SUPERANNUATION INDUSTRY (SUPERVISION) REGULATIONS 1994

PART 4 - MANAGEMENT AND TRUSTEESHIP OF SUPERANNUATION ENTITIES  

Division 4.1 - Prescribed matters  

REGULATION 4.02   COVENANTS IN GOVERNING RULES OF SELF MANAGED SUPERANNUATION FUND - BENEFICIARY INVESTMENT CHOICE  

4.02(1)  
This regulation is made for paragraph 52B(4)(b) of the Act.

4.02(2)  
The circumstances in which a direction, other than a subsequent direction, may be made by a specified beneficiary or class of beneficiaries are the following:


(a) the trustee:


(i) gives the beneficiary or class a choice of 2 or more strategies for investing the interest of the beneficiary or class in the fund; and

(ii) informs the beneficiary or class that the beneficiary or class may choose a strategy or combination of strategies;


(b) the beneficiary or class is fully informed of:


(i) the investment objectives of each strategy; and

(ii) anything else the trustee reasonably believes a person would need to know to understand the effect of, and any risk involved in, each strategy;


(c) the direction specifies:


(i) which strategy or combination of strategies the beneficiary or class has chosen; and

(ii) where applicable, matters related to the choice mentioned in subparagraph (i);

Example

The chosen strategy could be one that allows the beneficiary a choice in exposure to certain classes of asset. The beneficiary may choose 60% in fixed interest loans and 40% in shares. The choice of the level of exposure to the class of assets would be information for subparagraph (ii).


(d) the beneficiary or class is fully informed of the range of directions that can be given and the circumstances in which they can be changed.

4.02(3)  
A subsequent direction may be given in the following circumstances:


(a) the beneficiary or class 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 or class ' s interest in the fund.




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