Superannuation Industry (Supervision) Regulations 1994

PART 13 - MISCELLANEOUS  

Division 13.2 - Various operating standards  

REGULATION 13.16   ACCRUED BENEFITS - RESTRICTION ON ALTERATION  

13.16(1)   [ No adverse alterations]  

For the purposes of subsection 31(1) of the Act, it is a standard applicable to the operation of regulated superannuation funds that, subject to subregulation (2), a beneficiary's right or claim to accrued benefits, and the amount of those accrued benefits, must not be altered adversely to the beneficiary by amendment of the governing rules or by any other act carried out, or consented to, by the trustee of the fund.

13.16(2)   [ Allowable adverse alterations]  

The standard stated in subregulation (1) does not apply to an alteration if:

(a) in the case of an alteration that does not relate to minimum benefits within the meaning of Part 5 :

(i) subject to subregulation (3), written consent to the alteration has been given by:

(A) the beneficiary; and

(B) if the benefits are subject to a payment split, the non-member spouse; or

(ii) the Regulator has consented in writing to the alteration after either:

(A) the alteration has been approved by at least two-thirds of all of the beneficiaries of the fund who are affected by it, in accordance with the procedures specified in subregulation (4); or

(B) subject to subregulation (5), if, in accordance with section 89 of the Act, the fund complies with the basic equal representation rules, the alteration has been approved by at least two-thirds of the total number of trustees or, if the fund has a single corporate trustee, by two-thirds of the directors of the corporate trustee; or

(b) the alteration is necessary for compliance with:

(i) the Act, the Income Tax Act 1986 , the Superannuation (Unclaimed Money and Lost Members) Act 1999 , the Tax Act or the 1997 Tax Act; or

(ii) regulations made under any of those Acts; or

(c) the alteration is expressly permitted by the Act or these regulations; or

(d) the alteration:

(i) is solely for the purpose of rectifying a mistake which has resulted in a beneficiary's right or claim to accrued benefits, or the amount of the beneficiary's accrued benefits, being advantageously altered; and

(ii) the Regulator has approved the alteration; or

(e) the alteration:

(i) affects only the benefits of members in respect of whom assessments under section 15 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 have been made; and

(ii) serves to enable the trustee:

(A) to be reimbursed for an amount paid, or to be paid, under that Act and the Superannuation Contributions Tax (Imposition) Act 1997 ; or

(B) in relation to an amount paid before reimbursement occurs - to charge interest on the amount paid; or

(f) the alteration is made:

(i) to give effect to a payment split; or

(ii) as a consequence of the trustee taking action that, because of Division 2.2 of the Family Law (Superannuation) Regulations 2001 , has the effect that a future payment in respect of the superannuation interest of the member spouse would not be a splittable payment; or

(iii) as a consequence of the operation of a fund's governing rules that, because of Division 2.2 of the Family Law (Superannuation) Regulations 2001 , has the effect that a future payment in respect of the superannuation interest of the member spouse would not be a splittable payment; or

(g) the alteration enables the trustee to be reimbursed for an amount paid, or to be paid, under section 24 of the Co-contribution Act.

13.16(3)   [ Effective consent to adverse alteration]  

A consent referred to in subparagraph (2)(a)(i) is not effective for the purposes of this regulation unless, before the consent is given:

(a) the trustee of the fund has given to the beneficiary a notice that:

(i) informs the beneficiary that it is proposed that the beneficiary's right or claim to accrued benefits, or the amount of those benefits, be affected adversely; and

(ii) explains the effect of the alteration on the beneficiary's rights or claims to accrued benefits and the amount of those benefits; and

(iii) provides any other information that the trustee reasonably believes a beneficiary would expect to be told about the proposed alteration; and

(ab) if the benefits are subject to a payment split, the trustee has given a copy of the notice to the non-member spouse; and

(b) the beneficiary, and the non-member spouse (if any), have been allowed adequate time to consider the proposed alteration and its effect on the beneficiary's rights or claims to accrued benefits and the amount of those benefits.

13.16(4)   [ Obtaining approval of beneficiaries]  

For the purposes of sub-subparagraph (2)(a)(ii)(A), the procedures to be followed in obtaining the approval of beneficiaries are as follows:

(a) the trustee of the fund must send to each beneficiary of the fund who would be adversely affected by the alteration a notice that:

(i) informs the beneficiary that it is proposed that the beneficiary's right or claim to accrued benefits, or the amount of those benefits, be affected adversely; and

(ii) explains the effect of the alteration on the beneficiary's rights or claims to accrued benefits and the amount of those benefits; and

(iii) explains that the alteration requires:

(A) the approval of at least two-thirds of all of the beneficiaries of the fund who are affected by it, obtained by ballot in accordance with this subregulation; and

(B) the consent of the Regulator; and

(iv) explains the manner in which the beneficiary can cast his or her vote in relation to the ballot; and

(v) provides any other information that the trustee reasonably believes a beneficiary would expect to be told about the proposed alteration;

(b) the ballot must be conducted in a manner that ensures that each beneficiary is given not less than 21 days to consider the notice and the proposed alteration before voting.

13.16(5)   [ Ineffective approval of adverse alteration]  

An approval referred to in sub-subparagraph (2)(a)(ii)(B) is not effective for the purposes of this regulation unless, at least 21 days before the giving of that approval, the trustee of the fund has given to each beneficiary of the fund who would be adversely affected by the alteration a notice that:

(a) informs the beneficiary that it is proposed that the beneficiary's right or claim to accrued benefits, or the amount of those benefits, be affected adversely; and

(b) explains the effect of the alteration on the beneficiary's rights or claims to accrued benefits and the amount of those benefits and

(c) provides any other information that the trustee reasonably believes a beneficiary would expect to be told about the proposed alteration.

13.16(6)   [ Payment splits]  

In deciding whether to consent to an alteration under subparagraph (2)(a)(ii), the Regulator must consider the effect that the alteration would have on the value of benefits that may become payable to a person who is the non-member spouse in relation to an interest in the fund that is subject to a payment split.