EXPLANATORY STATEMENT
FAMILY LAW (SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION INTERESTS) AMENDMENT APPROVAL 2005 (No. 1)
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument the Attorney-General, under regulation 38 of the Family Law (Superannuation) Regulations 2001 (the Regulations), approves in writing, for the purposes of the family law and superannuation reforms, a method for valuing a superannuation interest that an employee of Hanson Australia Pty Limited (Hanson Australia) has in the Sunsuper superannuation trust fund (the Sunsuper fund).
The family law and superannuation reforms enable future superannuation payments to separated or divorcing spouses to be split in property settlements under the Family Law Act 1975.
The approval is contained in a new Part 40 of the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the Principal Approval).
On 29 June 2004, Hanson Australia entered into a Deed with Sunsuper Pty Ltd, the trustee of the Sunsuper fund, under which superannuation benefits formerly provided to its employees by the Pioneer International Limited Staff Superannuation Plan (the Pioneer Plan) would, from 1 July 2004, be provided through the Sunsuper fund.
The method approved in the instrument values the interest that an employee of Hanson Australia has in the Sunsuper fund as the total of the employee’s defined benefit, determined in accordance with the method for valuing defined benefit superannuation interests in Schedule 2 of the Regulations, and the accumulation benefit payable to the employee.
One part of the accumulation benefit payable to Hanson Australia employees who were members of the Pioneer Plan on 1 April 1996 is an additional amount representing a surplus which was distributed by the Pioneer Plan on that date to then existing members of that Plan.
The additional amount is only payable on retirement at or after age 55, or where a death, disability or retrenchment benefit is payable. It is not payable where an employee ceases employment before age 55.
The method under Schedule 3 of the Regulations, for valuing a partially vested accumulation interest, is not appropriate for valuing the accumulation benefit payable to Hanson Australia employees. The method assumes an even rate of accrual of benefits over a given vesting period. That part of the accumulation benefit that reflects the April 1996 surplus distributed by the Pioneer Plan vests only on retirement at or after age 55, or on retrenchment, death or total and permanent disability.
The method approved in the instrument values that part of the accumulation benefit reflecting the April 1996 surplus by a method that is a modification of the method in Schedule 3 of the Regulations. Instead of the factors that apply under the method in Schedule 3, the approved method uses factors reflecting the assumptions on exit from employment with Hanson Australia made in the most recent actuarial review of the Pioneer Plan.
The instrument incorporates two documents by reference.
The first document is the Trust Deed dated 1 October 1987, as amended and in force at the commencement of Part 40 of the Principal Approval, by which the Sunsuper fund was established.
The second document is the Deed dated 29 June 2004 between Sunsuper Pty Ltd and Hanson Australia setting out the terms on which superannuation benefits would be provided for the Hanson Australia employees formerly covered by the Pioneer Plan.
Copies of both documents may be obtained by contacting Sunsuper Pty Ltd, at Ground Level, Sunsuper Building, 30 Little Cribb Street, Milton, Queensland (telephone: 13 11 84).
Consultation about the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Australian Government Actuary, Hanson Australia Pty Limited and Sunsuper Pty Ltd, by way of the exchange of correspondence and discussions.
Overview
The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2005 (No. 1) was enacted to address the need for a specific method to value certain superannuation interests in the context of family law property settlements. This approval was made by the Attorney-General under regulation 38 of the Family Law (Superannuation) Regulations 2001, as part of the broader family law and superannuation reforms introduced to allow for the division of superannuation interests in the event of separation or divorce under the Family Law Act 1975. The primary objective of this legislative instrument is to ensure that superannuation benefits formerly provided by the Pioneer International Limited Staff Superannuation Plan to employees of Hanson Australia are appropriately valued for property settlement purposes when transitioned to the Sunsuper fund.
Scope and Application
The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2005 (No. 1) pertains specifically to the valuation of superannuation interests held by employees of Hanson Australia Pty Limited in the Sunsuper superannuation trust fund. This approval is a result of the family law and superannuation reforms that allow for the division of future superannuation payments in property settlements under the Family Law Act 1975. The approved method of valuation is detailed in a new Part 40 of the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003, which takes into account the unique circumstances of Hanson Australia's employees who were previously members of the Pioneer International Limited Staff Superannuation Plan. The instrument also incorporates the Trust Deed of the Sunsuper fund and the Deed between Sunsuper Pty Ltd and Hanson Australia, which outline the terms of superannuation benefits for Hanson Australia employees. This approval applies only to the defined benefit and the accumulation benefit payable to Hanson Australia employees, with specific regard to the additional amount reflecting a surplus distributed by the Pioneer Plan on 1 April 1996.
Key Provisions
The main operative sections of this instrument are those that detail the method approved for valuing the superannuation interests of Hanson Australia employees in the Sunsuper fund. Section 3 specifies the method for valuing the superannuation interest, which includes the defined benefit portion and the accumulation benefit portion. Section 4 clarifies that the accumulation benefit reflecting the April 1996 surplus is valued using a modified method based on the most recent actuarial review of the Pioneer Plan. Section 5 incorporates by reference the Trust Deed of the Sunsuper fund and the Deed between Sunsuper Pty Ltd and Hanson Australia. These sections collectively provide the framework for how the superannuation interests of Hanson Australia employees in the Sunsuper fund are to be valued under the family law and superannuation reforms.
The obligations and requirements imposed by this Act are primarily on Hanson Australia and Sunsuper Pty Ltd. Hanson Australia, as the employer, must ensure that its employees' superannuation interests are valued according to the method specified in the Act. This involves calculating the defined benefit portion and the accumulation benefit, including the additional amount reflecting the April 1996 surplus. Sunsuper Pty Ltd, as the trustee of the Sunsuper fund, must administer and manage the superannuation fund in accordance with the valuation method approved in the Act. Both parties are required to adhere to the terms set out in the incorporated Trust Deed and the Deed dated 29 June 2004. They are also obligated to provide the necessary information and documentation to support the valuation of the superannuation interests as required.
There are no explicit offences, penalties, or civil/criminal consequences mentioned in the explanatory statement for breaches of the provisions in this instrument. However, non-compliance with the approved valuation method could potentially lead to disputes or legal challenges in the context of family law proceedings, where the accurate valuation of superannuation interests is critical. Parties found to be in breach of the valuation method could face difficulties in property settlements under the Family Law Act 1975. Additionally, the Australian Government Actuary, who was consulted during the development of the instrument, may also be involved in ensuring the accuracy and appropriateness of the valuation method, thereby providing a layer of oversight and accountability.