EXPLANATORY STATEMENT
DETERMINATION NO 1 OF 2005 UNDER SECTION 52 OF THE DEFENCE ACT
1903
ISSUED BY THE AUTHORITY OF THE MINISTER ASSISTING THE MINISTER FOR
DEFENCE
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 (the Principal Determination), made under section 52, makes provision for a 3% productivity benefit in line with the Conciliation and Arbitration Commission's June 1986 National Wage decision. The Principal Determination was amended in February 1993 to provide a top-up to DFRDB Benefits to bring them in line with Superannuation Guarantee (SG) requirements.
Factor used in the calculation of interest
The Principal Determination credits notional interest on the 3% productivity contribution and SG top-up in accordance with factors set out in the schedule to the Principal Determination. It is necessary to amend the Principal Determination to add the factor concerned in the calculation of interest applicable in respect of the period 1 January 2005 to 31 December 2005. The factor taken into account is the 10 year Treasury Bond yield, declared on 31 December 2004 by the Reserve Bank of Australia, reduced by 15% to take account of the prevailing superannuation fund tax rate.
Individual amendments 1. Amendment
This clause is formal.
2. Commencement
This clause provides for the amendments to have effect from 1 January 2005. No person, other than the Commonwealth, has been disadvantaged by this retrospective commencement.
3. Schedule (Factors Concerned in the Calculation of Interest Applicable in respect of Certain Calendar Years)
This clause amends the Principal Determination by adding the factor concerned in the calculation of interest applicable in respect of the period 1 January 2005 to 31 December 2005.
Overview
The Defence Force (Superannuation) (Productivity Benefit) Determination No 1 of 2005, issued under section 52 of the Defence Act 1903, was enacted to amend the Principal Determination to provide an updated factor for calculating interest on the 3% productivity contribution and Superannuation Guarantee (SG) top-up for Defence Force Retirement and Death Benefits (DFRDB) contributors. This determination was issued by the authority of the Minister Assisting the Minister for Defence. The objective is to ensure that the superannuation benefits for Defence Force members remain aligned with economic indicators and SG requirements, providing a fair and consistent benefit structure. The amendments, which include the addition of a specific interest calculation factor based on the 10-year Treasury Bond yield, aim to reflect prevailing financial conditions and maintain the integrity of the superannuation benefits system.
Scope and Application
The Defence Force (Superannuation) (Productivity Benefit) Determination 2005 applies to members of the Defence Force who are contributors to the Defence Force Retirement and Death Benefits (DFRDB) Scheme, providing a superannuation productivity benefit in respect of their continuous full-time service. The legislation is made under the authority of the Minister Assisting the Minister for Defence, pursuant to section 52 of the Defence Act 1903. The amendments to the Principal Determination, which originally provided a 3% productivity benefit and a top-up to align with Superannuation Guarantee requirements, are designed to credit notional interest on the 3% productivity contribution and Superannuation Guarantee top-up using factors specified in the schedule. The amendments also incorporate the factor for calculating interest applicable from 1 January 2005 to 31 December 2005, based on the 10-year Treasury Bond yield adjusted for the prevailing superannuation fund tax rate. The amendments commence on 1 January 2005 and do not disadvantage any person other than the Commonwealth. The scope of the Act is limited to the specified period and the financial adjustments outlined, with no broader exclusions or exemptions noted in the provided text.
Key Provisions
The main operative sections of the Defence Force (Superannuation) (Productivity Benefit) Determination No 1 of 2005 (the Determination) include the formal amendment clause, the commencement clause, and the schedule which details the factor for calculating interest applicable from 1 January 2005 to 31 December 2005. The Determination, made under Section 52 of the Defence Act 1903, provides a 3% productivity benefit to Defence Force members who are contributors to the Defence Force Retirement and Death Benefits (DFRDB) Scheme, in line with the Conciliation and Arbitration Commission's June 1986 National Wage decision. It was amended in February 1993 to include a top-up to DFRDB Benefits to align them with Superannuation Guarantee (SG) requirements.
The Determination imposes obligations on the parties it governs, primarily concerning the calculation and crediting of notional interest on the 3% productivity contribution and the SG top-up. The interest calculation is based on factors specified in the schedule to the Determination. The schedule was amended to include the factor for the period 1 January 2005 to 31 December 2005, which is the 10 year Treasury Bond yield declared on 31 December 2004 by the Reserve Bank of Australia, reduced by 15% to account for the prevailing superannuation fund tax rate. This ensures that the interest calculation accurately reflects the financial conditions of the specified period.
There are no explicit offences or penalties mentioned in the Determination for non-compliance with the provisions. However, the accuracy and proper application of the interest calculation factor are crucial for the correct administration of the superannuation benefits. Any failure to adhere to the specified interest calculation method could lead to discrepancies in benefit payments, which could potentially result in legal or administrative consequences for the entities responsible for managing the DFRDB Scheme. The Determination ensures that these calculations are carried out in accordance with the law, thereby maintaining the integrity of the superannuation benefits system.