EXPLANATORY STATEMENT INSTRUMENT NO 3 OF 1993
ISSUED BY THE AUTHORITY OF THE MINISTER FOR DEFENCE MILITARY SUPERANNUATION AND BENEFITS TRUST DEED (AMENDMENT)
The Schedule to the Trust Deed made by the Minister for Defence Science and Personnel under section S 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
- 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 revealed unintended effects of the MSB Rules with regard to the counting of contributions under previous Defence Force retirement benefits schemes towards a
. person's member benefit under the MSB scheme. Instrument No 2 of 1992 made by the Minister under subsection 5(1) amended the MSB Rules to remove these unintended effects.
As explained below, contributions which are not to count are excluded by the operation of the definition of "previous contributions" in Schedule 1 to the MSB Rules. The amendments made by Instrument No 2 of 1992 added three classes of contributions to be excluded, ie:
- Contributions relating to service being "bought back" under the Defence Force Retirement and Death Benefits Act 1973 ("the 1973 Act") which the person had not paid for before 1 October 1991.
- Contributions made towards a pension under the 1973 Act by a retirement pensioner under that Act.
- Contributions relevant to a transfer value of a person who was a contributor to either of the previous Defence Force retirement benefits schemes and elected to have a transfer value paid to a public service superannuation scheme.
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Objection was raised in the Senate to excluding the contributions referred to in paragraph a., and Instrument No 2 was disallowed on that account on 9 September 1992. No objection was raised to excluding the contributions referred to in paragraphs band c except for the fact that the MSBS Board of Trustees had not been consulted on these amendments. The Board subsequently agreed that these amendments are necessary and the purpose of the new Instrument is to remake these amendments.
- Interpretation
This clause defines expressions used in the Instrument.
2. Amendment
This clause is formal.
3. Schedule l(GLOSSARY)
Schedule 9 to the MSB Rules describes how a person's member benefit is calculated.
The member benefit consists of several elements 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 thereon. The elements constituting transfer value and carry over value are listed in Schedules 10 and l0A, 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 l to the MSB Rules to exclude any contributions refunded to the member under either of the previous Defence Force retirement benefits schemes.
Two other cases have been identified in which the counting towards transfer value or carry over value of contributions made during 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 two cases are:
* Para (b). Contributions made towards a pension under the 1973 Act by a retirement pensioner under that Act.
* Para (c). Contributions relevant to a transfer value of a person who was a contributor to either of the previous Defence Force retirement benefits schemes and
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elected to have a transfer value paid to a public service superannuation scheme.
Printed by authority by the Commonwealth Government Printer
Overview
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 3 of 1993 was enacted to address unintended effects in the Military Superannuation and Benefits Rules concerning the counting of contributions under previous Defence Force retirement benefits schemes towards a person's member benefit in the Military Superannuation and Benefits Scheme. This instrument was issued under the authority of the Minister for Defence by the Commonwealth Government Printer, reflecting the policy objective of rectifying discrepancies in the application of the rules. The amendments were necessitated by the disallowance of a previous instrument due to objections raised in the Senate and the need for consultation with the MSBS Board of Trustees, which subsequently endorsed the amendments as necessary. The primary aim of this legislation is to ensure that contributions are counted correctly, avoiding benefits in excess of those intended under the scheme.
Scope and Application
The Military Superannuation and Benefits Trust Deed (Amendment) Instrument No 3 of 1993 amends the Military Superannuation and Benefits Rules under the Military Superannuation and Benefits Act 1991. This Act and its associated Rules govern the contributions and benefits for members of the Defence Force who are part of the Military Superannuation and Benefits Scheme. The scope of this legislation is confined to the contributions and benefits applicable to members of the Defence Force who are enrolled in the Military Superannuation and Benefits Scheme. The geographic reach is national, given the Commonwealth's responsibility for defence and related benefits. The Act applies to both individuals and entities within the Defence Force who are members of the scheme, focusing on their contributions and entitlements upon retirement or in the event of death. While the Act generally governs the entire Military Superannuation and Benefits Scheme, certain contributions are excluded from the calculation of member benefits to correct unintended effects identified in the scheme's operation. These exclusions are detailed in Schedule 1 to the MSB Rules, which define "previous contributions" and specify which contributions do not count towards a member's benefit. The Act does not explicitly state exemptions or thresholds, but the amendments address specific contributions to ensure the benefits align with intended policy outcomes. The Act allows for further adjustments through subordinate instruments, maintaining flexibility in governance.
Key Provisions
The key provisions of this legislation, as outlined in the explanatory statement, pertain to the Military Superannuation and Benefits (MSB) Rules under the Military Superannuation and Benefits Act 1991. The MSB Rules govern the contributions made by Defence Force members who are part of the Military Superannuation and Benefits Scheme, as well as the benefits provided to members upon retirement or to the dependents of deceased members. The Trust Deed, which includes these rules, is subject to amendments by the Minister for Defence, with such amendments being disallowable instruments as per the Acts Interpretation Act 1901.
This legislation specifically addresses unintended effects of the MSB Rules concerning the counting of contributions under previous Defence Force retirement benefits schemes towards a member's benefit under the MSB scheme. The previous amendments (Instrument No 2 of 1992) attempted to exclude certain contributions that were causing unintended effects, but they were disallowed due to objections raised in the Senate. The new instrument seeks to re-amend the MSB Rules to exclude specific contributions that were not intended to count towards a member's benefit. These include contributions relating to service bought back under the Defence Force Retirement and Death Benefits Act 1973, contributions made towards a pension under the 1973 Act by a retirement pensioner, and contributions relevant to a transfer value of a person who elected to have a transfer value paid to a public service superannuation scheme.
The obligations imposed by this Act are primarily on the members of the Defence Force who are part of the MSB scheme, as well as on the MSB Board of Trustees. Members must ensure their contributions are correctly accounted for in accordance with the amended MSB Rules. The Board of Trustees is required to implement the changes to the MSB Rules as outlined in the new instrument and to ensure that the calculation of member benefits is aligned with the legislative intent, taking into account the exclusion of specified contributions.
For breaches of the provisions set out in the Military Superannuation and Benefits Act 1991, penalties and consequences may apply, though specific details of offences, penalties, or consequences are not explicitly mentioned in the explanatory statement. However, as the amendments pertain to the interpretation and application of the MSB Rules within the context of the Act, non-compliance could potentially result in disputes over the calculation of benefits, which may need to be resolved through administrative or judicial processes. The exact penalties would depend on the nature and severity of the breach, but they could include financial penalties, corrective actions, or other remedies as prescribed by the relevant laws.