EXPLANATORY STATEMENT

Defence Force (Superannuation) (Productivity Benefit) Amendment Determination 2013 (No.1)

ISSUED BY THE MINISTER FOR DEFENCE SCIENCE AND PERSONNEL

Section 52 of the Defence Act 1903 empowers the Minister to make determinations providing a superannuation productivity benefit in respect of continuous full time service by members of the Defence Force who are contributors to the Defence Force Retirement and Death Benefits (DFRDB) Scheme.

The Defence Force (Superannuation) (Productivity Benefit) Determination 1988 (the Principal Determination), made under section 52, makes provision for a 3 per cent productivity benefit in line with the Conciliation and Arbitration Commission's June 1986 National Wage decision.  It also provides for a superannuation guarantee top-up in circumstances where a DFRDB benefit may not be payable. 

The productivity benefit is a notional superannuation benefit accrued by DFRDB scheme members during their service and is paid from the Consolidated Revenue Fund when a member claims a benefit.  The productivity benefit becomes part of the DFRDB superannuation unfunded liability and notional interest is calculated on the benefit.

Factor used in the calculation of interest

The Principal Determination credits notional interest on the 3 per cent productivity benefit and superannuation guarantee top-up in accordance with factors set out in the schedule to the Principal Determination.  It is necessary to amend the schedule to the Principal Determination to add the factor concerned in the calculation of interest applicable in respect of the period 1 January 2013 to 31 December 2013. 

The factor taken into account is 0.0327 which is the 10 year Treasury Bond yield, declared on 30 December 2012 by the Reserve Bank of Australia and which has been sourced from the Reserve Bank of Australia’s website.

Other amendments

The Superannuation Guarantee (Administration) Amendment Act 2011 provides for the incremental increase in the superannuation guarantee charge percentage from 9 per cent to 12 per cent from 1 July 2013 to 1 July 2019.  As a consequence of this, it is necessary to amend the Principal Determination to reflect these changes.

The details of the Determination are explained in Attachment A.

A Statement of Compatibility with Human Rights is at Attachment B.

Defence Force (Superannuation) (Productivity Benefit) Amendment Determination 2013 (No.1)

Individual amendments

Section 1. Name of determination

This section is formal and names the amending Determination that amends the Principal Determination.

Section 2. Commencement

This section sets out the commencement dates for each section and for the Schedules of the amending Determination.  Sections 1 to 4 and Schedule 1 commence on 1 January 2013.  No person, other than the Commonwealth, will be disadvantaged by this retrospective commencement.

Schedule 2 commences on 1 July 2013 to reflect the changes set out in the Superannuation Guarantee (Administration) Amendment Act 2011.   

Section 3. Authority

This section details the subsection of the Defence Act 1903 that authorises the Minister to make this Determination.

Section 4. Schedule(s)

This section provides that the Schedules to this amending instrument either amend and/or repeal and replace items in the Principal Determination and is formal.

Schedule 1 Amendments taken to have commenced on 1 January 2013

Item [1] Schedule (heading)

This item substitutes a new heading, the effect of which is to include in the note a reference to clauses 8AA and 8C to correct an oversight.  The previous note only referred to clause 8A.  Clauses 8AA and 8C also refer to the Schedule.

Item [2] Schedule (at the end of the table)

This item amends the Schedule in the Principal Determination by adding the factor concerned in the calculation of interest applicable in respect of the period 1 January 2013 to 31 December 2013.  

Schedule 2 Amendments commencing on 1 July 2013

Item [1]

This item substitutes the table at paragraph (a) of the definition of percentage in subclause 8AA(2) to reflect the increased superannuation guarantee percentage that is to apply incrementally from 1 July 2013 until 1 July 2019, when the superannuation guarantee percentage reaches 12 per cent.

Item [2]

This item substitutes the table at paragraph (b) of the definition of percentage in subclause 8AA(2) to reflect the increased superannuation guarantee percentage that is to apply incrementally from 1 July 2013 until 1 July 2019, when the superannuation guarantee percentage reaches 12 per cent.

Legislative Instrument Act

This amended Determination is a legislative instrument for the purpose of section 44(2) of the Legislative Instruments Act 2003 (LIA) and is not subject to disallowance in accordance with item 39 of the table in subsection 44(2) or sunsetting in accordance with item 42 of the table in subsection 54(2) of the LIA.

ComSuper, the administrator of the arrangements set out in the Principal Determination, Defence Legal, the First Assistant Secretary Resource Assurance and the Office of Parliamentary Counsel have all been consulted during the course of the preparation of this amending instrument.

A regulation impact statement is not required.

       Authority:

Section 52 of the Defence Act 1903