EXPLANATORY STATEMENT
Issued by the Authority of the Attorney-General
Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2022
INTRODUCTION
This instrument is made under Regulations 38 and 43A of the Family Law (Superannuation) Regulations 2001 (FLS Regulations) and is a legislative instrument under section 8 of the Legislation Act 2003.
PURPOSE AND OPERATION OF THE INSTRUMENT
Part VIIIB of the Family Law Act 1975 (Family Law Act) provides for the division of superannuation interests between married and de facto parties in family law proceedings. Following a relationship breakdown, the family law courts may split superannuation interests between parties where it is just and equitable to do so. Interests held under the Public Sector Superannuation Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld) are superannuation interests as defined by section 90XD of the Family Law Act, and are therefore subject to the superannuation splitting regime under the Act.
The FLS Regulations contain much of the detail of the legislative scheme for how superannuation is to be divided upon relationship breakdown. To facilitate superannuation splitting, the FLS Regulations provide ‘default’ methods and factors for valuing superannuation interests. However, the default methods and factors are not appropriate for valuing all types of superannuation interests. Some schemes offer ‘non-standard’ superannuation products, whose peculiarities mean that the default methods and factors would not result in an accurate valuation of the interest.
As an alternative to the default methods and factors, trustees of superannuation schemes may seek the Attorney-General’s approval of scheme-specific valuation methods and factors. Regulations 38 and 43A of the FLS Regulations provide that the Attorney-General may approve, in writing, scheme-specific methods and factors for the valuation of superannuation interests for family law purposes. Scheme-specific methods and factors have been approved by the Attorney-General for over 30 superannuation schemes. These are contained in the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the ‘Approval Instrument’).
The Attorney-General has previously approved a valuation method and factors for superannuation interests held in the State Public Sector Superannuation Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld) and governed by the Superannuation (State Public Sector) Deed 1990 (Qld). These methods and factors are contained within Schedule 4 Part 1 of Volume 5 of the Approval Instrument.
Amendments to the Approval Instrument as a result of changes to the Superannuation (State Public Sector) Deed 1990 (Qld)
The purpose of this instrument is to amend Part 1 of Schedule 4 of Volume 5 of the Approval Instrument to reflect the forthcoming changes to the trust structure, establishing legislation and trust deed of the State Public Sector Superannuation Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld) (the Scheme) as a result of the merger between QSuper and Sunsuper that is expected to take effect on 28 February 2022. The Attorney-General has authority to make these amendments under FLS Regulation 38.
To facilitate the merger, the Queensland Government has passed the Superannuation (State Public Sector) (Scheme Administration) Amendment Act 2021 (Qld) (the ‘Amendment Act’). Division 3 of the Amendment Act provides that the Superannuation (State Public Sector) Deed 1990 (Qld) will be repealed. However, the Scheme, as established by the Superannuation (State Public Sector) Act 1990 (Qld) and the repealed Superannuation (State Public Sector) Deed 1990 (Qld), will continue in existence. Following the commencement of Division 3 of the Amendment Act on a date to be fixed by Proclamation, the repealed provisions of the Superannuation (State Public Sector) Deed 1990 (Qld) will be restated in full and maintained in the new trust deed for the merged fund, which is to be known as the Australian Retirement Trust.
References to the trust structure, establishing legislation and trust deed in Part 1 of Schedule 4 of Volume 5 of the Approval Instrument will become inaccurate as a result of the merger. Technical amendments are required to address these inaccuracies and to provide certainty for the trustee, courts, separating couples and their advisors about how to value or divide a superannuation interest held in the Scheme for the purposes of family law property proceedings. These amendments are minor and are not intended to make substantive changes to the operation of the Approval Instrument or family law.
Amendments to the Approval Instrument to prescribe methods and factors for QSuper’s Lifetime Pension Product
The purpose of this instrument is to amend the Approval Instrument to prescribe a specific method and factors for the valuation of interests in a new superannuation product, known as the QSuper Lifetime Pension, being offered by the State Public Sector Superannuation Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld) (the Scheme). The Attorney-General has authority to make these amendments under FLS Regulation 43A.
The Australian Government Actuary (AGA) has advised that the use of the default valuation methods and factors in the FLS Regulations for QSuper Lifetime Pensions would result in valuations of superannuation interests that are quite different from best estimates of their underlying actuarial value and has concluded that a scheme-specific method and factors are appropriate for the valuation of these interests for the purposes of family law. The AGA reviewed QSuper’s proposed actuarial valuation method and factors for the product and recommended they be prescribed in the Approval Instrument.
Amendments to prescribe the specific method and factors will ensure that superannuation interests in the QSuper Lifetime Pension product can be accurately valued and split in family law property proceedings under Part VIIIB of the Family Law Act, providing certainty for trustees, separating couples, their advisors and the courts.
CONSULTATION
In accordance with section 17 of the Legislation Act 2003, consultation on this instrument has occurred between the Attorney-General’s Department, QSuper and the Australian Government Actuary. QSuper and the Australian Government Actuary have reviewed and are supportive of the amendment instrument.
COMMENCEMENT
The instrument commences on 28 February 2022.
NOTES ON SECTIONS
Details of the amendment instrument are as follows:
PART 1 – Preliminary
Section 1 – Name
Section 1 provides that the name of the instrument is the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment Approval 2022.
Section 2 – Commencement
Section 2 provides that the instrument commences on 28 February 2022.
Section 3 – Authority
Section 3 provides that the instrument is made under regulations 38 and 43A of the Family Law (Superannuation) Regulations 2001.
Section 4 – Schedules
Section 4 is a technical provision which provides that the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 is to be amended as set out in each applicable item.
SCHEDULE 1 – Amendments
Item 1 – Part 1 of Schedule 4 (Heading)
Item 1 omits the reference to the ‘Superannuation (State Public Sector) Deed 1990 (Qld)’ in the heading of Part 1 of Schedule 4 and clarifies that Part 1 of Schedule 4 applies to the superannuation scheme established by the Superannuation (State Public Sector) Act 1990 (Qld).
This reflects the changes arising as a result of the merger and the subsequent commencement of the Superannuation (State Public Sector) (Scheme Administration) Amendment Act 2021 (Qld) which repeals the Superannuation (State Public Sector) Deed 1990 (Qld) but enables the Scheme established under the Superannuation (State Public Sector) Act 1990 (Qld) to continue in existence.
Item 2 – Clause 1 of Schedule 4 (definition of Deed)
Item 2 amends the definition of ‘Deed’ for the purposes of Part 1 of Schedule 4 to be ‘the trust deed governing the Scheme’.
This amendment removes the reference in the previous definition to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and ensures that term is accurately defined in reference to the trust deed governing the Scheme following the merger.
Item 3 – Clause 1 of Schedule 4
Item 3 inserts definitions of ‘Government Division Rules’, the ‘participation schedule’ and ‘QSuper Lifetime Pension’ for the purposes of Part 1 of Schedule 4. The Government Division Rules and participation schedule are components of the new trust deed which will govern the Scheme following the merger. The QSuper Lifetime Pension is a particular type of superannuation interest offered by the Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld).
‘Government Division Rules’ means the Division Rules (within the meaning of the Deed) that relate to the Government Division referred to in clause 2.1 of the Deed.
‘Participation schedule’ means the part of the Government Division Rules known as the Participation Schedule.
‘QSuper Lifetime Pension’ means an interest in the Scheme that is in the payment phase, covered by Chapter 10 of the Government Division Rules, and which complies with the standards of regulation 1.06A of the Superannuation Industry (Supervision) Regulations 1994.
Item 4 - Clause 1 of Schedule 4 (definition of roll‑in amount)
Item 4 is a technical amendment which updates a reference to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and replaces it with a reference to the ‘participation schedule’.
The purpose of the amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 5 - Clause 1 of Schedule 4 (definition of Scheme)
Item 5 substitutes a new definition of ‘Scheme’ for the purposes of Part 1 of Schedule 4 of the Approval Instrument. The new definition of Scheme means the Scheme continued in existence under section 5 of the Superannuation (State Public Sector) Act 1990 (Qld).
This Item clarifies that the Scheme established under the Superannuation (State Public Sector) Act 1990 (Qld) will remain subject to the scheme-specific valuation method and factors set out in Part 1 of Schedule 4 following the merger of QSuper and Sunsuper.
Item 5 also notes that in 2022, the Scheme was known as the Australian Retirement Trust.
Item 6 - Clause 1A of Schedule 4 (heading)
Item 6 is a technical amendment which updates a reference to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and replaces it with a reference to the ‘participation schedule’.
The purpose of the amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 7 - Clause 1A of Schedule 4
Item 7 amends Clause 1A of Schedule 4 to make clear that it applies only to ‘clause 2 of this Part’.
The purpose of this amendment is to clarify that Clause 1A only applies to growth phase interests in the Scheme dealt with in Clause 2 of Part 1 of Schedule 4, and does not apply to QSuper Lifetime Pension interests prescribed for in clause 3.
Item 8 - Clause 2 of Schedule 4 (heading)
This item amends the heading of Clause 2 of Schedule 4 to clarify that the valuation methods and factors set out in Clause 2 and Table 1 apply to all interests that are in the growth phase in the Scheme established by the Superannuation (State Public Sector) Act 1990 (Qld) other than QSuper Lifetime Pensions. The purpose of this item is to make clear that QSuper Lifetime Pensions are excluded from being valued according to the method and factors set out in Table 1.
The reason that QSuper Lifetime Pensions are excluded from valuation according to Table 1 is because they are a particular type of interest in the Scheme that are in the payment phase and are subject to their own valuation method and factors for the purposes of family law superannuation splitting. These method and factors are set out in Clause 3.
Item 9 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Interest in the growth phase”)
Item 9 is a technical amendment which updates a reference to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and replaces it with a reference to the ‘participation schedule’.
The purpose of the amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 10 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 10 is a technical amendment which updates a reference to paragraph 23C(3)(b) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to paragraph 32(3)(b) of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 11 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 11 is a technical amendment which updates a reference to section 77 of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to rule 102 of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 12 – Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 12 is a technical amendment which updates a reference to subsection 52(8) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to subsection 52(8) of the ‘participation schedule’.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 13 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 13 is a technical amendment which updates a reference to subsection 23F(3) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to subrule 34(4) of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 14 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 14 is a technical amendment which updates a reference to section 77 of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to rule 102 of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 15 - Clause 2 of Schedule 4 (item 1 of the table, column headed “Method or factor”)
Item 15 is a technical amendment which updates a reference to paragraph 23C(3)(a) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to paragraph 32(3)(a) of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 16 - Clause 2 of Schedule 4 (item 2 of the table, column headed “Interest in the growth phase”)
Item 16 is a technical amendment which updates a reference to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to the ‘participation schedule’.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 17 – Clause 2 of Schedule 4 (item 2 of the table, column headed “Method or factor”)
Item 17 is a technical amendment which updates a reference to section 77 of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to rule 102 of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 18 - Clause 2 of Schedule 4 (item 2 of the table, column headed “Method or factor”)
Item 18 is a technical amendment which updates a reference to subsection 52(8) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to subsection 52(8) of the ‘participation schedule’.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 19 - Clause 2 of Schedule 4 (item 3 of the table, column headed “Interest in the growth phase”)
Item 19 is a technical amendment which updates references to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes them with references to the ‘participation schedule’.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 20 - Clause 2 of Schedule 4 (item 3 of the table, column headed “Method or factor”)
Item 20 is a technical amendment which updates a reference to subsection 23F(2) of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to subrule 34(3) of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 21 - Clause 2 of Schedule 4 (item 3 of the table, column headed “Method or factor”)
Item 21 is a technical amendment which updates a reference to section 77 of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to rule 102 of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 22 - Clause 2 of Schedule 4 (item 3 of the table, column headed “Method or factor”)
Item 22 is a technical amendment which updates a reference to section 23B of the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes it with a reference to rule 28 of the Government Division Rules.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 23 - Clause 2 of Schedule 4 (items 4, 5 and 6 of the table)
Item 23 is a technical amendment which updates references to the repealed Superannuation (State Public Sector) Deed 1990 (Qld) and substitutes them with references to the ‘participation schedule’.
The purpose of this amendment is to reflect the provision’s new location in the trust deed governing the Scheme.
Item 24 – At the end of Part 1 of Schedule 4
Item 25 adds a new clause 3 to Part 1 of Schedule 4 of the Approval Instrument which prescribes a product-specific method and factors for superannuation interests of scheme members with QSuper Lifetime Pensions under section 4 of the Approval Instrument.
Clause 3(1) establishes the formula to be used for the valuation of an interest of this kind as being the pension amount multiplied by the pension valuation factor. Clause 3(1) defines pension amount to mean the annual amount of the person’s pension at the relevant date, and defines pension valuation factor to mean the pension valuation factor worked out under subclause (2) of Clause 3 at the relevant date.
Subclause 3(2) provides the formula for determining the pension valuation factor at the relevant date, based on the member’s age. The pension valuation factor will also differ depending upon whether they receive a single or couple pension.
The Table in Clause 3 sets out the valuation factors to be used to value members’ interests in the QSuper Lifetime Pension, depending upon the member’s age and whether they receive a single or couple pension.