House of Representatives

Superannuation Legislation Amendment Bill (No. 4) 1999

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer, the Rod Kemp)

Outline and financial impact statement

Outline

This Bill gives effect to changes to the investment rules for superannuation funds announced in the 1998-99 Budget and to subsequent announcements by the Government on this issue.

The Bill contains one schedule containing amendments to the Superannuation Industry (Supervision) Act 1993 . The amendments relate to Part 8 of the Act, which limits the extent to which a superannuation fund can invest in in-house assets, and section 66, which prohibits the acquisition of assets from members of a fund and their relatives.

The changes made by this Bill include:

·
Providing a definition of a related party of a superannuation fund, which includes a member of a fund, a Part 8 associate of a member of a fund, a standard employer-sponsor of a fund, and a Part 8 associate of a standard employer-sponsor of a fund.
·
Providing definitions of a Part 8 associate and of a related trust.
·
Amending the coverage of the in-house asset rules so that they include investments in, loans to, and leases and lease arrangements with, a related party of the fund. In-house investments will also include investments in a related trust.
·
Providing that the in-house asset rules do not cover business real property leased by a superannuation fund with less than 5 members, or investments in widely held unit trusts.
·
Providing transitional arrangements for the changes to the in-house asset provisions.
·
Strengthening the provision that applies where an investment is not an in-house asset, but has the effect of achieving an investment in an in-house asset.
·
Amending section 66, which prohibits the acquisition of assets from members and relatives, so that it applies to acquisitions from all related parties, with specified exceptions.
·
Allowing superannuation funds with fewer than 5 members to use up to 100 per cent of their assets to purchase business real property.

Financial Impact Statement

The measures are not expected to impact on Budget revenues or outlays in the forward estimates years. However, longer term benefits can be expected, including savings to Age Pension outlays, from ensuring that superannuation savings are invested prudently and preserved for retirement income purposes.


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