(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.
4.03 Trustee of employer‑sponsored fund—prescribed direction by employer‑sponsor or associate of employer sponsor
(1) For the purposes of paragraph 58(2)(e) of the Act, the circumstances in which the governing rules of a superannuation entity (other than a superannuation fund with no more than 6 members) may permit an employer‑sponsor or an associate of an employer‑sponsor to give a direction to the trustee of an employer‑sponsored fund are:
(a) where, after the implementation of the direction:
(i) the fund (if a defined benefit fund) would not become technically insolvent within the meaning of subregulation 9.06(3); or
(ii) the fund (if an accumulation fund) would not become technically insolvent within the meaning of subregulation 9.35(3); and
(b) where the direction would not require the trustee to contravene the Act (other than section 55) or these regulations; and
(c) where the direction qualifies under subregulation (2).
(2) A direction qualifies if:
(a) the contributions of the employer‑sponsor to the fund include contributions that are not mandated employer contributions (within the meaning of Part 5) and the direction relates solely to either or both of the following:
(i) those non‑mandated employer contributions; or
(ii) benefits related to those non‑mandated employer contributions; or
(b) whether or not paragraph (a) applies—the direction relates solely to one or more of the following:
(i) the admission of new members to the fund; or
(ii) the category of members into which a new member or existing member is to be placed; or
(iii) allowing a person to become an employer‑sponsor of the fund; or
(iv) the termination of the fund; or
(v) the appointment of a trustee to an entity that does not have a trustee.
4.04 Governing rules of a superannuation entity—prescribed exercise of discretion by non‑trustee
(1) For the purposes of subparagraph 59(1)(b)(iii) of the Act, the circumstances in which a discretion under the governing rules of a superannuation entity other than a self managed superannuation fund may be exercised by a person other than the trustee are:
(a) where, after the exercise of the discretion:
(i) the fund (if a defined benefit fund) would not become technically insolvent within the meaning of subregulation 9.06(3); or
(ii) the fund (if an accumulation fund) would not become technically insolvent within the meaning of subregulation 9.35(3); and
(b) where the discretion could have been exercised by the trustee without contravening the Act (other than section 55) or these regulations; and
(c) where the discretion qualifies under subregulation (2).
(2) A discretion qualifies if:
(a) the contributions of the employer‑sponsor to the fund include contributions that are not mandated employer contributions (within the meaning of Part 5) and the discretion relates solely to either or both of the following:
(i) those non‑mandated employer contributions; or
(ii) benefits related to those non‑mandated employer contributions; or
(b) whether or not paragraph (a) applies—the discretion relates solely to one or more of the following:
(i) the admission of new members to the fund; or
(ii) the category of members into which a new member or existing member is to be placed; or
(iii) allowing a person to become an employer‑sponsor of the fund; or
(iv) the termination of the fund; or
(v) the appointment of a trustee to an entity that does not have a trustee.
4.05 Governing rules of a superannuation entity—prescribed circumstances of amendment
(1) For the purposes of subparagraph 60(1)(b)(iii) of the Act, the circumstances in which the governing rules of a superannuation entity other than a self managed superannuation fund may be amended are:
(a) where, after the making of the amendment:
(i) the fund (if a defined benefit fund) would not become technically insolvent within the meaning of subregulation 9.06(3); or
(ii) the fund (if an accumulation fund) would not become technically insolvent within the meaning of subregulation 9.35(3); and
(b) where the amendment could have been made by the trustee without contravening the Act (other than section 55) or these regulations; and
(c) where the amendment qualifies under subregulation (2).
(2) An amendment qualifies if:
(a) the contributions of the employer‑sponsor to the fund include contributions that are not mandated employer contributions (within the meaning of Part 5) and the amendment relates solely to either or both of the following:
(i) those non‑mandated employer contributions; or
(ii) benefits related to those non‑mandated employer contributions; or
(b) whether or not paragraph (a) applies—the amendment relates solely to one or more of the following:
(i) the admission of new members to the fund; or
(ii) the category of members into which a new member or existing member is to be placed; or
(iii) allowing a person to become an employer‑sponsor of the fund; or
(iv) the termination of the fund; or
(v) the appointment of a trustee to an entity that does not have a trustee.
4.06 Removal of member representatives—prescribed circumstances
(1) For the purposes of sub‑subparagraph 107(2)(a)(ii)(G) of the Act, the circumstances stated in subregulation (2) are prescribed as circumstances in which member representatives referred to in subparagraph 107(2)(a)(ii) of the Act can be removed other than by the same procedure by which they were appointed.
(2) The circumstances referred to in subregulation (1) are:
(a) if the member representative resigns from the position of trustee, director of the trustee or representative on a policy committee; or
(b) if the member representative’s tenure of that position expires; or
(c) if the member representative ceases to be a member of the fund; or
(d) if the member representative ceases to satisfy a condition that the member representative was required to satisfy to be eligible for appointment.
4.07 Removal of independent trustee or independent member—prescribed circumstances
(1) For the purposes of subparagraph 108(2)(a)(v) of the Act, the circumstances stated in subregulation (2) are prescribed as circumstances in which an additional independent trustee or additional independent director (the office‑holder) referred to in paragraph 108(2)(a) of the Act can be removed other than by the same procedure by which they were appointed.
(2) The circumstances referred to in subregulation (1) are:
(a) if the office‑holder resigns from office; or
(b) if the office‑holder’s tenure of office expires; or
(c) if the office‑holder ceases to be:
(i) in the case of an additional independent trustee—an independent trustee; or
(ii) in the case of an additional independent director—an independent director; or
(d) if the office‑holder ceases to satisfy a condition that the office‑holder was required to satisfy to be eligible for appointment.
Division 4.2—Operating standards
4.07C Definitions
In this Division:
insured benefit, for a member, means a right for the member’s benefits to be increased on the realisation of a risk.
4.07D Operating standard—permitted types of insurance
(1) This regulation is made for subsection 31(1) of the Act.
(2) A trustee of a regulated superannuation fund must not provide an insured benefit in relation to a member of the fund unless the insured event is consistent with a condition of release specified in item 102, 102A, 103 or 109 of Schedule 1.
(3) However, subregulation (2) does not apply to:
(a) the continued provision of benefits to members who joined a fund before 1 July 2014; or
(b) the provision of benefits under an approval granted before 1 July 2014 under subparagraph 62(1)(b)(v) of the Act.
(4) If a trustee is unable to amend the governing rules of a fund, to make the governing rules comply with subregulation (2):
(a) the rules that do not comply with subregulation (2) are taken to have been omitted from the governing rules; and
(b) the rules omitted under paragraph (a) are taken to have been replaced by rules that allow the provision of benefits that are permitted under subregulation (2).
(5) This regulation does not apply until 1 July 2014.
4.07E Operating standard—self‑insurance
(1) This regulation is made for subsection 31(1) of the Act.
Note: See also paragraph 31(2)(eb) of the Act.
(2) If, on 1 July 2013, a regulated superannuation fund does not self‑insure, in relation to a particular risk, a trustee of the fund may, on and after 1 July 2013, provide an insured benefit, in relation to that risk, to members of the fund only if the provision of the benefit is fully supported by an insurance policy provided by an insurer.
(3) Subregulation (2) does not apply, on or before 1 July 2016, to a member who is transferred from a fund that self‑insured, in relation to the member and the risk, into:
(a) a successor fund that, immediately before the transfer, did not self‑insure in relation to the risk; or
(b) under Part 33 of the Act—a fund that, immediately before the transfer, did not self‑insure in relation to the risk.
(4) If, on 1 July 2013, a regulated superannuation fund self‑insures, in relation to a particular risk, a trustee of the fund may, on and after 1 July 2016, provide an insured benefit, in relation to that risk, to members of the fund only if the provision of the benefit is fully supported by an insurance policy provided by an insurer.
(5) If the governing rules of the fund mentioned in subregulation (4) do not allow the trustee to obtain the insurance policy mentioned in that subregulation, the trustee must, before 1 July 2016, amend the rules of the fund to allow the trustee to do so.
(6) If the trustee cannot amend the rules, the rules are taken to be amended to allow the trustee to obtain the insurance policy.
(7) Subregulation (4) does not apply if the Commonwealth Government, or the government of a State or Territory:
(a) provides an insured benefit to members of the fund; or
(b) guarantees the provision of an insured benefit to members of the fund.
(8) Subregulation (4) does not apply, in relation to defined benefit members of the fund, if:
(a) on or before 1 July 2013, APRA has not imposed, under subsection 29EA(1) of the Act, a condition on the licence of the RSE licensee of the fund that prohibits self‑insurance in relation to defined benefit members; and
(b) on 1 July 2013, the fund self‑insures in relation to the members.
(9) Despite subregulation (4), a beneficiary of the fund who is mentioned in column 2 of the table has the entitlement mentioned in column 3 of the table.
Entitlements of beneficiaries
Item If one of the following applies to the beneficiary immediately before 1 July 2016 ... the beneficiary is entitled, on and after 1 July 2016, to ...
1 receives an insured benefit continue to receive the insured benefit
2 lodges a claim for an insured benefit (a) have the claim determined; and(b) receive an insured benefit, if the trustee so determines
3 is eligible to make a claim for an insured benefit (a) lodge a claim; and(b) have the claim determined; and(c) receive an insured benefit, if the trustee so determines
(10) In this regulation:
fund includes a sub‑fund.
4.08 Operating standard—voting rule where equal representation applies
(1) For the purposes of subsection 31(1) of the Act, the standard stated in subregulation (3) is applicable to the operation of standard employer‑sponsored funds that must comply:
(a) under subsection 91(4) or 93(4) of the Act—with the basic equal representation rules; or
(b) under subsection 90(3) of the Act—with either:
(i) the basic equal representation rules; or
(ii) the alternative agreed representation rule set out in subsection 90(4) of the Act; or
(c) under subsection 92(4) of the Act—with either:
(i) the basic equal representation rules; or
(ii) the alternative agreed representation rule set out in subsection 92(5) of the Act.
(2) Despite subregulation (1), the standard stated in subregulation (3) is not applicable:
(a) to the operation of standard employer‑sponsored funds that comply with the alternative agreed representation rule set out in subsection 90(4) or 92(5) of the Act; or
(b) to a decision of a delegate of the individual trustees or of the board of directors of the corporate trustee of the fund if the delegation was approved by at least two‑thirds of the total number of the trustees or directors.
(3) A decision of:
(a) the individual trustees of a fund; or
(b) the board of directors of the corporate trustee of a fund;
must be taken not to have been made, or to be of no effect, if fewer than two‑thirds of the total number of the trustees or directors, as the case requires, voted for it.
4.08A Operating standard—member representation for certain regulated superannuation funds where a declaration under subsection 18(7) of the Act applies
(1) For the purposes of subsection 31(1) of the Act, the standard stated in subregulation (2) applies to the operation of regulated superannuation funds.
(2) A regulated superannuation fund:
(a) that is not a standard employer‑sponsored fund; and
(b) that has more than 6 members; and
(c) in relation to which a declaration under subsection 18(7) of the Act is in force;
must have in place an arrangement in relation to the management and control of the fund that:
(d) has been agreed to by a majority of the members of the fund; and
(e) is approved by APRA in writing.
Note: Subsection 18(7) of the Act allows for funds to be declared not to be public offer funds.
(3) An approval for paragraph (2)(e):
(a) is subject to any conditions specified in the instrument of approval; and
(b) may be revoked by APRA by written notice given to the holder of the approval.
(4) APRA may vary the conditions of an approval for paragraph (2)(e) by written notice given to the holder of the approval.
(5) An approval that:
(a) was granted by the Commissioner or APRA under the regulation 4.08A that, under section 2 of Modification Declaration 10, had effect as if it had been inserted into these regulations; and
(b) was in force immediately before 1 March 2001;
continues in force as if granted by APRA for this regulation after that commencement.
Note: Modification Declaration 10 was gazetted on 19 July 1995 under section 332 of the Act.
(6) When deciding whether or not to approve an arrangement for paragraph (2)(e), APRA must have regard to any written guidelines determined by APRA under this subregulation.
(7) This regulation does not apply to a fund if the fund has an acting trustee appointed under Part 17 of the Act.
4.09 Operating standard—investment strategy
(1) This regulation:
(a) is made for subsection 31(1) of the Act; and
(b) applies to a superannuation entity that is a self managed superannuation fund.
(2) The trustee of the entity must formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:
(a) the risk involved in making, holding and realising, and the likely return from, the entity’s investments, having regard to its objectives and expected cash flow requirements;
(b) the composition of the entity’s investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;
(c) the liquidity of the entity’s investments, having regard to its expected cash flow requirements;
(d) the ability of the entity to discharge its existing and prospective liabilities;
(e) whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.
(3) An investment strategy is taken to be in accordance with subregulation (2) even if it provides for a specified beneficiary or class of beneficiaries to give directions to the trustee where the directions:
(a) relate to the strategy to be followed by the trustee in relation to the investment of a particular asset or assets of the entity; and
(b) are given in the circumstances covered by regulation 4.02.
4.09A Operating standard—money and other assets to be kept separate (self managed superannuation funds)
(1) For subsection 31(1) of the Act, the standard stated in subregulation (2) applies to the operation of regulated superannuation funds.
(2) A trustee of a regulated superannuation fund that is a self managed superannuation fund must keep the money and other assets of the fund separate from any money and assets, respectively:
(a) that are held by the trustee personally; or
(b) that are money or assets, as the case may be, of a standard employer‑sponsor, or an associate of a standard employer‑sponsor, of the fund.
4.10 Operating standard—investment by non‑complying superannuation funds
For the purposes of subsection 31(1) of the Act, it is a standard applicable to the operation of regulated superannuation funds that, if the Regulator gives a notice to the trustee of an entity stating that the entity is not a complying superannuation fund, the trustee must take all reasonable steps to immediately dispose of any units held by the trustee in a PST, unless the Regulator otherwise directs.
4.10A Operating standard—ownership of units in a PST
(1) For paragraph 33(2)(aa) of the Act, the standard stated in subregulation (2) is applicable to a registrable superannuation entity that is a PST.
(2) A trustee of the registrable superannuation entity must not offer ownership of units in the registrable superannuation entity unless the registrable superannuation entity is registered under Part 2B of the Act.