EXPLANATORY STATEMENT
Issued by Authority of the Attorney-General
Family Law Act 1975
Family Law (Superannuation) (Provision of Information—Military Superannuation and Benefits Scheme) Determination 2016
Introduction
This instrument was made under regulation 63(6B) of the Family Law (Superannuation) Regulations 2001 (the Regulations) and is a legislative instrument under section 8 of the Legislation Act 2003.
Outline
The Military Superannuation and Benefits Scheme (MSBS) is established by the Trust Deed under the Military Superannuation and Benefits Act 1991. Pursuant to section 90MZB of the Family Law Act 1975 (the Act), to facilitate the splitting of superannuation by court order or agreement, the trustee of the MSBS must provide information about a MSBS superannuation interest to an eligible person upon request. This instrument clarifies the information that the trustee of the MSBS must provide.
Subsection 125(1) of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. The Family Law (Superannuation) Regulations 2001 (the Regulations) have been prescribed to support the operation of Part VIIIB of the Act, which deals with the division of superannuation interests between separating couples.
The ‘default’ methods contained in the Regulations for valuing superannuation interests are not appropriate for some superannuation interests. As such, regulations 38 and 43A provide that the Attorney-General may approve, in writing, alternative valuation methods. The
Family Law (Superannuation)(Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the Approval) has been made for this purpose. It contains methods and factors for determining the value of superannuation interests in more than 30 superannuation schemes. The Approval is a legislative instrument and has been registered on the Federal Register of Legislation. The method and factors approved for MSBS superannuation interests are set out in Part 4 of Schedule 1 of the Approval.
The Regulations provide that if the Attorney-General has approved an alternative valuation method, the Attorney‑General may approve, in writing, that the trustee of the relevant superannuation scheme is either not required to provide certain information about the interest and/or that the trustee must provide other information about the interest. This is to ensure that applicants seeking information about superannuation interests which are to be valued using an alternative method, receive appropriate, scheme-specific information to support the valuation. Subregulations 63(6A) and 63(6B) give the Attorney-General this power in respect of certain accumulation interests, and subregulations 64(7), (7A) and (7B) give the Attorney‑General this power in respect of certain defined benefit interests.
In 2004, the Attorney-General made the Family Law (Superannuation) Provision of Information – Military Superannuation and Benefits Scheme) Determination 2004 (the existing Determination) under regulations 64(7) and (7B). It sets out the information which the trustee of the MSBS is required to provide in respect of MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval.
This instrument responds to uncertainty that may exist following a judgment of the Federal Court of Australia in Campbell v Superannuation Complaints Tribunal [2016] FCA 808 on 15 July 2016 as to whether the existing Determination applies to MSBS invalidity pension interests (which are a subset of MSBS pension interests). In this case, the Court concluded that invalidity pensions under the MSBS are ‘accumulation interests’ as defined in regulation 3 of the Regulations, rather than ‘defined benefit interests’ as defined in regulation 5. On this understanding, the correct source of power for the Attorney-General to make a determination applying to these interests is subregulation 63(6B).
This instrument amends the existing Determination to provide that it is also made under subregulation 63(6B). This clarifies that the Determination applies to all MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval, whether they are characterised as accumulation interests or defined benefit interests. This removes any doubt that the trustee of the MSBS can provide eligible persons with appropriate, scheme-specific information about their MSBS superannuation interests, including military invalidity pension interests, in the context of family law superannuation splitting.
Consultation
In accordance with section 17 of the Legislation Act 2003, consultation on the content of this instrument occurred between the Commonwealth Attorney-General’s Department, the Department of Defence, the Department of Finance, the Commonwealth Superannuation Corporation and the Australian Government Actuary.
Regulatory Impact Statement
The Office of Best Practice Regulation was consulted about the Determination and advised that a Regulatory Impact Statement is not required (OBPR ID: 21304).
Commencement
The instrument commences on 26 May 2005. This is the date that the Family Law (Superannuation) (Provision of Information — Military Superannuation and Benefits Scheme) Amendment Determination 2005 (No. 1) (the 2005 amendments) commenced. These amendments inserted into the existing Determination a new section (section 6) which sets out the information requirements for MSBS superannuation interests in the payment phase and for which the Attorney-General has approved methods and factors under regulation 43A. The amendments in the current instrument relate to these interests.
The instrument commences retrospectively on the same date as the 2005 amendments because the purpose of the amending instrument is to clarify that the Determination applies to all MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval, whether they are characterised as accumulation interests or defined benefit interests. It is desirable that this clarification applies to the provision of information by the trustee of the MSBS from the date of operation of the relevant provisions (26 May 2005), to remove any doubt about the trustee’s past reliance on the Determination in providing eligible persons with appropriate, scheme-specific information about their MSBS superannuation interests, including military invalidity pension interests.
Certainty as to the application of the Determination to all MSBS interests for which the Attorney-General has approved a method and factors in Part 4 of Schedule 1 of the Approval is beneficial to eligible persons. If the trustee were not able to rely on the Determination to provide eligible persons with scheme‑specific information, the trustee may consider that it is only able to provide the ‘default’ information provided for in the Regulations. In the context of superannuation interests for which approved methods and factors exist, the default information is less useful; the non-provision of scheme-specific information would make valuing the relevant superannuation interests more difficult.
Accordingly, the retrospective amendment which clarifies the source of authority for making the Determination in respect of a subset of MSBS pension interests, will not affect the rights of a person so as to disadvantage the person, nor impose liabilities on a person.
The instrument is a legislative instrument for the purposes of the Legislation Act 2003.
Details of the instrument are as follows:
Section 1 — Name of determination
Section 1 provides that the title of the instrument is the Family Law (Superannuation) (Provision of Information—Military Superannuation and Benefits Scheme) Amendment Determination 2016.
Section 2 — Commencement
Section 2 provides that the instrument commences on 26 May 2005.
Section 3 — Authority
Section 3 provides that the instrument is made under subregulation 63(6B) of the Regulations. Subregulation 63(6B) gives the Attorney-General the power to make a written determination setting out the information that a trustee is required to provide, or not provide, about a superannuation interest, if the Attorney-General has approved a method or factors to be used to determine the gross value of the interest under regulation 43A.
Section 4 — Schedules
Section 4 is a technical provision which provides that each instrument specified in a Schedule to the instrument is to be amended or repealed as set out in each applicable item.
Schedule 1
Item 1 — After section 2
Item 1 would insert a new section 2A into the Determination to make clear that the Determination is made under subregulations 63(6B), 64(7) and 64(7B) of the Regulations.
In 2004, the Attorney‑General made the Family Law (Superannuation) (Provision of Information—Military Superannuation and Benefits Scheme) Determination 2004 under subregulations 64(7) and (7B). The Determination specifies the information the trustee of the MSBS is required to provide, or not provide, to an eligible person, upon request, about a superannuation interest in the scheme (see section 90MZB of the Family Law Act). An eligible person includes a member and a spouse of the member.
Information provided to an eligible person in accordance with the Determination enables the person to value an interest in the scheme in accordance with the alternative valuation method approved by the Attorney-General in Part 4 of Schedule 1 of the Approval. The valuation facilitates superannuation splitting by court order or agreement.
The Attorney-General made the Determination under regulations 64(7) and (7B) on the understanding that all the MSBS superannuation interests for which the Attorney-General had approved an alternate valuation method in Part 4 of Schedule 1 of the Approval were ‘defined benefit interests’, as defined by regulation 5 of the Regulations, and that, therefore, these subregulations were the only source of authority required to make the Determination.
On 15 July 2016, a judgment of the Federal Court of Australia in Campbell v Superannuation Complaints Tribunal [2016] FCA 808 concluded that a subset of MSBS superannuation interests, invalidity pension interests, are ‘accumulation interests’ as defined by regulation 3 of the Regulations.
While the Determination clearly states that it applies to all MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval (see section 4), the decision in Campbell v Superannuation Complaints Tribunal [2016] FCA 808 may give rise to uncertainty about the application of the Determination to MSBS invalidity pensions because the Determination is not expressed to be made under regulation 63(6B) (which is in the same terms as regulation 64(7B), but applies to accumulation interests).
The amendments in this instrument respond to any potential uncertainty by expressly stating that the Determination is made under the authority of regulation 63(6B), thereby removing any doubt that the Determination applies to all MSBS superannuation interests for which the Attorney-General has approved methods and factors (including invalidity pensions), whether they are characterised as accumulation interests or defined benefit interests for the purposes of the Regulations.
It is important that the Determination applies to all MSBS superannuation interests for which the Attorney-General has approved methods and factors under regulation 43A. If the trustee were not able to rely on the Determination to provide eligible persons with scheme-specific information, the trustee may consider that it is only able to provide the ‘default’ information provided for in the Regulations. This may cause eligible persons difficulty because without the scheme-specific information it may be difficult to value the superannuation interest in accordance with the approved method and factors.
Item 2
Item 2 would omit “paragraph” and replace it with “the purposes of paragraphs 63(6B)(a) and” in paragraph 6(a) of the Determination. Paragraph 63(6B)(a) is the source of authority for the Attorney-General to make a determination which provides that the trustee of the MSBS is not required to provide certain information. It applies to accumulation interests for which the Attorney-General has approved a method or factors under regulation 43A. It is in the same terms as paragraph 64(7B)(a),which applies to defined benefit interests for which the Attorney-General has approved a method or factors under regulation 43A.
Adding a reference to paragraph 63(6B)(a) into paragraph 6(a) ensures that both sources of authority for the Attorney-General to make a determination, which provides that the trustee of the MSBS is not required to provide certain information (i.e. the authority in respect of accumulation interests and defined benefit interests), are expressly identified.
The amendment is to remove any doubt as to the application of section 6(a) to MSBS superannuation interests characterised as accumulation interests (such as invalidity pension interests). The substantive information requirements are unchanged.
Item 3
Item 2 would omit “paragraph” and replace with “the purposes of paragraphs 63(6B)(b) and” in paragraph 6(b) of the Determination. Paragraph 63(6B)(b) is the source of authority for the Attorney-General to make a determination which provides that the trustee of the MSBS is required to provide other information as specified in the determination. It applies to accumulation interests for which the Attorney-General has approved a method or factors under regulation 43A. It is in the same terms as paragraph 64(7B)(b), which applies to defined benefit interests for which the Attorney-General has approved a method or factors under regulation 43A.
Adding into paragraph 6(b) a reference to paragraph 63(6B)(b) ensures that both sources of authority for the Attorney-General to make a determination which provides that the trustee of the MSBS is required to provide other information as specified in the determination (i.e. the authority in respect of accumulation interests and defined benefit interests) are expressly identified.
The amendment is to remove any doubt as to the application of section 6(b) to MSBS superannuation interests characterised as accumulation interests (such as invalidity pension interests). The substantive information requirements are unchanged.
Items 4 and 5—Section 6 (table items 1 and 2, column headed “Information not required to be provided”
Items 4 and 5 insert into column 3 of the two items of the table in section 6, references to paragraph 63(3)(b) and subparagraphs 63(3)(b)(ii),(iii),(iv) and (v), respectively. Paragraph 63(3)(b) (which applies to certain accumulation interests) sets out certain payment phase information in relation to a superannuation interest. It is in the same terms as paragraph 64(3)(b) of the Regulations which applies to certain defined benefit interests.
Column 3, headed “Information not required to be provided”, sets out the information that the trustee of the MSBS is not required to provide for particular items. Adding references to paragraph 63(3)(b) and subparagraphs 63(3)(b)(ii),(iii),(iv) and (v) into the items in column 3 of the table ensures that there is an express reference to the relevant ‘accumulation interest’ provision, in addition to the relevant ‘defined benefit interest’ provision, in the description of the information that the MSBS trustee is not required to provide.
The effect is to confirm that the information that the MSBS trustee is not required to provide for MSBS superannuation interests characterised as accumulation interests (such as invalidity pension interests) is the same information that the MSBS trustee is not required to provide for MSBS superannuation interests characterised as defined benefit interests. This is appropriate as this information is not required to enable a person to value the interest.
The ‘other’ information that the trustee of the MSBS is required to provide is set out in column 4 of the table. The instrument does not make any changes to this information.
For an interest mentioned in item 1 of table, the more specific information the trustee of the MSBS is required to provide includes:
- the information mentioned in the definition of P in item 1 of the ‘payment phase table’ (which is the table in clause 3 of Part 4 of Schedule 1 to the Approval), and
- the following information in relation to the person who has the interest:
- the person’s date of birth;
- the type of pension to which the person is entitled; and
- the annual amount (if any) of the person’s pension that is payable, in accordance with the Rules, in respect of 1 or more eligible children.
For an interest mentioned in item 2 of the table, the more specific information the trustee of the MSBS is required to provide includes the date of birth of the person who has the interest.
This information about the interest is necessary to enable a person to value the interest.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Family Law (Superannuation) (Provision of Information—Military Superannuation and Benefits Scheme) Determination 2016
This Disallowable Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
The Military Superannuation and Benefits Scheme (MSBS) is established by the Trust Deed under the Military Superannuation and Benefits Act 1991. Pursuant to section 90MZB of the Family Law Act 1975 (the Act), to facilitate the splitting of superannuation by court order or agreement, the trustee of the MSBS must provide information about a MSBS superannuation interest to an eligible person upon request. This instrument clarifies the information that the trustee of the MSBS must provide.
Subsection 125(1) of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. The Family Law (Superannuation) Regulations 2001 have been prescribed to support the operation of Part VIIIB of the Act, which deals with the division of superannuation interests between separating couples.
The ‘default’ methods contained in the Regulations for valuing superannuation interests are not appropriate for some superannuation interests. As such, regulations 38 and 43A provide that the Attorney-General may approve, in writing, alternative valuation methods. The Family Law (Superannuation)(Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the Approval) has been made for this purpose. It contains methods and factors for determining the value of superannuation interests in more than 30 superannuation schemes. The Approval is a legislative instrument and has been registered on the Federal Register of Legislation. The method and factors approved for a MSBS superannuation interest are set out in Part 4 of Schedule 1 of the Approval.
The Regulations provide that if the Attorney-General has approved an alternative valuation method, the Attorney‑General may approve, in writing, that the trustee of the relevant superannuation scheme is either not required to provide certain information about the interest and/or that the trustee must provide other information about the interest. This is to ensure that applicants seeking information about superannuation interests which are to be valued using an alternative method, receive appropriate, scheme-specific information to support the valuation. Subregulations 63(6A) and 63(6B) give the Attorney-General this power in respect of certain accumulation interests, and subregulations 64(7), (7A) and (7B) give the Attorney‑General this power in respect of certain defined benefit interests.
In 2004, the Attorney-General made the Family Law (Superannuation) Provision of Information – Military Superannuation and Benefits Scheme) Determination 2004 under regulations 64(7) and (7B)). It sets out the information which the trustee of the MSBS is required to provide in respect of MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval.
This instrument amends the existing Determination to provide that it is also made under subregulation 63(6B). This clarifies that the Determination applies to all MSBS superannuation interests for which the Attorney‑General has approved a method and factors in Part 4 of Schedule 1 of the Approval, whether they are characterised as accumulation interests or defined benefit interests.
Nothing in the instrument allows for, or permits, the disclosure of personal information.
Human rights implications
The instrument makes technical amendments to clarify the Determination’s source of power. While the instrument will have retrospective commencement, it does not breach the limits on retrospective commencement set out in section 12 of the Legislation Act 2003 in that the clarification will not affect the rights of a person so as to disadvantage the person, nor impose liabilities on a person.
Conclusion
The instrument is compatible with human rights freedoms as it does not raise any human rights issues.