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B11/1995 FRIENDLY SOCIETY INVESTMENT RESTRUCTURES

Document

DATE OF ISSUE:  13 FEBRUARY 1995

FRIENDLY SOCIETY INVESTMENT RESTRUCTURES

Introduction

The purpose of this instruction is to advise on restructures proposed for and the treatment for service pension purposes of friendly society investments held in:

  • the Australian Unity Friendly Society (AUFS),  Manchester Unity Blue Chip Series 2 Bond;

  • AUFS, ANA Capital Guaranteed Bond;

  • AUFS, Manchester Unity Blue Chip Protection Bond; and

  • the Over 50's Friendly Society (Over 50's), Macquarie Tax Advantaged Funds.


Australian Unity Friendly Society Policy Restructures

Background

2.On 23 December 1994, AUFS advised that it intended to add two unitised investment options to the Manchester Unity Blue Chip Series 2 Bond (the Policy), and that the rules which govern the Policy had been amended to reflect this change. From 31 January 1995, existing members of the Policy will have a choice of remaining in the existing capital guaranteed portfolio or switching all or part of their investment into the new investment options under their existing policies.

3.Similarly, AUFS advised on 23 January of the intention to add two unitised investment options to the ANA Capital Guaranteed Bond and Manchester Unity Blue Chip Protection Bond, and that the rules which govern these policies would be amended to reflect the changes. From 20 February 1995, existing members of the Policies will have a choice of remaining in the existing capital guaranteed portfolios or switching all or part of their investment into the new investment options under their existing policies.

3.The three above-mentioned Policies will now include the existing renamed portfolio and two new investment options each as follows:

Product Group Name

Old Product Name

New Product Name

Manchester Unity Flexible Insurance No.11 Funds (managed by AUFS)

Manchester Unity Blue Chip series 2 Bond

Investment Option No.1 Fund

Investment Option No.2 Fund

Investment Option No.3 Fund

The Flexible Insurance Funds

ANA Capital Guaranteed Bond

Investment Option No.1 Fund

Investment Option No.2 Fund

Investment Option No.3 Fund

Manchester Unity Flexible Insurance Funds (managed by AUFS)

Manchester Unity Blue Chip Protection Bond

Investment Option No.1 Fund

Investment Option No.2 Fund

Investment Option No.3 Fund

Treatment of existing saved investments in the Policies and switching between fund options

4.An existing saved investment (made before 1 January 1988) in the restructured Policies will not be considered to be a realised for the purposes of subsection 5J(7) of the VEA.

5.In addition, for each of the three above-mentioned Policies, any switches which a service pensioner investor elects to make between any of the funds in each of the three Policies from an existing saved investment will not be considered to be a realisation of the original saved investment for the purposes of the VEA. This treatment also extends to the investment fund into which the pensioner switches ie., the investment retains the date of acquisition and saved status of the original investment

6.In respect of all of the AUFS restructures, interpretation of the realisation provisions of subsection 5J(7) of the VEA is identical to the reasoning detailed in paragraph 9 of DI B54/94 which dealt with the similar restructure of the IOOF (Victoria) Supersaver Flexible Insurance Policy No. 1 Fund. Please refer to this DI for detail.

Over 50's Friendly Society - Macquarie Tax Advantaged Funds Restructure

Background

6.The Over 50's Friendly Society has recently advised of an amendment to the Society's governing rules. The amendment was passed by the Society's Board in December 1993 and registered with the Victorian Financial Institutions Commission on 24 September 1994.

7.The amendment will allow switching, from a date to be determined by the Board (6 August 1985 has been suggested

[24]

6 August is the earliest date that an investor could have invested in any of the four funds.

[24] (go back)
), between the four (existing) funds that comprise the Macquarie Tax Advantaged Funds. These funds are:

  • The Macquarie Investment Bond Fund;

  • The Macquarie Government Bond Fund;

  • The Macquarie Growth Bond Fund; and

  • The Macquarie Capital Stable Fund.


Treatment of existing saved investments in the Policy and switching between fund options

8.Treatment of existing saved investments in the Macquarie Tax Advantaged Funds and switching between fund options is identical to policy described in paragraphs 4 to 6 above for the AUFS restructures.

Enquiries

9.If you have any enquiries in relation to this Instruction, please contact Martin Dibb on telephone 06-289 6440.

DAVID MACKRELL

ASSISTANT SECRETARY
INCOME SUPPORT BRANCH

3 February 1995