Document ID: chunk:federal_register_of_legislation:F2019L00646:body:0:p2
Version: federal_register_of_legislation:F2019L00646
Segment Type: other
Provision Reference: 
Character Range: 2838–5998

have approved benefit fund rules that adequately provide for, amongst other things, the following matters with respect to each approved benefit fund:

       (a)          the name of the approved benefit fund;

       (b)          in addition to matters dealt with under the constitution of the company for the purposes of the Corporations Act 2001, terms and conditions governing the operation of the approved benefit fund and the rights and obligations of both the friendly society and a member of an approved benefit fund under the policy contract;

       (c)          nature of the business to be carried out by the approved benefit fund;

       (d)          contribution rates for benefits, including any minimum contributions;

       (e)          method of determination of benefit payments under each possible contingency and any required notice period before the benefit is payable;

       (f)           any guaranteed benefits;

       (g)          membership of the approved benefit fund;

       (h)          authorised investments of the approved benefit fund;

       (i)            whether the fund is a defined contribution or defined benefit fund, as set out in this Prudential Standard;

       (j)            any costs or expenses which may be paid directly from the approved benefit fund;

       (k)          effect of taxation, including the method of calculation;

       (l)            whether the friendly society has the ability to make any transfers, by way of fees, transfer of surplus or otherwise, from the approved benefit fund to the management fund or other approved benefit funds of the friendly society; and

       (m)        whether the friendly society has the ability to allocate or distribute surplus.

Operational requirements
Classification of approved benefit funds
    6.      For the purposes of this Prudential Standard, a friendly society must classify an approved benefit fund as either 'defined contribution' or 'defined benefit'.

    7.      Subject to paragraphs 8 to 10:

       (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.

    8.      Where an approved benefit fund provides for a benefit which meets the characteristics of both paragraphs 7(a) and 7(b), then the approved benefit fund must be classified as either defined benefit or defined contribution according to the dominant characteristics of that benefit.

    9.      A friendly society may apply to APRA for a written determination of the classification of any approved benefit fund.

    10.  Notwithstanding any