EXPLANATORY STATEMENT

Select Legislative Instrument 2005 No. 142

Issued by authority of the Minister for Revenue
and Assistant Treasurer

Superannuation Industry (Supervision) Act 1993

Superannuation Industry (Supervision) Amendment Regulations 2005 (No. 3)

Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993 (the Act) provides 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.

Paragraphs 31(2)(i) and 32(2)(d) provide that regulations may prescribe standards for the portability of superannuation benefits for regulated superannuation funds and approved deposit funds respectively.

The Government considers that individuals should have the right to determine who manages their superannuation and should be free to move their benefits when they choose without unnecessary restrictions.

The purpose of the Regulations is to remove the restriction that provides that compulsory portability does not apply to a superannuation fund or approved deposit fund in relation to a member where the fund has received an employer contribution or allocated surplus amount for the benefit of the member in the past six months.

Portability has been in place since 1 July 2004 and allows members to consolidate their superannuation benefits in one account, thus avoiding multiple sets of fees and charges, and allowing individuals to decide on the superannuation fund to manage such benefits.

Targeted consultation with industry groups was undertaken.

The regulations already provide a balance between superannuation fund members’ ability to move their benefits and administrative efficiency.  For example, funds can reject a transfer request where they have made a transfer within the past 12 months, transfer requests must be acted on as soon as practicable and in any case within three months and funds have the ability to request further information to facilitate a transfer of benefits.

The regulations remove subregulation 6.30(3) of the Superannuation Industry Supervision Regulations 1994 (the Principal Regulations) so that Division 6.5 of the Principal Regulations (which provides for compulsory portability) applies to funds which have received an employer contribution in the six months prior to a portability request being made.  The regulations also remove subregulation 6.30(4) as it contains a definition of ‘allocated surplus amount’ which is only needed for the purposes of subregulation 6.30(3).

Details of the Regulations are set out in the Attachment.

The Regulations commence on 1 July 2005.

 

ATTACHMENT

 

Details of the Superannuation Industry (Supervision) Amendment Regulations 2005 (No. 3)

Regulation 1 — Name of Regulations

This is a formal provision specifying the mode of citation of the regulations.

Regulation 2 — Commencement

The regulations will commence on 1 July 2005.

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

The Superannuation Industry (Supervision) Regulations 1994 are amended as set out in Schedule 1.

Schedule 1 — Amendments

Item 1 of Schedule 1 — Deletes subregulations 6.30(3) and (4).

This will mean that compulsory portability applies to regulated superannuation funds and approved deposit funds which have received contributions within the past six months in respect of a particular member.  Subregulation 6.30(4) is no longer needed as it contains a definition of allocated surplus amount which is only needed for the purposes of subregulation 6.30(3).