EXPLANATORY STATEMENT INSTRUMENT NO 2 OF 1992
ISSUED BY THE AUTHORITY OF THE MINISTER FOR DEFENCE SCIENCE AND
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.
Operation of the MSB scheme has revealed an unintended effect of the MSB Rules with regard to the counting of contributions under the Defence Force Retirement and Death Benefits scheme towards a person's member benefit under the MSB scheme. The purpose of this Instrument is to amend the MSB Rules accordingly.
1. Interpretation
This clause defines expressions used in the Instrument
2. Amendment
This clause is formal.
3. Schedule 1(GLOSSARY)
Schedule 9 to the MSB Rules describes how a person's member benefit is calculated.
The member benefit consists of several Clements including, in the case of a transferred member, the person's transfer value and notional interest thereon or, in the case of a 1973 scheme (deferred benefit) re-entrant, the person's carry over value and notional interest
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thereon. The Clements constituting transfer value and cmy over value arc listed in Schedules 10 and 10A, respectively, to. the MSB Rules, and include in each case previous contributions made by the person when a member of the DFRDB scheme. The expression "previous contributions" is defined in Schedule 1 to the MSB Rules to exclude any contributions refunded to the member under the Defence Force Retirement and Death Benefits Act 1973 ("the 1973 Act").
Three other cases have been identified in which the counting towards transfer value or cmy over value of contributions made durin1 particular service provides a member with benefits in excess of those intended to apply.
This clause amends the definition to exclude the contributions in question. The three cases are:
• Para (b). In the case of a person who applied under the 1973 Act to "buy back" previous service, etc - any such service which the person had not paid for before, 1 October 1991 (the first day on which a member of the DFRDB scheme could transfer to the MSB scheme).
• Para (c). In the case of a 1973 scheme redocument pensioner- contributions made towards the 1973 scheme pension.
• Para (d). In the case of a person who, on transfer to public employment from the DFRDB or DFRB scheme, elected to have a transfer value paid to the public employment superannuation scheme - contributions relevant to the transfer value.
4. Application
This clause is a saving provision which excludes the operation of the amendments to a member who transferred before the date of commencement of the Instrument.
Printed by authority by the Commonwealth Government Printer
Overview
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument 1992, issued under the authority of the Minister for Defence Science and Personnel, amends the Military Superannuation and Benefits Trust Deed established by the Military Superannuation and Benefits Act 1991. This legislation was introduced to address an unintended consequence in the calculation of contributions under the Military Superannuation and Benefits Scheme (MSB scheme) for members of the Defence Force. Specifically, it aimed to correct discrepancies in the counting of contributions made under the Defence Force Retirement and Death Benefits scheme towards a member's benefit under the MSB scheme. The policy objective was to ensure that members received benefits consistent with the intended scheme provisions. The instrument, which is a disallowable instrument, includes amendments to the definitions of certain terms to exclude specific contributions that led to over-benefiting of members.
Scope and Application
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 2 of 1992 applies to members of the Australian Defence Force who are participants in the Military Superannuation and Benefits Scheme established by the Military Superannuation and Benefits Act 1991. The Instrument amends the Trust Deed to correct unintended effects of the Military Superannuation and Benefits Rules regarding the calculation of contributions under the Defence Force Retirement and Death Benefits Scheme towards a member's benefit under the Military Superannuation and Benefits Scheme. This includes excluding certain contributions from the calculation of transfer value or carry over value in specific circumstances, such as when a member "buys back" previous service, contributions towards a 1973 scheme pension, or contributions relevant to a transfer value paid to a public employment superannuation scheme. The changes do not apply to members who transferred to the Military Superannuation and Benefits Scheme before the Instrument's commencement. The Instrument has a Commonwealth jurisdictional reach, being made under the authority of the Minister for Defence Science and Personnel and as a disallowable instrument under the Acts Interpretation Act 1901.
Key Provisions
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 2 of 1992 amends the Military Superannuation and Benefits Rules (MSB Rules) under the Military Superannuation and Benefits Act 1991. Specifically, the Instrument modifies the way in which contributions made under the Defence Force Retirement and Death Benefits scheme are counted towards a member's benefit under the Military Superannuation and Benefits scheme (MSB scheme). This change is necessary to address unintended effects that have arisen from the original calculation of member benefits.
The primary change, detailed in Schedule 9 of the MSB Rules, adjusts how a person's member benefit is calculated. The member benefit is composed of various elements, including the person's transfer value and notional interest, or the person's carry-over value and notional interest if they are a re-entrant from the 1973 scheme (deferred benefit). Contributions made by the person when they were a member of the Defence Force Retirement and Death Benefits scheme (DFRDB scheme) are included in these values. However, the Instrument amends the definition of "previous contributions" to exclude contributions that were refunded to the member under the Defence Force Retirement and Death Benefits Act 1973. This amendment is intended to correct instances where the counting of certain contributions provided members with benefits that exceeded those originally intended.
The MSB Rules impose several obligations on parties governed by the Act. Members of the Defence Force who are members of the MSB scheme must ensure their contributions are accurately recorded and counted towards their member benefit as per the amended rules. The Minister for Defence Science and Personnel must ensure the MSB Rules are updated to reflect any necessary changes to maintain the integrity of the scheme. Additionally, any entity involved in the administration or calculation of member benefits must comply with the updated rules to ensure benefits are correctly calculated and paid.
Failure to comply with the amended MSB Rules can lead to civil or criminal consequences. While the specific penalties are not detailed in the Explanatory Statement, the Instrument notes that amendments made by the Minister are disallowable instruments under the Acts Interpretation Act 1901. This means that Parliament can review and potentially disallow the amendments, highlighting the seriousness with which legislative changes to the MSB scheme are regarded. The precise penalties for non-compliance would typically be found in the MSB Act or related legislation, but the implication is that breaches could result in financial penalties, legal action, or other sanctions as deemed appropriate by the relevant authorities.