Superannuation Industry (Supervision) modification declaration No. 1 of 2015
Exceptions to restrictions on minimum benefits (remaking MD 26)
Superannuation Industry (Supervision) Act 1993 - section 332
I, Brandon Kong Leong Khoo, a delegate of APRA, under section 332 of the Superannuation Industry (Supervision) Act 1993 (the Act), DECLARE that regulation 5.08 of the Regulations has effect in relation to the class of persons described in the attached Schedule, as if it were modified in the manner specified in the attached Schedule.
This declaration comes into force upon registration of this instrument on the Federal Register of Legislative Instruments.
Dated: 23 September 2015
[Signed]
Brandon Kong Leong Khoo
Executive General Manager
Diversified Institutions Division
Interpretation Document ID: 218989
In this instrument
APRA means the Australian Prudential Regulation Authority.
Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.
Regulations means the Superannuation Industry (Supervision) Regulations 1994.
Note 1 This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (the LIA) (see section 5 and Item 15 of section 7 of the LIA).
Schedule - the class of persons to whom this declaration applies
All RSE licensees of registrable superannuation entities that are regulated superannuation funds.
Schedule - the manner in which the specified modifiable provisions are modified
Regulation 5.08 of the Regulations is modified by inserting after subregulation 5.08(2):
“(2A) Subregulation (1) does not apply in relation to an amount of minimum benefits of a member (the forfeited member) in an accumulation fund (the forfeiting fund) that is not a self-managed superannuation fund if all the following conditions are satisfied:
(a) The amount is attributable only to non-mandated employer contributions that were made, for the benefit of the forfeited member, to:
(i) the forfeiting fund; or
(ii) another regulated superannuation fund (other than a self-managed superannuation fund) of which the forfeited member was a member and in which the forfeited member did not have a defined benefit interest.
(b) The forfeited member’s entitlement to the amount is subject to certain minimum service provisions (the applicable minimum service provisions) that are contained in one or more of the following:
(i) the governing rules of the forfeiting fund;
(ii) a written agreement between the forfeited member and the forfeited member’s employer;
(iii) an award relating to the forfeited member’s conditions of employment;
(iv) a certified agreement relating to the forfeited member’s conditions of employment.
Note: Some of the applicable minimum service provisions may be contained in one of the documents mentioned in subparagraphs (i) to (iv) while others may be contained in another of those documents.
(c) The forfeited member failed to satisfy the minimum service requirement contained in the applicable minimum service provisions.
(d) As a result of that failure, the forfeited member lost their entitlement to the amount.
(e) Either:
(i) the applicable minimum service provisions applied to the forfeited member during the whole of the period (the post-11 May 2004 period) from 11 May 2004 to the occurrence of the forfeiting event; or
(ii) the applicable minimum service provisions applied to the forfeited member during the latter part of the post-11 May 2004 period and predecessor minimum service provisions applied to the member during the rest of the post-11 May 2004 period.
(f) If subparagraph (e)(i) applies - the trustee of the forfeiting fund is satisfied, on reasonable grounds, that the applicable minimum service provisions are not more unfavourable to the forfeited member than the predecessor minimum service provisions.
Note: An example of the applicable minimum service provisions being more unfavourable to the forfeited member than the predecessor minimum service provisions is where the predecessor minimum service provisions specify a minimum service period of 10 years, while the applicable minimum service provisions specify a minimum service period of 12 years.
(g) If any of the applicable minimum service provisions are contained in the governing rules of the forfeiting fund - the trustee of the forfeiting fund believes, on reasonable grounds, that the provisions, or their effect, were disclosed to the forfeited member in accordance with applicable disclosure requirements imposed by or under the Act or the Corporations Act 2001.
(h) The contributions mentioned in paragraph (a) were required to be made by:
(i) the applicable minimum service provisions; or
(ii) predecessor minimum service provisions.
Note 1: Note the use of the term required in paragraph (h). If, under the applicable minimum service provisions or predecessor minimum service provisions, the employer merely has a discretion to make non-mandated employer contributions to the fund for the benefit of the forfeited member, but is not obliged to make the contributions, the exception in subregulation (2A) will not apply to the minimum benefits financed by such discretionary contributions.
Note 2: If a member loses their entitlement to an amount of benefits in the manner described in subregulation (2A), the amount cannot be paid out to the employer unless the payment complies with section 117 of the Act.
Interpretation
(2B) In this regulation:
Act means the Superannuation Industry (Supervision) Act 1993.
applicable minimum service provisions has the meaning given in subregulation (2A).
award means an award relating to conditions of employment which is made by an employment tribunal under a law of the Commonwealth, a State or a Territory.
certified agreement means an agreement relating to conditions of employment which is certified, approved or registered by an employment tribunal under a law of the Commonwealth, a State or a Territory.
employment tribunal means a tribunal or body having authority under a law of the Commonwealth, a State or a Territory to make an award or to certify, approve or register an agreement relating to conditions of employment.
forfeited member has the meaning given in subregulation (2A).
forfeiting event, in relation to the forfeited member, means the event (involving ceasing to be an employee or member) which results in the forfeited member failing to satisfy the minimum service requirement in the applicable minimum service provisions, and consequently losing their entitlement to the amount of minimum benefits mentioned in subregulation (2A).
forfeiting fund has the meaning given in subregulation (2A).
minimum service provisions has the meaning given in subregulation (2C).
minimum service requirement has the meaning given in subregulation (2C).
non-mandated employer contributions means employer contributions other than mandated employer contributions.
predecessor minimum service provisions has the meaning given in subregulation (2D).
(2C) In this regulation, minimum service provisions means provisions that satisfy all the following conditions:
(a) The provisions are contained in one or more of the following:
(i) the governing rules of a regulated superannuation fund (other than a self-managed superannuation fund);
(ii) a written agreement between a member of the fund and the member’s employer;
(iii) an award relating to the member’s conditions of employment;
(iv) a certified agreement relating to the member’s conditions of employment.
Note: Some of the minimum service provisions may be contained in one of the documents mentioned in subparagraphs (i) to (iv) while others may be contained in another of those documents.
(b) The provisions require the member’s employer to make non-mandated employer contributions to the fund for the benefit of the member.
(c) The provisions make the member’s entitlement to the benefits that are attributable to those non-mandated employer contributions conditional or contingent on the member satisfying a stipulation (a minimum service requirement) contained in the provisions that the member be, for a specified minimum period (a minimum service period):
(i) an employee (or a particular class or category of employee) of the employer; or
(ii) an employee (or a particular class or category of employee) of a person (a previous employer) who previously carried on the business of the employer; or
(iii) an employee (or a particular class or category of employee) of a related body corporate (a related employer) of the employer or a previous employer; or
(iv) a member (or a particular class or category of member) of the fund; or
(v) a member (or a particular class or category of member) of another regulated superannuation fund (other than a self-managed superannuation fund) to which the employer, a previous employer or a related employer made contributions for the benefit of the member.
Note: The minimum service requirement may require the member to belong to only one of the categories mentioned in paragraphs (i) to (v), or to only some of those categories. For example, a given minimum service requirement may require the member to be an employee of either the employer or a related employer for a minimum of 10 years.
Also, a minimum service requirement may permit the member to be in different categories during different parts of the minimum service period (as long as the member is in one or other of those categories at all times during that period).
(2D) In this regulation, predecessor minimum service provisions, in relation to the applicable minimum service provisions, means:
(a) an earlier version of the applicable minimum service provisions, which applied to the forfeited member when they were a member of the forfeiting fund; or
(b) other minimum service provisions, which applied to the forfeited member when they were a member of another regulated superannuation fund (other than a self-managed superannuation fund) from which they were subsequently transferred to the forfeiting fund.”
