FRIENDLY SOCIETY INVESTMENT RESTRUCTURES

INTRODUCTION

The purpose of this instruction is to confirm departmental policy regarding the restructures of friendly society investments held in the StateGuard Friendly Society.

Background

2.On 2 April 1995, the StateGuard Friendly Society advised of a restructuring of investment products whereby four existing investment funds would be renamed and marketed as subfunds of a new investment product group.

3.The table below shows the name of the new product, plus the old and new names of the four funds which the product incorporates.

Product Group Name	Old Fund name	New Fund Name
StateGuard Insurance Bonds	Flexible Insurance Entry Fee Fund	Insurance Bond - Bonus Accumulation Fund
	Investors Option Bond - Capital Base	Insurance Bond - Capital Base Fund
	Investors Option Bond - Managed Investment	Insurance Bond - Managed Investment Fund
	Investors Option Bond - Balanced	Insurance Bond - Balanced Fund

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

4.Friendly Societies are able (under the Friendly Society Act) to vary their Rules without creating a new contract or Policy. Therefore, where a pensioner held an existing saved investment (made before 1 January 1988) in any of the four funds involved in the restructure, that investment will not be considered to have been realised as a result of the restructure.

5.In addition, any switching of money which a service pensioner elects to make between any of the four funds 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 the StateGuard Friendly Society restructure, 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.

ENQUIRIES

7.If you have any enquiries in relation to this Instruction, please contact Jennifer Schluter on telephone (06) 289 6647.

R J HAY

BRANCH HEAD

INCOME SUPPORT