EXPLANATORY STATEMENT
FAMILY LAW (SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION INTERESTS) AMENDMENT APPROVAL 2005 (No.5)
ISSUED BY THE AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument methods are approved, for the purpose of the provisions of the Family Law Act 1975 allowing superannuation to be split on marriage breakdown, for determining the gross value of particular interests in the Local Government Superannuation Scheme and the Energy Industries Superannuation 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 Local Government Superannuation Scheme and the Energy Industries Superannuation Scheme each have an identical benefit structure. The same method is approved for each Scheme.
The methods that are approved are for interests within a particular category of membership in each Scheme, consisting of members who have left employment with local government bodies in New South Wales, or with the electricity industry in that State, and have elected to retain a deferred benefit in the relevant Scheme.
In each Scheme, the deferred benefit is a lump sum being the total of:
- the balance of the former employee’s contributor account (comprising his or her contributions and interest); and
- an employer-financed benefit referable in part to the former employee’s final average salary over his last three year’s of employment.
The deferred benefit is payable on reaching 58 years of age, invalidity before that age or on death or retirement from the workforce.
Former employees may, in each Scheme, elect to withdraw a lower benefit at any time prior to the time when the deferred benefit will become payable. Where the lower benefit is withdrawn, no further benefit is payable.
The methods value an interest that a former employee, having elected to retain a deferred benefit, has in each Scheme, as the sum of the current value of:
- the balance of his or her contributor account, calculated as if the deferred benefit were payable at the time of valuation; and
- his or her employer-financed benefit.
In calculating the current value of the employer-financed benefit, the value of that part of the deferred benefit is discounted by a factor reflecting the probability that the former employee might elect to withdraw the lower benefit prior to the deferred benefit becoming payable.
The instrument incorporates by reference:
- the Rules set out in Schedule 2 to the Trust Deed dated 30 June 1997, entered into by the Treasurer of New South Wales and LGSS Pty Limited, as amended; and
- the Rules set out in Schedule 2 to the Trust Deed dated 30 June 1997, entered into by the Treasurer of New South Wales and Energy Industries Superannuation Scheme Pty Limited, as amended.
The first-mentioned Rules provide for the benefits and entitlements of certain members of the Local Government Superannuation Scheme, and can be viewed at the following website:
http://www.lgsuper.com.au/pdf/misc/lg_schedule_2.pdf
A copy of the Rules may be obtained from FuturePlus Financial Services Pty Limited, the administrator for LGSS Pty Limited (the Trustee of the Local Government Superannuation Scheme), at Ground Floor, 28 Margaret Street, Sydney, NSW 2000 (telephone: 1300 369 901).
The second-mentioned Rules provide for the benefits and entitlements of certain members of the Energy Industries Superannuation Scheme, and can be viewed at the following website:
http://www.eisuper.com.au/pdf/misc/ei_schedule_2.pdf.
A copy of the Rules may be obtained from FuturePlus Financial Services Pty Limited, the administrator for Energy Industries Superannuation Scheme Pty Limited (the Trustee of the Energy Industries Superannuation Scheme), at Ground Floor, 28 Margaret Street, Sydney, NSW 2000 (telephone: 1300 369 901).
Consultation on the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Australian Government Actuary, LGSS Pty Limited, Energy Industries Superannuation Scheme Pty Limited, Mercers Human Resource Consulting (the actuaries for each Scheme) and the Family Law Section of the Law Council of Australia, by way of exchange of correspondence, discussions and, in the case of the Family Law Section of the Law Council of Australia, a meeting with one of its representatives.