EXPLANATORY STATEMENT
Issued by the authority of the Minister for Veterans’ Affairs
MILITARY SUPERANNUATION AND BENEFITS AMENDMENT TRUST
DEED 2007 (No. 4)
The Schedule to the Trust Deed made by the Minister for Veterans' Affairs under section 5 of the Military Superannuation and Benefits Act 1991 (‘the MSB Act’) contains Rules (‘the MSB Rules’) which deal with the benefits to be provided to members of the MSB Scheme upon retirement, or to dependants of deceased members of the scheme. The benefits payable are a member benefit based on member contributions, accrued MSB Fund earnings and an employer benefit which includes employer contributions.
Section 5 of the MSB Act provides that the Minister may amend the Trust Deed (including the MSB Rules) by a signed instrument. This is a legislative instrument for the purpose of section 44(2) of the Legislative Instruments Act 2003.
The amendments made by the Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) changes the rules to improve access to reversionary benefits in certain circumstances where the retirement pensioner commenced a marital relationship after age 60 years. Generally, a spouse's pension under the military schemes is not payable if the pensioner who commences a marital relationship after age 60 dies within 5 years of the relationship commencing. This amendment removes the restrictions on the payment of benefits following such post-retirement relationships from 5 years to 3 years. However, a pro-rata rate of spouse's pension will be payable where the relationship existed for less than 3 years immediately before the pensioner's death. Where the resulting rate of annual pension is small the spouse will instead receive a lump sum payment. The Superannuation Legislation Amendment Act 2007 provided similar amendments to the Defence Force Retirement and Death Benefits Act 1973 (Act) which received royal assent on 25 September 2007.
The Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) will commence on 1 January 2008 being the same commencement day for the Act amendments and the Defence Force Retirement and Death Benefits Amendment Regulations 2007 (No. ).
Consultation in respect of this instrument has taken place between the MSB Board of Trustees No. 1, the Australian Government Actuary and the Department of Finance and Administration.
A regulation impact statement is not required; the Office of Best Practice Regulation has been consulted.
0720561A
Clause 1 cites the full title of the Trust Deed amendment.
Clause 2 provides for commencement on 1 January 2008.
Clause 3 provides for the amendment to the Trust Deed.
Schedule 1 – Amendments
Item [1]-Schedule 1, subparagraph 9(b) (iii)
This item replaces the 5 year restriction for post retirement marriages to 3 years
Item [2] – Schedule 1, paragraph 10 (c)
This item replaces the 5 year restriction for post retirement relationship to 3 years.
Item [3] – Schedule 1, after rule 10
Inserts an new rule 11
The Application of rule 11
This item inserts rule 11 (1) to provide for a spouse's pension where the relationship existed for less than 3 years immediately before the pensioner's death.
Rate of spouse’s pension
Inserts rule (11) (2) to provide the formula to calculate a pro rata spouse’s pension if the relationship was less than 3 years immediately before the pensioner’s death.
Minimum amount for lump sum payment
Inserts rule 11 (3) to make provision for a resulting annual rate of pension that is less than or equal to $1407.79, (the minimum amount), the spouse is instead entitled to a lump sum payment.
Indexation of the amount mentioned in subrule (3) (the minimum amount)
Inserts rules 11(4) to (7) to provide the method of indexing the minimum amount specified in subrule (3) each half year in line with the consumer price index published in the March and September quarters.
Calculating the lump sum payment
Inserts rules 11(8) and (9) to provide the method for calculating the small resulting pension to a lump sum payment by using the spouses age factor provided by the Australian Government Actuary’s ‘methods and factors for valuing particular superannuation interests’.
Overview
The Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) was enacted to amend the Military Superannuation and Benefits Act 1991, addressing the issue of restricted access to reversionary benefits for spouses of military retirees who entered into marital relationships post-retirement, specifically after the age of 60. This Trust Deed, issued by the Minister for Veterans’ Affairs, aims to improve the conditions under which these benefits are provided, particularly by reducing the period during which a pension is not payable from five to three years following the commencement of a new marital relationship. The policy objective behind these amendments is to ensure that spouses receive more timely and fair benefits, providing a more equitable outcome in cases where the retiree passes away shortly after entering a new relationship.
The changes introduced by the Trust Deed, which took effect from 1 January 2008, are designed to ensure that where a relationship lasts less than three years before the retiree’s death, a proportionate pension is paid, or if the pension is minimal, a lump sum payment is provided instead. This approach aims to balance the need for financial security for spouses with the administrative requirements of the scheme. The amendments reflect broader legislative efforts to update and harmonise rules across different military benefit schemes, as evidenced by the concurrent changes made to the Defence Force Retirement and Death Benefits Act 1973.
Scope and Application
The Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) applies to members of the Military Superannuation and Benefits Scheme (MSB Scheme), including their dependants. Specifically, the Act addresses the eligibility and calculation of reversionary benefits for spouses of pensioner members who enter into marital relationships post-retirement, thereby modifying the Military Superannuation and Benefits Act 1991. The changes made by this Trust Deed amendment focus on improving access to reversionary benefits for spouses in certain circumstances, particularly when the retirement pensioner commences a marital relationship after the age of 60. The Act reduces the restriction period for the payment of benefits following such post-retirement relationships from five years to three years. However, where the relationship existed for less than three years immediately before the pensioner's death, a pro-rata rate of spouse's pension will be payable. If the resulting rate of annual pension is small, the spouse will instead receive a lump sum payment. The Trust Deed and its amendments will commence on 1 January 2008, aligning with the Superannuation Legislation Amendment Act 2007 and the Defence Force Retirement and Death Benefits Amendment Regulations 2007 (No.).
Key Provisions
The Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) amends the Military Superannuation and Benefits Rules under the Military Superannuation and Benefits Act 1991. These amendments primarily focus on improving access to reversionary benefits in cases where a retirement pensioner begins a marital relationship after the age of 60. Section 5 of the MSB Act allows the Minister for Veterans’ Affairs to amend the Trust Deed, including the MSB Rules, by a signed instrument. The primary operative sections of this amendment are found in Schedule 1, specifically Item [1], Item [2], and Item [3]. These items modify the restrictions on post-retirement marital relationships from a 5-year period to a 3-year period, introduce a new rule 11 to account for pensions where the relationship lasted less than 3 years, and provide for a lump sum payment if the resulting pension is small.
The Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4) imposes specific obligations and requirements on the parties governed by the MSB Rules. The new rule 11, as introduced by Item [3], mandates a pro-rata calculation of the spouse's pension if the relationship existed for less than 3 years immediately before the pensioner's death. Furthermore, if the resulting annual pension rate is less than or equal to $1407.79, the spouse will receive a lump sum payment instead, as specified in rule 11(3). Rule 11(4) to (7) outlines the method for indexing this minimum amount every half year in line with the Consumer Price Index published in the March and September quarters. Rules 11(8) and (11(9) provide the formula for calculating the lump sum payment using the spouse's age factor from the Australian Government Actuary’s ‘methods and factors for valuing particular superannuation interests’.
Under the Military Superannuation and Benefits Amendment Trust Deed 2007 (No. 4), there are no specific offences or penalties for breaches as it is a regulatory instrument rather than a statute. However, non-compliance with the amended MSB Rules could lead to civil consequences, such as disputes over pension entitlements and potential legal challenges. The Trust Deed and the MSB Rules are designed to ensure that pension benefits are distributed according to the specified guidelines, and any failure to adhere to these rules could result in disputes that may need to be resolved through the courts. There are no criminal penalties associated with breaches of these rules, as they primarily govern the distribution of superannuation benefits rather than criminal activities.