Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 (155 of 2013)

Schedule 1   Amendments relating to MySuper

Superannuation Industry (Supervision) Regulations 1994

94   Regulations 4.01 and 4.02

Repeal the regulations, substitute:

4.01 Covenants in governing rules of superannuation entity - prescribed information and documents

For paragraphs 52(2)(j) and 52B(2)(h) of the Act, the information and documents that are available to a concerned person under section 1017C of the Corporations Act 2001 are prescribed.

4.02 Covenants in governing rules of self managed superannuation fund - beneficiary investment choice

(1) This regulation is made for paragraph 52B(4)(b) of the Act.

(2) The circumstances in which a direction, other than a subsequent direction, may be made by a specified beneficiary or class of beneficiaries are the following:

(a) the trustee:

(i) gives the beneficiary or class a choice of 2 or more strategies for investing the interest of the beneficiary or class in the fund; and

(ii) informs the beneficiary or class that the beneficiary or class may choose a strategy or combination of strategies;

(b) the beneficiary or class is fully informed of:

(i) the investment objectives of each strategy; and

(ii) anything else the trustee reasonably believes a person would need to know to understand the effect of, and any risk involved in, each strategy;

(c) the direction specifies:

(i) which strategy or combination of strategies the beneficiary or class has chosen; and

(ii) where applicable, matters related to the choice mentioned in subparagraph (i);

Example: The chosen strategy could be one that allows the beneficiary a choice in exposure to certain classes of asset. The beneficiary may choose 60% in fixed interest loans and 40% in shares. The choice of the level of exposure to the class of assets would be information for subparagraph (ii).

(d) the beneficiary or class is fully informed of the range of directions that can be given and the circumstances in which they can be changed.

(3) A subsequent direction may be given in the following circumstances:

(a) the beneficiary or class is given all the information the trustee believes a person would need to understand the effect of, and any risk involved in, giving the subsequent direction;

(b) the subsequent direction relates to the strategy for investing the beneficiary or class’s interest in the fund.

4.02A Trustee subject to direction - registrable superannuation entity other than regulated superannuation fund with fewer than 5 members

(1) This regulation is made for subparagraph 58(2)(d)(ii) of the Act.

(2) If a beneficiary is a standard employer-sponsored member, the circumstances in which a direction other than a subsequent direction may be given by the beneficiary to take up, dispose of or alter the amount invested in an investment option are:

(a) the trustee:

(i) gives the beneficiary a choice of 2 or more strategies for investing the interest of the beneficiary in the fund; and

(ii) informs the beneficiary that the beneficiary may choose a strategy or combination of strategies;

(b) the beneficiary is fully informed of:

(i) the investment objectives of each strategy; and

(ii) anything else the trustee reasonably believes a person would need to know to understand the effect of, and any risk involved in, each strategy;

(c) the direction specifies:

(i) which strategy or combination of strategies the beneficiary has chosen; and

(ii) where applicable, matters related to the choice mentioned in subparagraph (i).

Example: The chosen strategy could be one that allows the beneficiary a choice in exposure to certain classes of asset. The beneficiary may choose 60% in fixed interest loans and 40% in shares. The choice of the level of exposure to the class of assets would be information for subparagraph (ii).

Note: Information regarding investment strategies is generally set out in a Product Disclosure Statement. However, a shorter Product Disclosure Statement may, in accordance with the modifications of the Corporations Act 2001 set out in Part 5B of Schedule 10A to the Corporations Regulations 2001 provide some of the information by applying, adopting or incorporating a matter in writing; or refer to information that is set out in another document.

(d) the beneficiary is fully informed of the range of directions that can be given and the circumstances in which they can be changed;

(e) the trustee, when presenting a choice of 2 or more investment strategies to the beneficiary, informs the beneficiary which strategy the trustee will adopt if no direction is given.

(3) Disregard the circumstance in paragraph (2)(e) if it is a condition of membership that the beneficiary chooses a strategy or combination of strategies.

(4) If a beneficiary is not a standard employer-sponsored member, the circumstances in which a direction other than a subsequent direction may be given by the beneficiary to take up, dispose of or alter the amount invested in an investment option are the circumstances in paragraphs (2)(a) to (d).

(5) A subsequent direction may be given in the following circumstances:

(a) the beneficiary is given all the information the trustee believes a person would need to understand the effect of, and any risk involved in, giving the subsequent direction;

(b) the subsequent direction relates to the strategy for investing the beneficiary’s interest in the fund.

4.02AA Operating standard - direction on investment option to trustee of regulated superannuation fund with fewer than 5 members

(1) This standard:

(a) is made for subsection 31(1) of the Act; and

(b) applies to a regulated superannuation fund (other than a self managed superannuation fund) with fewer than 5 members.

(2) A beneficiary of the fund who is a standard employer-sponsored member may give a direction other than a subsequent direction to take up, dispose of or alter the amount invested in an investment option only if the circumstances in subregulation (3) apply.

(3) For subregulation (2), the circumstances are the following:

(a) the trustee:

(i) gives the beneficiary a choice of 2 or more strategies for investing the interest of the beneficiary in the fund; and

(ii) informs the beneficiary that the beneficiary may choose a strategy or combination of strategies;

(b) the beneficiary is fully informed of:

(i) the investment objectives of each strategy; and

(ii) anything else the trustee reasonably believes a person would need to know to understand the effect of, and any risk involved in, each strategy;

(c) the direction specifies:

(i) which strategy or combination of strategies the beneficiary has chosen; and

(ii) where applicable, matters related to the choice mentioned in subparagraph (i);

Example:The chosen strategy could be one that allows the beneficiary a choice in exposure to certain classes of asset. The beneficiary may choose 60% in fixed interest loans and 40% in shares. The choice of the level of exposure to the class of assets would be information for subparagraph (ii).

Note: Information regarding investment strategies is generally set out in a Product Disclosure Statement. However, a shorter Product Disclosure Statement may, in accordance with the modifications of the Corporations Act 2001 set out in Part 5B of Schedule 10A to the Corporations Regulations 2001 provide some of the information by applying, adopting or incorporating a matter in writing; or refer to information that is set out in another document.

(d) the beneficiary is fully informed of the range of directions that can be given and the circumstances in which they can be changed;

(e) the trustee, when presenting a choice of 2 or more investment strategies to the beneficiary, informs the beneficiary which strategy the trustee will adopt if no direction is given.

(4) Disregard the circumstance in paragraph (2)(e) if it is a condition of membership that the beneficiary chooses a strategy or combination of strategies.

(5) If a beneficiary is not a standard employer-sponsored member, the circumstances in which a direction other than a subsequent direction may be given by the beneficiary to take up, dispose of or alter the amount invested in an investment option are the circumstances in paragraphs (3)(a) to (d).

(6) A subsequent direction may be given in the following circumstances:

(a) the beneficiary is given all the information the trustee believes a person would need to understand the effect of, and any risk involved in, giving the subsequent direction;

(b) the subsequent direction relates to the strategy for investing the beneficiary’s interest in the fund.