“601KEA Hardship withdrawals—definitions
(1) In this section and in sections 601KA, 601KEB and 601KEC:
cash means scheme property that consists of money in an account or on deposit with a bank.
frozen scheme means a registered scheme for which the responsible entity of the scheme has:
(a) suspended withdrawals (other than any hardship withdrawals) from the scheme; and
(b) ceased to allow the issue of new interests in the scheme.
hardship category has the meaning given by subsection (2).
hardship criteria has the meaning given by subsection (2).
hardship withdrawal has the meaning given by subsection 601KEB(1).
hardship withdrawal request means a request for a hardship withdrawal.
operator means a person who is any of the following:
(a) a member of the scheme in its capacity as responsible entity or custodian of another registered scheme;
(b) a life company within the meaning of the Life Insurance Act 1995;
(c) a trustee of a trust;
(d) a trustee or custodian of a superannuation entity within the meaning of the Superannuation Industry (Supervision) Act 1993;
(e) a trustee of a self-managed superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993;
(f) a provider or acquirer in relation to a custodial arrangement as defined in section 10l2IA.
quarter means a period of three months ending on 31 March, 30 June, 30 September or 31 December.
(2) For the purposes of this section and sections 601KEB to 601KEC, the person in relation to whom a hardship withdrawal request is made is:
(a) unless paragraph (b) or (c) applies—the member making the hardship withdrawal request;
(b) where the member is deceased—a beneficiary of the estate of the deceased member; or
(c) where the member is an operator—a person (instructor) who has asked the operator to exercise a right to withdraw.
(3) For the purposes of this section and sections 601KEB to 601KEC, a person in relation to whom a hardship withdrawal request has been made falls within a hardship category specified in column 2 of the following table if the hardship criteria specified in column 3 are satisfied in relation to the person.
Item
Column 2hardship category
Column 3hardship criteria
1
Urgent Financial Hardship
The amount requested under the hardship withdrawal request is needed to enable the person to meet reasonable and immediate living expenses for the person or any dependant.
The person has not been in gainful employment for a period of at least three months and has no other means of financial support (except government assistance, such as unemployment benefits).
3
Compassionate Grounds
The amount requested under the hardship withdrawal request is needed for one or more of the following:(a) to help the person or a dependant pay for medical costs (including transport costs) required to treat a life-threatening illness or injury, to alleviate acute or chronic pain, or to alleviate an acute or chronic mental disturbance where a registered medical practitioner has provided a certified statement confirming the medical condition is of this nature;(b) to fund specific modifications to a principal place of residence or vehicle that are necessary to accommodate special needs of the person or a dependant arising from a severe disability;(c) if the person is a beneficiary of the estate of a deceased member—to assist with funeral and other expenses related to the death of the deceased member;(d) to assist with funeral and other expenses related to the death of a dependant of the person;(e) to enable the person to provide care for another person who is dying from a terminal illness, including home care;(f) to prevent a mortgagee or lender from selling the person’s principal place of residence;(g) to meet a binding financial obligation entered into by the person before the responsible entity suspended withdrawals (other than hardship withdrawals, if any);where the person and, if applicable, their dependant (and in the case of paragraphs (c) and (d), the estate of the deceased member or dependant as the case may be) do not otherwise have the financial capacity to meet the expense.
4
Permanent Incapacity
Where the person has ceased gainful employment by reason of mental or physical ill-health and the person is unlikely ever again to engage in gainful employment of the type for which the person is reasonably qualified by education, training or experience.
601KEB Hardship withdrawals
Power to allow hardship withdrawals
(1) Subject to this section, the responsible entity of a frozen scheme may allow a member to withdraw (hardship withdrawal) from the scheme in accordance with a provision of the scheme’s constitution that provides that the responsible entity may allow a member to withdraw if:
(a) the member has made a hardship withdrawal request; and
(b) the responsible entity is satisfied that:
(i) the member falls within a hardship category; or
(ii) where the member is deceased—a beneficiary of the estate of the deceased member falls within a hardship category; or
(iii) where the member is an operator—a person (instructor) who has asked the operator to exercise a right to withdraw falls within a hardship category.
Responsible entity must notify ASIC and members before allowing hardship withdrawals
(2) The responsible entity must not allow a hardship withdrawal unless:
(a) the responsible entity has, since the scheme most recently became a frozen scheme, given written notice to ASIC that the responsible entity proposes to allow hardship withdrawals and that includes a statement signed by a director or secretary of the responsible entity that the board of the responsible entity has resolved that that:
(i) the scheme is a frozen scheme; and
(ii) the board has considered expected hardship withdrawals and believes on reasonable grounds that the scheme property will include adequate cash over the following 6 months to meet hardship withdrawals from members and continue the day-to-day operations of the scheme; and
Note: If the scheme ceases to be a frozen scheme after the responsible entity gives a notice under paragraph (a) and then becomes a frozen scheme again, the responsible entity will need to give a new notice under paragraph (a) if it wishes to allow hardship withdrawals.
(b) before allowing the first hardship withdrawal for each period during which the scheme has become a frozen scheme, the responsible entity has given each member of the scheme written notice by post or by email explaining the effect of allowing hardship withdrawals; and
Note: A single notice could be used for the purposes of paragraph 601GCC(2)(a) and paragraph 601KEB(2)(b).
(c) the responsible entity has published a statement on its website:
(i) explaining the effect of allowing hardship withdrawals; and
(ii) in a way that it is likely to come to the attention of a person looking for information about the scheme on the website.
Responsible entity to notify ASIC if scheme ceases to be a frozen scheme
(3) If the responsible entity has given notice to ASIC under paragraph (2)(a), the responsible entity must give written notice to ASIC that the scheme has ceased to be a frozen scheme as soon as practicable after the scheme ceases to be frozen.
Other restrictions on hardship withdrawals
(4) The responsible entity must not allow a hardship withdrawal in relation to a member, beneficiary or instructor (as applicable) unless the responsible entity is satisfied that:
(a) there are reasonable grounds to consider that following the withdrawal the scheme property would include adequate cash over the following 6 months to meet likely future hardship withdrawals and for the day-to-day operation of the scheme; and
(b) allowing the hardship withdrawal:
(i) would not result in more than 4 hardship withdrawals for the member, beneficiary or instructor in any calendar year; and
(ii) would not result in the total amount of hardship withdrawals for the member, beneficiary or instructor in any calendar year exceeding $100,000; and
(c) in the case of a withdrawal in relation to a beneficiary—any amount paid on withdrawal to an executor or administrator of the estate will be paid to the beneficiary after deduction of any fees and charges payable to the executor or administrator; and
(d) in the case of a withdrawal in relation to an instructor—any amount paid on withdrawal to an operator will be paid to the instructor after deduction of any fees and charges payable to the operator.
Note: In making any payment to an instructor, an operator must comply with any obligations under the terms of the relevant trust or arrangement under which it acts and other applicable laws. For example, the responsible entity of a registered scheme must comply with Part 5C.6 and the trustee of a superannuation entity or self-managed superannuation fund must comply with requirements under the Superannuation Industry (Supervision) Act 1993.
601KEC Hardship withdrawals—record keeping and reporting
Subsections (2) and (3) apply to a responsible entity if the scheme’s constitution includes a provision permitting the responsible entity to allow hardship withdrawals.
Record keeping for hardship withdrawal requests
(2) The responsible entity must ensure that the records which it keeps under section 988A document how and why a decision to allow or refuse a hardship withdrawal request was made, including in relation to any discretion:
(a) to allow or refuse the hardship withdrawal request; or
(b) to allow the hardship withdrawal request in whole or in part.
Information to be provided to ASIC
The responsible entity must for each quarter from the date it gives notice to ASIC under paragraph 601KEB(2)(a) and for so long as the scheme is a frozen scheme for some or all of a quarter, provide ASIC with an electronic spreadsheet that includes the following information for the scheme within 14 days after the end of the quarter:
Note: ASIC Information Sheet 249 Frozen funds – Information for responsible entities (INFO 249) contains a link to a template spreadsheet provided for this purpose. INFO 249 is available from ASIC’s website.
the total value of the scheme property as at the end of the quarter;
(b) the number of members of the scheme as at the end of the quarter;
(c) the number and total value of hardship withdrawal requests received for the scheme in that quarter;
(d) for each hardship category:
(i) the number of hardship withdrawal requests accepted in full in that quarter and the total value of those hardship withdrawal requests; and
(ii) the number of hardship withdrawal requests accepted in part in that quarter and:
(A) the total value in respect of which those hardship withdrawal requests were accepted; and
(B) the total value in respect of which those hardship withdrawal requests were rejected; and
(iii) the number of hardship withdrawal requests rejected in full in that quarter and the total value of those hardship withdrawal requests;
Note: Where a responsible entity accepts or rejects a hardship withdrawals request under two or more hardship categories, the responsible entity should identify the primary hardship category for reporting purposes.
(e) across all hardship categories:
(i) the total number of hardship withdrawal requests accepted in full for that quarter and the total value of those hardship withdrawal requests; and
(ii) the total number of hardship withdrawal requests accepted in part in that quarter and:
(A) the total value in respect of which those hardship withdrawal requests were accepted; and
(B) the total value in respect of which those hardship withdrawal requests were rejected; and
(iii) the total number of hardship withdrawal requests rejected in full in that quarter and the total value of those hardship withdrawal requests;
(f) the number of complaints in relation to hardship withdrawals that were received in that quarter.
Note: Complaints in relation to hardship withdrawals include complaints about changes to the scheme’s constitution to facilitate hardship withdrawals and the time taken to pay accepted hardship claims.”.
Part 4—Repeal
8 Repeal
This instrument is repealed at the end of 28 February 2027.
Endnotes
Endnote 1—About the endnotes
Note: The endnotes provide information about this compilation and the compiled law.
Note: The following endnotes are included in every compilation:
Note: Endnote 1—About the endnotes
Note: Endnote 2—Abbreviation key
Note: Endnote 3—Legislation history
Note: Endnote 4—Amendment history
Note: Abbreviation key—Endnote 2
Note: The abbreviation key sets out abbreviations that may be used in the endnotes.
Note: Legislation history and amendment history—Endnotes 3 and 4
Note: Amending laws are annotated in the legislation history and amendment history.
Note: The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation.
Note: The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law.
Note: Misdescribed amendments
Note: A misdescribed amendment is an amendment that does not accurately describe how an amendment is to be made. If, despite the misdescription, the amendment can be given effect as intended, then the misdescribed amendment can be incorporated through an editorial change made under section 15V of the Legislation Act 2003.
Note: If a misdescribed amendment cannot be given effect as intended, the amendment is not incorporated and “(md not incorp)” is added to the amendment history.