Overview

The Military Superannuation and Benefits Amendment Trust Deed 1999 (No. 1) was enacted to address the issue of the Superannuation Contributions Tax, also known as the surcharge debt, within the Military Superannuation and Benefits Scheme. This instrument was introduced under the authority of the Minister for Veterans' Affairs and the Minister Assisting the Minister for Defence, pursuant to section 5 of the Military Superannuation and Benefits Act 1991. The policy objective of the amendment is to provide greater flexibility to scheme members in discharging their surcharge debt, allowing them to elect the method by which their debt is to be adjusted. Previously, the surcharge debt was deducted from the employer benefit before it was paid as a lump sum or converted to a pension, which disproportionately affected those who opted for a pension. The new rules allow for the debt to be discharged from either the employer benefit or the member benefit before conversion to a pension, or from the pension itself, providing scheme members with a choice in how their debt is managed. The Military Superannuation and Benefits Amendment Trust Deed 1999 (No. 1) amends the Military Superannuation and Benefits Trust Deed to introduce new rules under Part 10, titled "Surcharge deduction amount," detailing the new methods of discharging the surcharge debt. This amendment includes the insertion of a default provision if a member does not make an election. Consequently, several subrules that previously detailed the method of surcharge debt discharge have been omitted, and others have been amended to reflect the new rules. The amendments ensure that there will be sufficient funds available to discharge a surcharge debt if a member claims part of their preserved employer benefit under financial hardship or compassionate grounds, and it allows members to make an election under Part 10.

Scope and Application

The Military Superannuation and Benefits Amendment Trust Deed 1999 (No. 1) applies to members of the Military Superannuation and Benefits (MSB) scheme and their dependants, primarily focusing on the administration and adjustment of benefits upon retirement or death of a member. The scope of this legislation is to amend the rules governing the MSB scheme, particularly concerning the discharge of the Superannuation Contributions Tax (the surcharge debt) from member benefits. This amendment provides greater flexibility for members in choosing how their surcharge debt is deducted from their benefits, whether it be from their member benefit or employer benefit, either before or after conversion into a pension. The amendment applies nationally as it is governed under the Commonwealth through the Military Superannuation and Benefits Act 1991. The Trust Deed, and subsequent amendments, are issued by the authority of the Minister for Veterans' Affairs and the Minister Assisting the Minister for Defence, which empowers the Minister to amend the Trust Deed by instruments, including the Schedule to this Deed. This legislative instrument does not specify exclusions or exemptions but rather expands the options available to MSB scheme members for the discharge of their surcharge debt.

Key Provisions

The Military Superannuation and Benefits Amendment Trust Deed 1999 (No. 1) amends the existing Trust Deed under the Military Superannuation and Benefits Act 1991 (MSB Act) to provide military scheme members with more flexibility in discharging their superannuation contributions tax surcharge debt, also known as the surcharge debt. This is achieved through the introduction of new rules in Part 10 of the Trust Deed, which detail the options available for surcharge debt deduction. Specifically, members can now choose to have the surcharge debt deducted from either their member benefit or employer benefit, or from their pension if their employer benefit has already been converted to a pension (section 80 and 81). If no election is made, the surcharge debt will be deducted from the employer benefit after it is converted into a pension, unless the member has elected to receive part of their employer benefit as a lump sum or has already converted their benefit to a pension, in which case the deduction will be from the employer benefit after conversion, or from the member benefit before it is paid out or converted (section 80(2)). The amended Trust Deed imposes certain obligations on the parties involved, primarily the military scheme members themselves and the trustee of the trust. Members are required to make an election regarding the method of surcharge debt deduction if they wish to avoid the default method (clause 64(2A)). The trustee must then ensure that the surcharge debt is deducted in accordance with the member's election or the default provision, and that the member is informed of the deduction amount and the remaining balance of their benefit (subrules 13(1)(a), 13(2)(d), 13(4)(b), 14(1)(c), 14(1)(d), 14(3)(b), 14(3)(c), 27(1)(a), 27(1)(b), 28(1)(a), 28(1)(b), 40(1), 49(1), 51(1), 52(1), 53(1), 53(2), 54(2), 54(3), 54(4), and rule 39). Additionally, the trustee must ensure that there are sufficient funds available to discharge the surcharge debt if a member claims part of their preserved employer benefit under financial hardship or compassionate grounds (subrule 51(1B)). Failure to comply with the requirements of the amended Trust Deed may result in legal consequences for the trustee or the military scheme members. While the Trust Deed itself does not explicitly outline offences, penalties, or civil/criminal consequences for breach, the MSB Act provides a framework for enforcing compliance. For instance, a trustee who fails to discharge the surcharge debt in accordance with the member's election or the default provision may be subject to legal action by the member or the Minister for Veterans' Affairs. In such cases, the court may order the trustee to take appropriate action to rectify the situation and compensate the affected member for any loss or damage incurred. Additionally, if a member fails to make an election regarding the method of surcharge debt deduction, the trustee is required to deduct the surcharge debt from the employer benefit after it is converted into a pension, which may result in a reduction of the member's pension or lump sum payment. While these consequences are not explicitly stated in the Trust Deed, they are implied by the provisions outlined in the MSB Act and the Trust Deed itself.