Life Insurance (prudential standard) determination No. 2 of 2011 - Prudential Standard LPS 700 - Friendly Society Benefit Funds
Classification of approved benefit fundsClassification of approved benefit funds
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Classification of approved benefit funds
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For the purposes of this Prudential Standard, a friendly society must classify an approved benefit fund as either Defined Contribution or Defined Benefit.
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Subject to paragraphs 7 to 9:
(a) an approved benefit fund should be classified as Defined Contribution where the benefit is derived from contributions made by the member, in accordance with the approved benefit fund rules, together with the investment performance of the assets of the approved benefit fund; and
(b) an approved benefit fund should be classified as Defined Benefit where the amount of any benefit is specified in, or determined in accordance with, a formula set out in approved benefit fund rules and the amount of the benefit is not directly related to the assets of the approved benefit fund or the investment performance of those assets.
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Where an approved benefit fund provides for a benefit which meets the characteristics of both paragraphs 6(a) and 6(b), then the approved benefit fund must be classified as either Defined Benefit or Defined Contribution according to the dominant characteristics of that benefit.
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A friendly society may apply to APRA for a written determination of the classification of any approved benefit fund.
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Notwithstanding any determination under paragraph 8, APRA may, by written notice, determine the classification of any approved benefit fund of a friendly society.