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Week 1 Notes

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Queensland University of Technology

1 AYB240 – SUPERANNUATION REGULATION AND PRACTICE LECTURE 1: INTRODUCTION TO SUPERANNUATION What is superannuation?  Form of savings and investment → save during working life to provide money in retirement  Investment vehicle or structure holding assets accessed via membership of a superannuation fund o ‘Pension’ in most other countries = employment-related retirement savings, in Australia = means-tested government-provided age pension Why have super?  Ageing population  Longer life expectancy  Greater lifestyle expectations  Fewer taxpayers to provide government revenue for pensions 3 Pillar Approach  Mandatory contributions o Employers contributing on behalf of workers while they are employed  Compulsory Superannuation Guarantee (9%)  Voluntary contributions o Voluntary employer-sponsored superannuation schemes  In excess of compulsory SG 9% o Tax and other incentives to encourage individuals to save voluntarily  Government-provided age pension o Social security providing a safety net (means tested Regulation  How is superannuation regulated? o Key regulation  Superannuation Industry (Supervision) Act 1993 (SIS Act) and associated Regulations  Corporations Act 2001 and associated Regulations  Income tax legislation  Who regulates superannuation? o Australian Prudential Regulation Authority (APRA) o Australian Securities and Investments Commission (ASIC) o Australian Taxation Office (ATO) 2 Sole Purpose Test (s62 SIS Act)  Central to government’s retirement savings objectives.  Superannuation fund must be maintained solely for at least one ‘core purpose’ o May be in conjunction with ‘ancillary purposes’  Core purposes o Retirement o Attaining age 65 o Death benefits  Ancillary purpose o Termination of employment o Benefits of cessation of work due to ill-health o Death/reversionary benefits o Additional ancillary purposes approved by APRA What is a Superannuation Fund? (s10 SIS Act)  … an indefinitely continuing fund established as a legal trust in order to provide benefits to fund members or their dependants upon the sickness, death or retirement of the member Key Characteristics  Distinguishing features from other saving/investment forms o
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