Explanatory Statement

Issued by the authority of the Minister for Financial Services, Superannuation and Corporate Law

Superannuation Industry (Supervision) Amendment Regulations 2010 (No. 1)

Subject - Subsection 353(1) of the Superannuation Industry (Supervision) Act 1993

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 Superannuation Industry (Supervision) Regulations 1994 (the Principal Regulations), inter alia, contain the standards for annuities and pensions. These standards include provisions which specify that an annuity or pension cannot be commuted unless certain conditions have first been satisfied.

The Regulations make minor technical changes to the Principal Regulations to update legislative references which were impacted by the Better Super reforms of 2007, which introduced changes to taxation and other rules for superannuation. The Regulations also correct two minor grammatical errors.

Details of the amendments are set out in the Attachment.

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulations are taken to have commenced on 1 July 2007 to align with the commencement of the Better Super changes. The amendments simply correct legislative references between the relevant provisions and do not affect the substantive operation of the law. Accordingly, their retrospective application creates no adverse impacts.

Given the purely technical nature of the proposed amendments, no public consultation was undertaken.

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

ATTACHMENT

Details of Superannuation Industry (Supervision) Amendment Regulations 2010 (No. 1)

Regulation 1 specifies the name of the Regulations as the Superannuation Industry (Supervision) Amendment Regulations 2010 (No. 1).

Regulation 2 provides that the Regulations are taken to have commenced on 1 July 2007.

Regulation 3 provides that Schedule 1 amends the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations).

Schedule 1 Amendments

Items 1 and 2

The amendments correct grammatical errors in paragraphs 1.05(1B)(c) and 1.05(1B)(d).

Items 3 and 4

Regulation 1.07B contains an integrity rule which requires a minimum pro-rata payment to be made from a defined benefit income stream prior to a commutation. Subregulation 1.07B(1) contains legislative references to the income stream types to which regulation 1.07B applies. The amendments include in subregulation 1.07B(1) references to life expectancy annuities and pensions which commenced on or after 20 September 2007. These references were overlooked at the time the Better Super changes were made in 2007.

Items 5 and 6

Regulation 1.07C contains a similar integrity rule which requires a minimum pro-rata payment to be made from a market linked income stream prior to a commutation. Subregulation 1.07C(1) contains legislative references to the income stream types to which regulation 1.07C applies. The amendments correct the references in subregulation 1.07C(1) to market linked annuities and pensions which commenced prior to 20 September 2007, and add references to market linked annuities and pensions which commenced on or after 20 September 2007.