EXPLANATORY STATEMENT
MILITARY SUPERANNUATION AND BENEFITS TRUST DEED (AMENDMENT) (NO. 1 OF 1998)
ISSUED BY THE AUTHORITY OF THE MINISTER FOR DEFENCE SCIENCE AND PERSONNEL
The Schedule to the Trust Deed made by the Minister for Defence Industry, 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 I 901.
The Military Superannuation and Benefits Trust Deed (Amendment)(No 1 of 1998) amends provisions in the Rules dealing with leave without pay to engage in full time employment; and preservation of unclaimed member benefits.
Leave without pay to engage in full time employment
Rule 7 of the MSB Rules specifies leave granted for the purpose of "engaging, with the approval of the appropriate authority of the Defence Force, in full time employment."
Rule 10 of the MSB Rules sets out what constitutes a "prescribed arrangement" between another employer and the Commonwealth to meet the employer costs of a member on leave without pay. On any payday on which a member makes a contribution the employer must agree to pay to the Commonwealth an employer contribution. The employer contribution is defined in MSB subrule 10(3) as the 3% productivity contribution, not the total employer cost of the scheme. In addition, the prescribed arrangement does not come into operation until the period of leave has exceeded 12 months.
Rule 7 is based on the recommendations of the Defence Force Retirement and Death Benefits (DFRDB) Review Committee and it was intended that the MSB Board of Trustees should have a discretion to let contributions continue where a member
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engages in approved full time employment and the organisation concerned agreed to fully meet the employer contributions. In addition. it was also intended that an MSBS employer benefit should accrue as long as the other organisation continues to meet the employer costs. This contrasts with other leave, such as leave to undertake further education or training, where the employer benefit accrues for a maximum of one year. The information distributed to members during the election period in 1991/1992 reflected this position.
This instrument amends the Rules to allow for the employer benefit costs associated with leave without pay to engage in other employment to be fully recovered through arrangements between the Commonwealth and the other employer.
Preservation of unclaimed member benefits
Rules 12, 13, 14, 27 and 28 of the MSB Rules prescribe circumstances where member benefits become payable. In each of these circumstances, the member benefit is payable immediately unless the member elects to preserve it If a separated member either fails to claim or elect to preserve the member benefit after approximately three months, and cannot be traced, the benefit is preserved in the MSB fund event though 1:}le rules are currently silent on this provision. This has been the most beneficial arrangement from the member's point of view since the preserved benefit would not be subject to administration fees. It would also ensure consistency with the Public Sector Superannuation Scheme (PSS) which allows for the unclaimed member benefits to be preserved in its Fund.
This instrument amends the Rules to ensure that the benefit must be preserved where a member has failed to make an election to either claim the benefit or preserve it in the MSB fund after an appropriate time has elapsed from separation. This time frame is not important since members can claim their member benefit at any time after separation from the Defence Force.
Leave without pay to engage in full time employment
- Commencement
This clause sets the date when the instrument becomes operative
2. Amendment
This clause is formal.
3. Rule 10 (Liability of Department to pay employer contributions)
Rule 10 of the MSB Rules requires the Department to pay an employer contribution to the Board whenever a member pays contributions, subject to certain exceptions in cases of leave without pay.
Subclause 3.l amends subrule 10 (2) (a) which provides that in a case where a member is on leave without pay to engage in full time employment, the employer contribution is not payable in respect of the member where a prescribed arrangement has been entered into with the other employer. Subclause 3.1 also inserts a new sub e 10(2)(aa) which provides that in the case of leave without pay to either undertake further education, undergo training, engage in some other activity, or because the member was for the time being physically or mentally incapable of performing his or her duties, in these circumstances the employer contribution is not payable after any period in excess of 12 months.
Definition of prescribed arrangement
Subclause 3.2 redefines the definition of a prescribe arrangement to ensure that an amount equivalent to the amount of the employer contributions that would have been payable by the Commonwealth is paid by the member's employer under a prescribed arrangement while the member is on leave without pay to engage in full time employment.
Preservation of unclaimed member benefits
Rule 12 (Benefit on retirement before reaching 55 years of age or earlier retiring age, otherwise than for redundancy or retrenchment etc)
Rule 12 of the MSB Rules describes the benefits payable to a member who, before reaching age 55 years of age or an earlier statutory retiring age, resigns, is retired on invalidity grounds but is not entitled to invalidity pension or is retired for disciplinary reasons or dismissed.
Subclause 4.1 inserts subrule 12(4) which provides for a circumstance where a member does not claim his or her member benefit as a lump sum or elects to have the member benefit preserved in the MSB Fund. This subrule provides that after a period of three months has elapsed the member benefit is automatically preserved in the MSB Fund.
Rule 13 (Benefits on retirement for redundancy or retrenchment or on completion of limited tenure appointment or on attaining retiring age of less than 55years)
Rule 13 of the MSB Rules describes the benefit payable to members who retire due to redundancy or retrenchment or on attaining a statutory retiring age of less than 55 years.
Subclause 5.1 inserts subrule 13(6) which provides for a circumstance where a member does not claim his or her member benefit as a lump sum or elects to have the member benefit preserved in the MSB Fund. This subrule provides that after a period
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of three months has elapsed the member benefit is automatically preserved in the MSB Fund.
Rule14 (Benefits on retirement on or after attaining age of 55 years)
Rule 14 of the MSB Rules describes the benefit payable to a member who retires on or after attaining the age of 55 years.
Subclause 6.1 inserts subrule 14 (5) which provides for a circumstance where a member does not claim his or her member benefit as a lump sum or elects to have the member benefit preserved in the MSB Fund. This subrule provides that after a period of three months has elapsed the member benefit is automatically preserved in the MSB Fund.
Rule 27 (Invalidity benefits for person classified as Class A)
Rule 27 of the MSB Rules describes the. Benefit payable to a member who is entitled to an invalidity benefit and is classified as Class A.
Subclause 7.1 inserts subrule 27(3) which provides for a circumstance where a member does not claim his or her member benefit as a lump sum or elects to have the member benefit preserved in the MSB Fund. This subrule provides that after a period of three months has elapsed the member benefit is automatically preserved in the MSB Fund.
Rule 28 (Invalidity benefits for person classified as Class B)
Rule 28 of the MSB Rules describes the benefit payable to a member who is entitled to an invalidity benefit and is-classified as Class B.
Subclause 8.1 inserts subrule 28 (3) which provides for a circumstance where a member does not claim his or her member benefit as a lump sum or elects to have the member benefit preserved in the MSB Fund. This subrule provides that after a period of three months has elapsed the member benefit is automatically preserved in the MSB Fund.
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