Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 3 - Retirement savings accounts portability time frames
Outline of chapter
3.1 Schedule 1 to this bill amends the Retirement Savings Accounts Act 1997 (RSA Act 1997) to more closely align the portability regime for retirement savings account (RSA) providers with the regime that applies to other superannuation providers. Specifically, the period in which an RSA provider must action a portability request would be reduced from the current time frame of 12 months and aligned with the Superannuation Industry (Supervision) Regulations 1994 requirement of actioning the request as soon as possible and within 90 days.
Context of amendments
3.2 Currently an RSA provider commits an offence if they fail to action a valid request from an RSA holder and transfer the balance of the holder's account within the time frame specified in subsection 50(2) of the RSA Act 1997. The provision requires the transfer to be made within the time frame specified in the RSA contract; as soon as practicably possible and, in any case, within a maximum period of 12 months. The portability regime contained in the Superannuation Industry (Supervision) Regulations 1994 commences on 1 July 2004 and will apply to superannuation funds. This measure will ensure that RSA holders are entitled to the same responsiveness from their account providers as superannuation fund account holders can expect from superannuation fund trustees.
Summary of new law
3.3 The amendments will ensure that superannuation fund members and RSA account holders have access to similar portability arranagements. The amendments will allow RSA providers a maximum period of 90 days to give effect to a portability request. The Superannuation Industry (Supervision) Regulations 1994 will require superannuation fund trustees to action requests to have fund balances transferred in the same maximum time frame of 90 days.
Comparison of key features of new law and current law
| New law | Current law |
|---|---|
| An RSA provider has an obligation to give effect to an RSA account holder's request to transfer the balance of that account within the time frame specified in the RSA account contract, or as soon as practicably possible. In any case the transfer must be completed within 90 days of the request being made. | An RSA provider has an obligation to give effect to an RSA account holder's request to transfer the balance of that account within the time frame specified in the RSA account contract, or as soon as practicably possible. In any case the transfer must be completed within 12 months of the request being made. |
Detailed explanation of new law
3.4 The amendments will remove the reference to the maximum period of '12 months' in subsection 50(2) and replace it with a reference to '90 days'. The effect of the change is that RSA providers will be subject to the same requirements as superannuation fund trustees; to complete transfers within 90 days of the request being made. [Schedule 1, item 4, subsection 50(2)]
Application provisions
3.5 The amendments will apply from 1 July 2004 or 28 days after Royal Assent, whichever is later. [Subclause 4(2)]