Superannuation Industry (Supervision) Amendment Regulations 2004 (No. 4) (148 of 2004)

Schedule 3   Amendments commencing on 20 September 2004

[12]   Subregulation 1.05 (9)

substitute

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

(a) for an annuity that has a commencement day before 20 September 2004:

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

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

(b) for an annuity that has a commencement day on or after 20 September 2004:

(i) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary's life expectancy on the commencement day, rounded up to the next whole number if the primary beneficiary's life expectancy does not consist of a whole number of years; or

(ii) the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to the primary beneficiary's life expectancy mentioned in subparagraph (i) calculated, at the option of the primary beneficiary, as if the primary beneficiary were up to 5 years younger on the commencement day; or

(iii) if:

(A) the annuity is an annuity that reverts to a surviving spouse on the death of the primary beneficiary; and

(B) the life expectancy of the primary beneficiary's spouse is greater than the life expectancy of the primary beneficiary; and

(C) the primary beneficiary has not chosen to make an arrangement mentioned in subparagraph (i) or (ii) for the annuity;

the annuity is paid at least annually to the primary beneficiary or to a reversionary beneficiary throughout a period equal to:

(D) the life expectancy of the spouse on the commencement day; or

(E) the life expectancy of the spouse calculated, at the option of the primary beneficiary, as if the spouse were up to 5 years younger on the commencement day;

at the option of the primary beneficiary, and rounded up to the next whole number if the life expectancy of the spouse does not consist of a whole number of years; and

(c) 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 the benefit was purchased; and

(d) 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:

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

(ii) 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

(e) the total amount of the payments to be made in a year in accordance with paragraph (c) or (d) may be varied only to allow commutation to pay a superannuation contributions surcharge; and

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

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

(h) the annuity cannot be commuted except:

(i) if the annuity is not funded from the commutation of another annuity or a pension and the commutation is made within 6 months after the commencement day of the annuity; or

(ii) subject to subparagraph (iv), 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

(iii) subject to subparagraph (iv), 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

(iv) for subparagraphs (ii) and (iii), if the primary beneficiary has opted, under subparagraph (b) (iii), for a period worked out in relation to the life expectancy of the primary beneficiary's spouse - the annuity cannot be commuted until the death of both the primary beneficiary and the spouse; or

(v) if the eligible termination payment resulting from the commutation is transferred directly to the purchase of another benefit that is:

(A) an annuity provided under a contract that meets the standards of subregulation (2), (3) or (10) or this subregulation; or

(B) a pension that is provided under rules that meet the standards of subregulation 1.06 (2), (3), (7) or (8); or

(C) a pension that is provided under terms and conditions that meet the standards of subregulation 1.07 (3A) of the RSA Regulations; or

(vi) to pay a superannuation contributions surcharge; and

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

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

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

(i) 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

(ii) 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

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