Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION INDUSTRY (SUPERVISION) AMENDMENT REGULATIONS 2004 (NO. 8) 2004 NO. 155

Subsection 353(1) of the Superannuation Industry (Supervision)Act 1993 (the Act) provides, in part, that the Governor-General may make regulations prescribing 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.

The purpose of the Regulations is to provide transitional relief from requirements in the Superannuation Industry (Supervision) Amendment Regulations 2004 (No.2) that commenced on 12 May 2004, which prohibit regulated superannuation funds with fewer than fifty members from putting new defined benefit pension arrangements in place.

The Regulations will ensure that retiring members of small superannuation funds are able to continue with their plans to commence a defined benefit pension through their fund between 11 May 2004 and 1 July 2005 (transitional period). Defined benefit pensions include life time and life expectancy complying pensions which receive taxation and social security concessions.

The transitional period will also provide impending retirees with sufficient time to make an informed decision on their retirement income arrangements following the commencement of the new market-linked income stream on 20 September 2004. All regulated superannuation funds will be able to provide market-linked income streams. These income streams will be complying pensions and therefore will be eligible for taxation and social security concessions.

Details of the Regulations are set out in the Attachment.

The Regulations commence on the date of their notification in the Gazette.

ATTACHMENT

Superannuation Industry (Supervision) Amendment Regulations 2004 (No. 8)

Regulation 1 - Name of the Regulations

This specifies that the Regulations are the Superannuation Industry (Supervision) Amendment Regulations 2004 (No. 8).

Regulation 2 - Commencement

This provides that the Regulations commence on the date of their notification in the Gazette.

Regulation 3 - Amendment of the Superannuation Industry (Supervision) Regulations 1994

This provides that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations).

Schedule 1 - Amendments

Item 1 amends Subregulation 9.04I(1) of the Principal Regulations to insert an exception to the requirement that a regulated superannuation fund with less than 50 members must not provide a defined benefit pension. The exception would be set out in new Subregulation 9.04I(3) - see item 2 below.

Item 2 inserts new subregulation 9.04I(3) in the Principal Regulations. This permits a regulated superannuation fund to provide a defined benefit pension to a person who was a member of the fund on 11 May 2004, and who retires from the workforce on or after age 55, or attains age 65, before 1 July 2005. The member must become entitled to be paid the defined benefit pension before 1 July 2005 and the first pension payment must be made within 12 months after the day when the member became entitled to be paid the pension.

Superannuation funds taking advantage of this exception will need to comply with notification requirements under section 140M of the Income Tax Assessment Act 1936 on commencement of the pension.