Superannuation Industry (Supervision) Amendment Regulations 1998 (No. 8)
(312 of 1998)
19 November 1998
Made under Superannuation Industry (Supervision) Act 1993
1 Name of Regulations
These regulations are the Superannuation Industry (Supervision) Amendment Regulations 1998 (No. 8).
2 Commencement
These regulations commence on gazettal.
3 Amendment of Superannuation Industry (Supervision) Regulations
Schedule 1 amends the Superannuation Industry (Supervision) Regulations.
4 Application
The amendments made by items 2, 3, 4, 5, 6, 7, 8, 9 and 12 of Schedule 1 apply to:
(a) a benefit in the nature of an annuity that arises under a contract under which the payment of the purchase price was completed on or after 20 September 1998; or
(b) a benefit in the nature of a pension to which the primary beneficiary became entitled, on or after 20 September 1998, under rules that provide that the commencement day is the day when the primary beneficiary became entitled to the benefit.
Schedule 1 Amendments of Superannuation Industry (Supervision) Regulations
[1] Regulation 1.01
substitute
1.01 Name of regulations
These regulations are the Superannuation Industry (Supervision) Regulations 1994.
[2] Subregulation 1.03 (1)
insert
life expectancy has the same meaning as life expectation factor in section 27H of the Tax Act.
pension age :
(a) in relation to a person other than a person mentioned in paragraph (b) - has the meaning given by subsections 23 (5A), (5B), (5C) or (5D) of the Social Security Act 1991; and
(b) in relation to a person who is a veteran within the meaning of the Veterans' Entitlement Act 1986 - has the meaning that it has in section 5QA of that Act.
[3] Subregulation 1.05 (1)
substitute
(1) A benefit provided by a life insurance company or a registered organisation is taken to be an annuity for the purposes of the Act if:
(a) it arises under a contract that meets the standards of subregulation (2), (4), (6), (7), (8) or (9); and
(b) for a benefit purchased on or after 3 August 1993 - it is purchased with the whole or part of a rolled-over amount within the meaning given to that term by section 27A of the Tax Act; and
(c) for a benefit that arises under a contract that meets the standards of subregulation (9) and is purchased by the primary beneficiary on or after 20 September 1998 - the commencement day under the contract is the day when the benefit was purchased.
[4] Paragraph 1.05 (2) (c)
substitute
(c) unless APRA otherwise approves, the sum payable as benefit in each year to the primary beneficiary or to the reversionary beneficiary, as the case may be, is:
(i) if CPIc is not less than CPIp - not less than SPp; or
(ii) if CPIc is less than CPIp - not less than:
(CPIc / CPIp) * SPp
where:
CPIc means the quarterly CPI first published by the Australian Statistician for the second-last quarter before the day on which payment is to be made.
CPIp means the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year.
SPp means the sum payable in the immediately preceding year.
and
[5] Subparagraph 1.05 (2) (f) (iii)
substitute
(iii) if the eligible termination payment resulting from the commutation is transferred directly to the purchase of another benefit provided under:
(A) a contract that meets the standards of this subregulation or subregulation (3) or (9); or
(B) rules that meet the standards of subregulation 1.06 (2), (3) or (7); or
[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 lessthan 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.
[7] Subregulation 1.06 (1)
substitute
(1) A benefit is taken to be a pension for the purposes of the Act if:
(a) it is provided under rules of a superannuation fund that meet the standards of subregulation (2), (4), (6) or (7); and
(b) where the primary beneficiary became entitled to the benefit on or after 20 September 1998 under rules of a superannuation fund that meets the standards of subregulation (7), those rules provide that the commencement day is the day when the primary beneficiary became entitled to the pension.
[8] Paragraph 1.06 (2) (c)
substitute
(c) unless APRA otherwise approves, the sum payable as benefit in each year to the primary beneficiary or to the reversionary beneficiary, as the case may be, is:
(i) if CPIc is not less than CPIp - not less than SPp; or
(ii) if CPIc is less than CPIp - not less than:
(CPIc / CPIp) * SPp
where:
CPIc means the quarterly CPI first published by the Australian Statistician for the second-last quarter before the day on which payment is to be made.
CPIp means the quarterly CPI first published by the Australian Statistician for the same quarter in the immediately preceding year.
SPp means the sum payable in the immediately preceding year.
and
[9] Subparagraph 1.06 (2) (e) (iii)
substitute
(iii) if the eligible termination payment resulting from the commutation is transferred directly to the purchase of another benefit provided under:
(A) rules that meet the standards of this subregulation or subregulation (3) or (7); or
(B) a contract that meets the standards of subregulation 1.05 (2), (3) or (9); or
[10] Paragraphs 1.06 (2) (g) and (h)
omit
that
[11] Paragraph 1.06 (4) (b)
omit
and
[12] After subregulation 1.06 (6)
insert
(7) Rules meet the standards of this subregulation if:
(a) the primary beneficiary became entitled to be paid the pension on or after the day when the primary beneficiary became of pension age; and
(b) the rules ensure that:
(i) the pension 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, not later than the day when the primary beneficiary becomes entitled to the pension, 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, not later than the day when the primary beneficiary becomes entitled to the pension, 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 primary beneficiary became entitled to the pension; 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 pension does not have a residual capital value; and
(vi) the pension cannot be commuted except:
(A) within 6 months after the commencement day of the pension; 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 rules that meet the standards of subregulation (2), (3) or this subregulation or under a contract that meets the standards of subregulation 1.05 (2), (3) or (9); or
(E) to pay a superannuation contributions surcharge; and
(vii) if the pension reverts, it does not have a reversionary component greater than 100% of the benefit that was payable before the reversion; and
(viii) if the pension is commuted, the commuted amount cannot exceed the benefit that was payable immediately before the commutation; and
(ix) the pension 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
(x) the capital value of the pension, and the income from it, cannot be used as security for a borrowing.