Document ID: chunk:federal_register_of_legislation:F2013L01247:body:0:p3
Version: federal_register_of_legislation:F2013L01247
Segment Type: other
Provision Reference: 
Character Range: 5625–8527

these policies and functions give appropriate regard to the RSE licensee's business operations.[9]

Shortfall limit

    10.         An RSE licensee must set a shortfall limit, approved by the Board, for each defined benefit fund within its business operations.[10] For the purposes of this Prudential Standard, a 'shortfall limit' is the extent to which an RSE licensee considers that a fund can be in an unsatisfactory financial position with the RSE licensee still being able to reasonably expect that, because of corrections to temporary negative market fluctuations in the value of fund assets, the fund can be restored to a satisfactory financial position within one year.[11]

    11.         The shortfall limit may be set so there is zero deviation from a satisfactory financial position. The shortfall limit must not be such that that the fund may become technically insolvent as referred to in regulation 9.06(3) of the SIS Regulations before breaching the shortfall limit.

    12.         The shortfall limit approved by the Board must be calculated and expressed in the same way as required under the reporting standards made under the Financial Sector (Collection of Data) Act 2001.[12]

    13.         The Board must determine and implement a monitoring process designed to detect, on a timely basis, when the fund has, or may have, fallen into an unsatisfactory financial position and/or breached the shortfall limit.

Actuarial investigations – regular and initial investigations
    14.         An RSE licensee must appoint an RSE actuary to make an actuarial investigation in relation to a defined benefit fund:

       (a)          at least every three years if the fund is not paying a defined benefit pension;

       (b)          at least annually if the fund has fewer than five members and is paying a defined benefit pension;

       (c)          if the fund has more than four members, and is paying a defined benefit pension, within one year of the RSE licensee commencing to pay the pension. APRA may determine another date by which the initial investigation must be carried out which will be not less than one year and not more than three years after the commencement of the pension; and

       (d)          if the fund has more than four members, and is paying a defined benefit pension, for second and further investigations after the RSE licensee commences paying the pension, annually or with a frequency determined by APRA which will be not less than one year and not more than three years after the most recent regular investigation.

    For the purposes of this Prudential Standard, investigations required under this paragraph are referred to as 'regular investigations'.

    15.         Where an RSE licensee establishes a new defined benefit fund, the RSE licensee must appoint an RSE actuary to carry out a first investigation as at the date of