House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

GENERAL OUTLINE

This Bill will make various miscellaneous amendments to the Bankruptcy Act 1966 (the Bankruptcy Act), the Superannuation Industry (Supervision) Act 1993 (the SIS Act) and the Superannuation (Resolution of Complaints) Act 1993 (the SRC Act) to improve the efficiency and effectiveness of the superannuation supervisory framework.

Summary of major Bankruptcy Act amendments

The Bill will amend the Bankruptcy Act to ensure members of exempt public sector superannuation schemes within the meaning of the SIS Act are afforded the same protection in respect of their superannuation entitlements as members of regulated superannuation funds from creditors.

Summary of major SIS Act amendments

The Bill will amend the SIS Act to:

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include various arrangements outlined in the Bankruptcy Act 1966 in the definition of insolvent under administration in the SIS Act, where obligations under those arrangements have not yet been fulfilled;

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insert a definition of invest which means: to apply assets or make a contract for the purposes of gaining interest, income or profit;

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amend the definition of governing rules to provide that they may be written or unwritten;

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permit a trustee of a superannuation fund to amend the governing rules of the fund to enable the acceptance of binding death benefit nominations from members under section 59 of the SIS Act;

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apply the in-house asset rules to individual sub-funds, as if these sub-funds were funds in their own right under section 69 of the SIS Act;

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treat unrelated groups of associated employer-sponsors separately for the purposes of the in-house asset rules under section 72 of the SIS Act;

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insert a new division in Part 8 of the SIS Act which applies alternative in-house asset rules to certain defined benefit funds with large accumulated surpluses;

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improve the operation of the gazettal requirements for orders disqualifying a person from being an approved auditor under section 131 of the SIS Act;

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remove an anomaly with the operation of the trust account provisions under section 168 and section 169 of the SIS Act which arises because the applicant in relation to a superannuation interest is not necessarily the person on whose behalf the money is received by the trustee;

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clarify to whom contributions should be refunded when a member withdraws from a public offer fund during the 14 day cooling-off period in section 171 of the SIS Act;

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extend, from 5 June 1997 to 5 June 1998, the transitional period during which tax file numbers (TFNs) already quoted for superannuation purposes may be taken to have also been quoted for surcharge purposes;

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enable the Insurance and Superannuation Commissioner (now the Australian Prudential Regulation Authority (APRA)) to revoke an approval of a trustee without Ministerial approval where the revocation is requested by the trustee;

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enable superannuation benefits to be recovered under the Australian Federal Police Act 1979 and the Crimes (Superannuation Benefits) Act 1989 ;

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improve the operation of the Insurance and Superannuation Commissioners (now APRAs and the Australian Securities and Investments Commissions (ASICs) monitoring and investigation powers including amendments to provide more flexibility to the Commissioner when issuing a notice to freeze assets under Part 25 of the SIS Act; and

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remove the right of a body corporate to claim privilege against self-incrimination in respect of notices issued under the SIS Act (in line with common law) in section 287 of the SIS Act.

Summary of major SRC Act amendments

The Bill will amend the SRC Act to:

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enable the Superannuation Complaints Tribunal to be constituted by one, two or three members and to expressly confer responsibility for the operation and administration of the Tribunal on the Tribunal Chairperson;

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ensure that section 14A applies to complaints about trustees decisions to admit persons to life policies made prior to 12 December 1995, and to apply remedies under section 37A(4) to complaints under section 14A; and

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clarify the scope of a trustee, insurer or RSA providers duty to notify potential persons who may have an interest in the payment of death benefits and to reduce the penalty for failure to provide notification.

FINANCIAL IMPACT STATEMENT

The financial impact of this Bill is considered to be negligible.

EXPLANATORY NOTES ON THE SUPERANNUATION LEGISLATION AMENDMENT BILL 1997

Clause 1 - Short title

1. This clause provides the mode of citation of the Act.

Clause 2 - Commencement

2. Subclause (1) provides that, subject to this section, this Act commences on the day on which it receives the Royal Assent. Therefore, Schedule 1, Part 1 of Schedule 2 and Schedule 3 commence on Royal Assent.

3. Subclause (2) provides that Part 2 of Schedule 2 commences 28 days after the day of Royal Assent.

4. Subclause (3) provides that Part 3 of Schedule 2 is taken to have commenced on 5 June 1997.

5. Subclause (4) provides that Part 4 of Schedule 2 commences on 1 July 1999.

6. Subclause (5) provides that Part 5 of Schedule 2 commences six months after the day of Royal Assent.

Clause 3 - Schedule(s)

7. This clause provides that each Act specified in a Schedule to this Act is amended or repealed as set out in the Schedule.