EXPLANATORY STATEMENT INSTRUMENT NO 1 OF 1993
ISSUED BY THE AUTHORITY OF THE MINISTER FOR DEFENCE SCIENCE AND
i' PERSONNEL
MILITARY SUPERANNUATION AND BENEFITS TRUST DEED (AMENDMENT)
The Schedule to the Trust Deed made by the Minister for Defence Science and Personnel under section 5 of the Military Superannuation and Benefits Act 1991 ("the MSB Act") contains Rules ("the MSB Rules") which deal with:
- the contributions to be made by members of the Defence Force who are members of the Military Superannuation and Benefits Scheme ("the MSB scheme") established by the Trust Deed in accordance with section 4 of the MSB Act; and
b. the benefits to be provided to members of the MSB scheme upon retirement or to dependants of deceased members of the scheme.
The Minister is empowered, by subsection 5(1) of the MSB Act, to amend the Trust Deed (including the MSB Rules), by an instrument which, by subsection 49(1) of the MSB Act, is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.
The superannuation guarantee charge scheme (SGC scheme), which came into force on l July 1992, requires a prescribed minimum level of superannuation support to be provided by the employer, gradually increasing during the period 1992 to 2003. It is necessary to amend the MSB Rules so that they will comply with the scheme.
In order to encourage the retention in the Defence Force of members during their initial years of service, the MSB Rules provide for a reduced scale of benefits for those who retire before they have completed 7 years service, other than invalidity retirees and most re-entered members. The reduction applies to the employer benefit only and the percentage of employer benefit payable is increased on a sliding scale. An effect of these reductions is that the amount of employer benefit payable in respect of a member who renders less than 6 years' service is less than the amount required by the SGC scheme. Increases required by the SGC scheme are being phased in on an annual basis and the instrument increases the percentage of employer benefit in accordance with the SGC scheme as it applies up to the year ending on 1 July 1993. Increases in respect of later years will be made by a later instrument when the results of actuarial calculations are available.
( 1. Interpretation
This clause defines expressions used in the Instrument.
2
2. Amendment
This clause is formal.
3. Schedule 8(CALCULATION OF EMPLOYER BENEFIT)
Schedule 8 to the MSB Rules describes how a person's employer benefit is calculated. Paragraph 5 of that schedule deals with a retiree with less than 7 years' eligible service and paragraph 10 deals with a retiree who had an earlier period of service which is aggregated with the service just completed by him or her for the purpose of calculating the 7-year period.
This clause amends paragraphs 5 and 10 of schedule 8 to increase the percentage applicable to the level required by the SGC scheme as it applies up to the year ending on 1 July 1993. As mentioned above, increases in respect of later years will be made by a later instrument when the results of actuarial calculations are available.
Overview
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 1 of 1993 was issued under the authority of the Minister for Defence Science and Personnel, amending the Military Superannuation and Benefits Trust Deed to address the requirements of the superannuation guarantee charge scheme (SGC scheme) which came into force on 1 July 1992. The Military Superannuation and Benefits Act 1991 established the Military Superannuation and Benefits Scheme (MSB scheme) and the Trust Deed contains rules governing contributions and benefits. The instrument is designed to align the MSB Rules with the SGC scheme, which mandates a minimum level of superannuation support from employers, with the aim of ensuring compliance and providing adequate benefits to members of the Defence Force.
The policy objective of this amendment is to encourage retention in the Defence Force by adjusting the scale of benefits for members who retire before completing seven years of service. This is achieved by increasing the percentage of employer benefit in line with the SGC scheme up until 1 July 1993. Further increases for later years will be implemented as actuarial calculations become available, ensuring ongoing compliance with the SGC scheme requirements.
Scope and Application
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 1 of 1993 applies to members of the Defence Force who are participants in the Military Superannuation and Benefits Scheme, established under the Military Superannuation and Benefits Act 1991. This Act governs the contributions made by Defence Force members to the superannuation scheme and the benefits provided upon retirement or to dependants of deceased members. The amendment to the Trust Deed, made by the Minister for Defence Science and Personnel, specifically adjusts the calculation of employer benefits to align with the requirements of the Superannuation Guarantee Charge scheme, which mandates a minimum level of employer-provided superannuation support. The changes primarily affect the percentage of employer benefits payable to members who retire before completing seven years of service, ensuring compliance with the SGC scheme’s phased implementation. This amendment is applicable nationally, affecting all members of the Defence Force across Australia. The instrument does not specify exclusions but is subject to disallowance under the Acts Interpretation Act 1901. Future adjustments will be made based on actuarial calculations for later years.
Key Provisions
The primary operative sections of this legislation, as outlined in the Explanatory Statement, pertain to amendments in the Military Superannuation and Benefits Rules (MSB Rules) under the Military Superannuation and Benefits Act 1991 (MSB Act). Specifically, section 5 of the MSB Act empowers the Minister for Defence Science and Personnel to amend the Trust Deed, which includes the MSB Rules. The amendments, as detailed in the Schedule, are intended to bring the MSB Rules into compliance with the Superannuation Guarantee Charge (SGC) scheme, which mandates a minimum level of employer-provided superannuation support. These amendments are necessary to ensure that the benefits provided to Defence Force members align with the requirements of the SGC scheme.
The MSB Rules, as amended, impose several obligations and requirements on the parties they govern. Firstly, they specify the contributions that members of the Defence Force must make to the Military Superannuation and Benefits Scheme (MSB scheme). Additionally, the Rules determine the benefits that will be provided to members upon retirement or to the dependants of deceased members. These Rules also include provisions for a reduced scale of benefits for those who retire before completing seven years of service, with the exception of invalidity retirees and most re-entered members. This reduction applies solely to the employer benefit, with the percentage of employer benefit payable increasing on a sliding scale based on the length of service.
The legislation further outlines the penalties and consequences for non-compliance with the MSB Rules. As the instrument is a disallowable instrument under section 46A of the Acts Interpretation Act 1901, it is subject to disallowance by Parliament. This means that if Parliament chooses to disallow the instrument, the amendments will not come into effect. Furthermore, any failure to comply with the provisions of the MSB Rules could result in legal consequences for the parties involved. However, the specific penalties for breach of the MSB Rules are not detailed within the text of this legislation. The consequences of non-compliance would likely be determined by the relevant governing authorities and may include financial penalties, legal action, or other remedies as deemed appropriate.