EXPLANATORY STATEMENT
 

Issued by authority of the Attorney-General

in compliance with section 15J of the Legislation Act 2003

Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024

Purpose and operation of the Instrument

Subsection 125(1) of the Family Law Act 1975 (the Family Law Act) provides, in part, that the Governor-General may make regulations, not inconsistent with the Family Law Act, prescribing all matters required or permitted by the Family Law Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Family Law Act.

Parts VIIIB and VIIIC of the Family Law Act provide for the division of superannuation interests between married and de facto couples on relationship breakdown. The Family Law (Superannuation) Regulations 2001 (the FLS Regulations) give effect to the distribution of superannuation interests under Parts VIIIB and VIIIC of the Family Law Act.

The FLS Regulations provide ‘default’ methods and factors for valuing superannuation interests. Where the default methods and factors are not appropriate for valuing interests in a particular scheme, regulations 38 and 43A of the FLS Regulations authorise the Attorney‑General to approve scheme-specific methods and factors to be used to determine the gross value of particular superannuation interests.

The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003 (the Approval Instrument) sets out methods and factors approved by the Attorney-General for determining the value of interests for over thirty superannuation funds or schemes, including for the Public Sector Superannuation Scheme (PSS Scheme). Part 2 of Schedule 1 of the Approval Instrument contains the scheme‑specific methods and factors to determine the family law value for PSS Scheme interests.

Division 2.2 of Part 2, Schedule 1 of the Approval Instrument prescribes the methods and factors for valuing PSS Scheme interests in the growth phase (“growth phase table”). There are four separate methods that could apply depending on whether the defined benefit interest pertains to:

• an interest that a person has as a member of the PSS Scheme (that is, a contributing member) (Item 1)
• an interest that a person has in the PSS Scheme if the person is a preserved benefit member and the person is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a)[1] of the Public Sector Superannuation Scheme Rules set out in the Schedule to the Public Sector Superannuation Scheme Trust Deed (PSS Rules) (that is, a former contributing member with preserved benefits who is eligible to convert the preserved benefit to a pension) (Item 2)
• an interest that a person has in the PSS Scheme if the person is a preserved benefit member and the person is not eligible to receive a benefit under paragraph rule 8.2.1A or paragraph 8.2.1B(a)[2] of the PSS Rules (that is, a former contributing member with preserved benefits who is not eligible to convert the benefit to a pension) (Item 3), and
• an interest that a person has in the PSS Scheme if the person is entitled to an associate preserved benefit under Division 3 of Part 16 of the PSS Rules (Item 4).

To determine the value of a superannuation interest for the purpose of a family law property division, a member or their spouse can request information from the trustee about the interest under section 90XZB of the Family Law Act. The FLS Regulations outline what information a trustee must provide in response to a request under section 90XZB. Where the Attorney‑General has approved methods or factors for the valuation of a superannuation interest under regulation 38 or 43A of the FLS Regulations, the FLS Regulations allow the Attorney-General to provide, by written determination, that the trustee is either not required to provide certain information, or that the trustee must provide other information as specified in the determination under subsections 63(6A) and (6B), and 64(7), (7AA), (7A) and (7B) of the FLS Regulations. The PSS Scheme is covered by a scheme specific information determination, the Family Law (Superannuation) (Provision of Information – Public Sector Superannuation Scheme) Determination 2004 (the PSS Scheme Information Determination). 

Section 5 of the PSS Scheme Information Determination contains a table which prescribes what information the Commonwealth Superannuation Corporation (CSC), as trustee of the PSS Scheme, is required and is not required to provide about each type of superannuation interest referred to in the growth phase table in the Approval Instrument. The PSS Scheme Information Determination currently does not require the CSC to provide information about whether or not a person is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a) of the PSS Rules (that is, whether the person is eligible to convert the preserved benefit to a pension). Whether or not certain benefits are payable as a pension can make a significant difference to the value of the interest, and without this information, it is difficult for a person to determine whether the method in Item 2 or Item 3 of the growth phase table in the Approval Instrument should be used to value the superannuation interest.

The purpose of the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024 (the Amendment Instrument) is to amend Section 5 of the PSS Scheme Information Determination to require the CSC to provide information about whether or not the preserved benefit member is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a) of the PSS Rules in relation to an interest mentioned in Items 2 and 3 of the growth phase table in the Approval Instrument. By ensuring the information the CSC provides to separating couples includes whether or not the member is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a) of the PSS Rules, parties will be able to identify and apply the relevant method under the Approval Instrument to value a PSS Scheme superannuation interest as accurately as possible.

The Amendment Instrument is a legislative instrument for the purposes of the Legislation Act 2003. The Amendment Instrument is not subject to disallowance by operation of Item 3 of Regulation 9 of the Legislation (Exemptions and Other Matters) Regulation 2015.

The Amendment Instrument and the PSS Scheme Information Determination are not subject to sunsetting. Item 6 of the table in section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015, made under paragraph 54(2)(b) of the Legislation Act 2003, exempts legislative instruments (other than regulations) that relate to superannuation from the sunsetting regime set out under Part 4 of Chapter 3 of that Act. Instruments pertaining to family law superannuation splitting of PSS Scheme interests are intended to have enduring operation and the existence of uncertainty in respect of an individual’s scheme entitlements would not be appropriate.

Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary any such instrument.

CONSULTATION

In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department consulted with the Department of Finance and the Commonwealth Superannuation Corporation, as trustee of the Public Sector Superannuation Scheme, on the development of the amendments.

The Office of Impact Analysis was also consulted on this instrument and advised that an Impact Analysis is not required for these amendments: OIA24-06480.

Details of the Amendment Instrument are set out in Attachment A.

ATTACHMENT A

Details of the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024

Section 1 – Name

This section provides that the name of the Amendment Instrument is the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024.

Section 2 - Commencement

This section provides that the instrument will commence on the later of the day after the instrument is registered on the Federal Register of Legislation, the day after the Superannuation Amendment (PSS Trust Deed) Instrument 2024 is registered, or the day after the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 is registered.

The Superannuation Amendment (PSS Trust Deed) Instrument 2024 and the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 make amendments to update some existing references to superseded paragraph 8.2.1 (A) of the PSS Rules to reference the current provisions in the PSS Rules.

However, the Amendment Instrument does not commence at all unless both the Superannuation Amendment (PSS Trust Deed) Instrument 2024 and the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 are registered, to ensure that the substantive instruments relating to calculation of PSS Scheme interest values remain consistent.

Section 3 - Authority

This section provides that the Amendment Instrument is made under subregulation 64(7) of the Family Law (Superannuation) Regulations 2001.

Section 4 – Schedules

This section is a technical provision which provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned. Any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1 – Amendments

Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Determination 2004

Item 1: Section 5 (at the end of the cell at table item 2, column headed “Information that must be provided”)

Item 1 adds “; (c) whether or not the person is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a) of the Rules” to the list of information that must be provided in relation to a superannuation interest mentioned in item 2 of the growth phase table.

This ensures that in relation to a preserved benefit member that is eligible to convert their interest to a pension, information about their eligibility under rule 8.2.1A or paragraph 8.2.1B(a) will be provided.

Item 2: Section 5 (at the end of the cell at table item 3, column headed “Information that must be provided”)

Item 2 adds “; (c) whether or not the person is eligible to receive a benefit under rule 8.2.1A or paragraph 8.2.1B(a) of the Rules” to the list of information that must be provided in relation to a superannuation interest mentioned in item 3 of the growth phase table.

This ensures that in relation to a preserved benefit member that is not eligible to convert their interest to a pension, information about their eligibility under rule 8.2.1A or paragraph 8.2.1B(a) will be provided.

Item 3: At the end of the instrument

Item 3 adds an application provision so that any applications to the PSS Scheme trustee made after the commencement of the instrument or before the commencement of the instrument, but not yet responded to, would be required to provide the information about eligibility to receive a benefit under the relevant provisions.

[1] References in the Approval Instrument to rule 8.2.1A or paragraph 8.2.1B(a) of the PSS Rules previously referred to paragraph 8.2.1 (A) of the PSS Rules. Paragraph 8.2.1 (A) has been repealed and replaced by rule 8.2.1A and paragraph 8.2.1B(a). The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 amends all references to paragraph 8.2.1 (A) to correctly reference rule 8.2.1A and/or paragraph 8.2.1B(a) as the current provisions in the PSS Rules.

[2] See footnote No. 1.