Unsatisfactory financial position — RSE Unsatisfactory financial position — RSE licensee requirements

Unsatisfactory financial position – RSE licensee requirements

32. When an RSE licensee receives a statement from the RSE actuary under paragraph 31, the RSE licensee must:

(a) provide a copy of the statement to APRA as soon as practicable but no later than 15 business days after receipt from the RSE actuary;

(b) consult with each employer-sponsor (as relevant) about the content and implementation of the recommendations of the RSE actuary, which may include an increase in the contribution rate or rates or change to the pattern or frequency of contribution payments;

(c) appoint an RSE actuary to be responsible for provision of advice to the RSE licensee in regard to actuarial management during the period in which the fund is in an unsatisfactory financial position, including advice as to whether, under the governing rules of the fund, there can be any reduction in the amounts of any benefit payments from the fund, or deferral of payment of any part of the benefit, during the period;

(d) set out a plan (restoration plan) to return the fund to a satisfactory financial position within the timeframe referred to in paragraph 31(a)(ii). The restoration plan may be developed in consultation with the employer-sponsor and the RSE actuary and must be approved by the Board within three months of receiving the statement from the RSE actuary;

(e) provide a copy of the restoration plan to APRA and the RSE actuary as soon as practicable but no later than 15 business days after the Board has approved the plan; and

(f) implement the restoration plan, subject to any changes required by APRA under paragraph 34 or 35.

33. At a minimum, a restoration plan must outline:

(a) the RSE licensee’s view of the likelihood that contributions will be made as recommended, taking into account the obligations of each employer-sponsor under the governing rules of the fund, and the outcome of the RSE licensee’s consultation with each employer-sponsor;

(b) any changes to the investment strategy of the fund determined by the RSE licensee to be necessary;

(c) the likely impact on benefit payments during the period of the plan; and

(d) the process by which the RSE actuary and the Board will monitor and review progress towards restoration of the fund to a satisfactory financial position.

34. On receipt of a restoration plan, APRA may, at a minimum:

(a) require the RSE licensee to report to APRA at specified intervals or on occurrence of certain events;

(b) require the RSE licensee to review the investment strategy of the fund; or

(c) require or permit a variation to the period of the plan.