Document ID: chunk:federal_register_of_legislation:F2019L00646:body:0:p3
Version: federal_register_of_legislation:F2019L00646
Segment Type: other
Provision Reference: 
Character Range: 5714–8824

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 determination under paragraph 9, APRA may, by written notice, determine the classification of any approved benefit fund of a friendly society.

Allocation or distribution of approved benefit fund surplus
    11.  The board of a friendly society must seek and consider the written advice of the Appointed Actuary prior to making any allocation or distribution of surplus under modified section 56 of the Act with respect to each approved benefit fund of the friendly society. The Appointed Actuary's advice must include, as applicable:

       (a)          the effect of the proposal on the approved benefit fund's compliance with the requirements of Prudential Standard LPS 110 Capital Adequacy (LPS 110) and Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112);

       (b)          whether or not the proposed distribution is consistent with representations made to members;

       (c)          the level of unallocated surplus after the proposed allocation or distribution, relative to the liabilities of the fund, and whether or not the level is unduly large;

       (d)          the extent to which level of unallocated surplus may give rise to undue intergenerational inequity;

       (e)          the extent to which the proposal is fair and equitable with regard to different members of the particular approved benefit fund and the general membership of the friendly society;

       (f)           the extent to which the proposal would equitably reflect the relative contribution of different members to the creation of the surplus;

       (g)          the extent to which the surplus has arisen due to management fund fees being less than the cost of servicing the approved benefit fund;

       (h)          the possible and probable effects of the proposal on the finances of the approved benefit fund, and the friendly society more generally; and

       (i)            the probable future course of surplus creation in the approved benefit fund and hence the probable future surplus available for allocation or distribution.

    12.  For the purposes of modified subsection 56(3) of the Act, a friendly society, with respect to a defined contribution fund:

       (a)          must not distribute any surplus arising in that fund to the management fund or to another approved benefit fund;

       (b)          must, in relation to any surplus in an approved benefit fund:

           (i)            allocate or distribute the surplus to members of that approved benefit fund; or

           (ii)         maintain the surplus as unallocated surplus of that approved benefit fund; and

       (c)          may make transfers (which exclude surplus, but may include any fees) from that fund to the management fund only if the approved benefit fund rules of the fund