the end of the 28 day period the non-member spouse is given, under Subregulation 4A.21(2), to nominate a regulated superannuation fund or RSA for the rollover or transfer (given that no nomination had previously been received from the non member spouse).

Within 28 days of the rollover or transfer taking place, the RSA provider must notify the nonmember spouse that the interest has been rolled over or transferred and, in the case of a base amount payment split, the amount of any adjustment to the base amount. [Reg 4A.23]

The standards for the payment of benefits as a lump sum to an eligible non-member spouse who requests the payment of his or her entitlements under Regulation 4A.18 are contained in Regulation 4A.24. The non-member spouse's entitlements are valued in the same way as if an RSA were opened for the non-member spouse under Regulation 4A.22. In the case of a base amount payment split, if a splittable payment becomes payable from the member spouse's interest before the lump sum is paid, the amount of the lump sum will be reduced by the amount that is payable to the non-member spouse out of the splittable payment prior to the RSA being opened. After the RSA provider has paid the lump sum to the non-member spouse, the RSA provider must notify the non-member spouse and the member spouse of the amount of the payment and any adjustment made to the base amount. This information may be given at the same time as the RSA provider fulfils other relevant ETP reporting obligations. [Reg 4A.24]

Payment standards for non-member spouse entitlements

Division 4A.4 establishes payment standards for non-member spouse entitlements where the non-member spouse is entitled to a payment because a splittable payment has become payable. Division 4A.4 only applies to interests that have not been split under Division 4A.2 or Division 4A.3 or to satisfy Regulation 14G of the Family Law (Superannuation) Regulations. [Reg 4A.25]

The availability of particular options for an RSA provider under Division 4A.4 depends in part on whether or not the non-member spouse has satisfied a relevant condition of release. The relevant conditions of release are contained in Schedule 2 of the RSA Regulations and relate to release on the condition of retirement, death, permanent incapacity or attaining age 65. [Reg 4A.26]

If a non-member spouse has not satisfied a relevant condition of release at the time of the splittable payment, the non-member spouse's benefits must be preserved in the superannuation system. The RSA provider may open a new RSA for the non-member spouse. However, the RSA provider cannot open a new RSA for the non-member spouse unless the non-member spouse submits an eligible application. Otherwise, the RSA provider must transfer the non-member spouse's entitlement to an RSA provided by another RSA provider, or to a regulated superannuation fund, ADF or EPSSS. This should be done within 90 days after the splittable payment becomes payable. The Regulator may allow a longer period.

The transferor RSA provider cannot roll over or transfer a non-member spouse's entitlement to an RSA provided by another RSA provider, or to a regulated superannuation fund, ADF or EPSSS without the non-member spouse's consent. It is sufficient if the RSA provider has reasonable grounds to believe that the receiving fund or RSA provider has obtained the non-member spouse's consent. If these conditions are not met, the RSA provider must roll over or transfer the payments to an ERF. [Reg 4A.27]

If the non-member spouse has satisfied a condition of release when the splittable payment becomes payable, or the splittable payment derives from an allocated pension, then there are no further preservation restrictions on the payment of the non-member spouse's entitlement to the nonmember spouse. If the splittable payment does not derive from a pension, the non-member spouse may request the RSA provider to keep the non-member spouse's entitlement within the superannuation system. The non-member spouse may submit an eligible application and request the RSA provider to open a new RSA for the non-member spouse. Alternatively, the non-member spouse may request the RSA provider to roll over or transfer the non-member spouse's entitlement to an RSA provided by another RSA provider, or to a regulated superannuation fund, ADF or EPSSS. Any new RSA opened for the non-member spouse or through a transfer will be subject to the normal RSA requirements, including the compulsory cashing standards. If the non-member spouse does not make any of these requests, the RSA provider must pay the non-member spouse's entitlement to the non-member spouse. [Reg 4A.28]

Preservation of member spouse and non-member spouse entitlements

It is possible for an RSA provider to split an RSA interest in accordance with the terms and conditions of the RSA but outside of the circumstances in which Divisions 4A.2 and 4A.3 operate. If the interest split meets the requirements of Regulation 14G of the Family Law (Superannuation) Regulations 2001, then any future payments from the member spouse's interest will not be splittable payments. Division 4A.5 imposes preservation requirements consistent with those contained in Divisions 4A.2 and 4A.3. The benefits in the non-member spouse's interest must comprise unrestricted non-preserved, restricted non-preserved and preserved benefits in the same proportion as in the member spouse's interest.

ITEMS 24 AND 25 - CONTRIBUTION STANDARDS

Regulation 5.03 sets out the conditions for the acceptance of contributions by an RSA institution. Items 24 and 25 insert a new paragraph into Subregulation 5.03(1) which permits an RSA institution to accept contributions in satisfaction of a payment split. For example, a member spouse might pay an amount into an RSA for the non-member spouse to satisfy a payment split in accordance with subparagraph 14H(2)(b)(ii) of the Family Law (Superannuation) Regulations 2001.

ITEM 26 - PAYMENT OF BENEFIT TO ELIGIBLE ROLLOVER FUND

Item 26 ensures that a payment of an entitlement to a non-member spouse under Part 4A is not subject to the requirements of Part 9 of the RSA Act concerning the payment of benefits to an ERF. Item 26 also ensures that, where the benefits of an RSA holder that are subject to a payment split are transferred to an ERF, the value of the RSA holder's new interest in the ERF excludes any amount that is payable to the RSA holder's spouse or former spouse under the payment split.