EXPLANATORY STATEMENT
FAMILY LAW (SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION INTERESTS) AMENDMENT APPROVAL 2005 (No.4)
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument a method and additional factors are approved, for the purpose of the provisions of the Family Law Act 1975 that allow for superannuation to be split on marriage breakdown, for determining the gross value of an interest within additional categories of interests in the Public Sector Superannuation Scheme (the PSS Scheme).
The instrument also makes other revisions to several methods approved in May 2004 for valuing interests in the Military Superannuation and Benefits Scheme (the MSB Scheme) and the Defence Force Retirement and Death Benefits Scheme (the DFRDB Scheme).
The gross value is one element in the determination of an amount which is taken to be the value of a superannuation interest in property settlement proceedings under the Family Law Act.
The method and additional factors approved under the instrument for interests in the PSS Scheme are for additional categories of interests in the Scheme providing for a non-member spouse (NMS) entitlement when a splitting order or agreement under Part VIIIB of the Family Law Act 1975 has been received by the Scheme.
These entitlements replace the entitlement under the order or agreement that the NMS, the person for whose benefit the order or agreement has been made, has to receive a split of future payments when they are made to the member of the Scheme.
The method that has been approved applies when the NMS is entitled to associate preserved benefit under the Scheme.
An NMS is entitled to associate preserved benefit when his or her former spouse was a contributing member of the Scheme at the time the splitting order or agreement was received by the Scheme.
At or after age 55, or on becoming terminally ill, physically incapacitated or departing Australia permanently, a lump sum benefit is payable.
The method values the NMS’s interest by reference to the value that the lump sum benefit has, at the time of valuation, under the rules for the administration of the Scheme.
The additional factors that have been approved apply when the NMS is entitled to associate preserved pension or associate standard pension under the Scheme.
Part or all of the lump sum benefit payable to an NMS entitled to associate preserved benefit may be drawn as a pension, termed an associate preserved pension.
An NMS is entitled to associate standard pension when his or her former spouse was a pensioner member of the Scheme at the time the splitting order or agreement was received by the Scheme.
The revisions made to the methods approved for interests in the MSB and DFRDB Schemes:
- re-draw the one method approved in May 2004 for interests held by pensioner members in the MSB Scheme into two methods, one for former defence force pensioner members and the other for surviving and former spouse pensioner members;
- amend the definition of a factor used in the formula for one of the methods approved in May 2004 for interests held by pensioner members in the DFRDB Scheme to correct an oversight (it was overlooked in May 2004 that non-indexed retirement pay and invalidity pay, like indexed retirement pay and invalidity pay, can be suspended);
- include footnotes at the end of two tables of factors used for that method to clarify that particular factors, appearing in secondary formulas for the method, are, in a particular circumstance, zero;
- change references to the terms ‘retirement pension’, ‘invalidity benefits’ and ‘invalidity pension’, used in relation to the methods and factors approved for interests in the DFRDB Scheme, to ‘retirement pay’ and ‘invalidity pay’; and
- correct a typographical error in the subscript of a factor used in a method approved in May 2004 for a category of interests in the MSB Scheme.
The instrument incorporates by reference the Rules for the administration of the Public Sector Superannuation Scheme (the PSS Rules) and the Military Superannuation and Benefits Rules (the MSB Rules). The instrument also refers to the Defence Force Retirement and Death Benefits Act 1973.
The PSS Rules make provision in relation to the membership of the PSS Scheme and other matters, including the contribution rates for, and the benefits payable to, members of the Scheme. The Rules can be viewed at the following website:
http://www.pss.gov.au/pss/rules/pssrules_19th.pdf
The MSB Rules provide for the administration of the Military Superannuation and Benefits Scheme, including the contribution rates for members of the Scheme and the benefits payable to them. The Rules can be viewed at the following website:
http://www.militarysuper.gov.au/legislation/MSBS_rules.pdf
Copies of the PSS Rules and the MSB Rules may be obtained from Commonwealth Superannuation Administration (ComSuper), Unit 4, Cameron Offices, Chandler Street, Belconnen, ACT (telephone: 13 23 66).
The Defence Force Retirement and Death Benefits Act 1973 makes provision in relation to the retirement and death benefits for certain members of the Defence Force. The Act can be viewed at the following website:
http://www.comlaw.gov.au/comlaw/Legislation/ActCompilation1.nsf/0/5F4015C8BF6DC210CA256F71004CE8C2/$file/DefForRetDeathBen1973.pdf
A copy of the Act may be purchased from CanPrint Information Services, PO Box 7456, Canberra MC ACT 2610 (telephone: 1300 656 863).
Consultation on the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Australian Government Actuary, the Department of Finance and Administration, the Department of Defence and Commonwealth Superannuation Administration (ComSuper) by way of exchange of correspondence and discussions.