Superannuation Industry (Supervision) Amendment Regulations 1998 (No. 8) (312 of 1998)

Schedule 1   Amendments of Superannuation Industry (Supervision) Regulations

[6]   After subregulation 1.05 (8)

insert

(9) A contract for the provision of a benefit (in this subregulation called the annuity ) meets the standards of this subregulation if:

(a) the primary beneficiary purchased the annuity on or after the day when the primary beneficiary became of pension age; and

(b) the contract ensures that:

(i) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary:

(A) if the life expectancy of the primary beneficiary on the commencement day is less than 15 years - throughout a period equal to the primary beneficiary's life expectancy (rounded up, at the primary beneficiary's option, on the day when the annuity is purchased, to the next whole number if the primary beneficiary's life expectancy does not consist of a whole number of years); or

(B) if the life expectancy of the primary beneficiary on the commencement day is 15 years or more - throughout a period that is not less than 15 years but not more than the primary beneficiary's life expectancy (rounded up, at the primary beneficiary's option, on the day when the annuity is purchased, to the next whole number if the primary beneficiary's life expectancy does not consist of a whole number of years); and

(ii) the total amount of the payment, or payments, to be made in the first year after the commencement day (not taking commuted amounts into account) is fixed and that payment, or the first of those payments, relates to the period commencing on the day when the benefit was purchased; and

(iii) the total amount of the payments to be made in a year other than the first year after the commencement day (not taking commuted amounts into account) does not fall below the total amount of the payments made in the immediately preceding year (the previous total ), and does not exceed the previous total:

(A) if CPIc is less than or equal to 4% - by more than 5% of the previous total; or

(B) if CPIc is more than 4% - by more than CPIc 1%;

where:

CPIc is the change (if any), expressed as a percentage, determined by comparing the quarterly CPI first published by the Australian Statistician for the second-last quarter before the day on which the first of those payments is to be made and the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year.

and

(iv) the total amount of the payments to
be made in a year in accordance with subparagraph (ii) or (iii) may be varied only to allow commutation to pay a superannuation contributions surcharge; and

(v) the amount paid as the purchase price is wholly converted into annuity income; and

(vi) the annuity does not have a residual capital value; and

(vii) the annuity cannot be commuted except:

(A) within 6 months after the commencement day of the annuity; or

(B) by payment, on the death of the primary beneficiary, to the benefit of a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary; or

(C) by payment, on the death of a reversionary beneficiary, to the benefit of another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary; or

(D) if the eligible termination payment resulting from the commutation is transferred directly to the purchase
of another benefit provided under a contract that meets the standards of subregulation (2) or (3) or this subregulation or under rules that meet the standards of subregulation 1.06 (2), (3) or (7); or

(E) to pay a superannuation contributions surcharge; and

(viii) if the annuity reverts, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion; and

(ix) if the annuity is commuted, the commuted amount cannot exceed the benefit that was payable immediately before the commutation; and

(x) the annuity cannot be transferred to a person except:

(A) on the death of the primary beneficiary, to a reversionary beneficiary or, if there is no reversionary beneficiary, to the estate of the primary beneficiary; or

(B) on the death of a reversionary beneficiary, to another reversionary beneficiary or, if there is no other reversionary beneficiary, to the estate of the reversionary beneficiary; and

(xi) the capital value of the annuity, and the income from it, cannot be used as security for a borrowing.