Superannuation Act 1976 (Interest) Determination No. 168 - Explanatory Statement
1 Name of Determination
This determination is the Superannuation Act 1976 (Interest) Determination No. 168.
2 Purpose and operation of instrument
Section 154A of the Superannuation Act 1976 provides that where, under any provision of this Act, interest is payable in respect of an amount, the interest must be calculated, and is payable, in accordance with a determination made by the CSS Board.
3 Principal Instrument
The principal instrument means the determination, as amended, in force by virtue of paragraph 154A(4)(b) of the Superannuation Act 1976. The principal instrument has been amended by consecutively numbered determinations.
4 Investment strategy choice
There are currently two different investment strategies available for the Commonwealth Superannuation Scheme (CSS): the Default Fund investment strategy or, since 1 December 2004, the Cash Option investment strategy for those people who switch to this investment strategy.
The current Default Fund daily compounding interest rate is set out in Schedule 2 to the principal instrument.
The current Cash Option daily compounding interest rate is set out in Schedule 3 to the principal instrument.
5 Interest rate determinations apply from the date specified
This determination amends Schedule 2 to the principal instrument by inserting a new Default Fund interest rate to apply from the date specified.
This determination amends Schedule 3 to the principal instrument by inserting a new Cash Option interest rate to apply from the date specified.
Overview
The Superannuation Act 1976 (Interest) Determination No. 168 was enacted to provide a framework for calculating interest payable under the Superannuation Act 1976, as mandated by section 154A of the Act. This legislative instrument, issued by the CSS Board, serves to ensure that any interest payable in relation to superannuation funds is calculated and disbursed according to the prescribed rates. The determination is designed to update the interest rates applicable to the Commonwealth Superannuation Scheme (CSS), specifically for the Default Fund and the Cash Option, which cater to different investment preferences within the scheme. The principal instrument, which has been amended by consecutively numbered determinations, sets out these interest rates, ensuring they are applied consistently and transparently. The policy objective is to maintain the integrity and value of superannuation funds by providing clear guidelines on interest calculation.
Scope and Application
The Superannuation Act 1976 (Interest) Determination No. 168 applies to the calculation of interest payable under the Superannuation Act 1976, specifically for the Commonwealth Superannuation Scheme (CSS). The interest rates for the Default Fund and the Cash Option are set out in Schedules 2 and 3 of this determination, respectively, and are subject to amendment by the CSS Board. The interest rates apply to the benefit payments of individuals who are members of the CSS, including both active members and retirees, and are calculated based on the daily compounding interest rate specified in the determination. The determination has a national jurisdictional reach as it applies to the CSS, which is a federal scheme. There are no stated exclusions, exemptions, or thresholds within the determination itself; however, the application of the Superannuation Act 1976 may include various exclusions and exemptions. The determination extends the application of the principal instrument by specifying the interest rates applicable to the CSS investment strategies.
Key Provisions
The Superannuation Act 1976 (Interest) Determination No. 168 (hereafter referred to as the Determination) outlines specific provisions regarding the interest rates applicable to the Commonwealth Superannuation Scheme (CSS). This Determination is issued under the authority of Section 154A of the Superannuation Act 1976, which mandates that any interest payable under the Act must be calculated in accordance with a determination made by the CSS Board. This ensures that interest rates are set transparently and in a manner consistent with the legislative framework governing superannuation.
The Determination sets out the current investment strategies available under the CSS, namely the Default Fund and the Cash Option. The Default Fund operates under a daily compounding interest rate detailed in Schedule 2 of the principal instrument, while the Cash Option, introduced on 1 December 2004, follows a different daily compounding interest rate specified in Schedule 3 of the principal instrument. These schedules are subject to amendment, with changes taking effect from specified dates as outlined in the Determination.
Entities and parties governed by the Superannuation Act 1976 must adhere to the interest rates specified in this Determination. This includes trustees of superannuation funds, employers contributing to the CSS, and employees whose superannuation benefits are governed by the Act. They must ensure that interest on amounts payable under the CSS is calculated according to the rates detailed in the Determination. This requirement applies to all superannuation funds within the Commonwealth Superannuation Scheme, ensuring uniformity and compliance with the legislative framework.
Failure to comply with the interest rate provisions stipulated in the Determination may result in civil or criminal consequences. While the Determination itself does not explicitly state penalties, breaches of the Superannuation Act 1976 can attract significant penalties under the broader Act. These may include fines and other sanctions for non-compliance, with the severity of penalties depending on the nature and extent of the breach. The Determination, by setting clear and specific interest rates, aims to mitigate potential disputes and ensure that all parties are held to the same standard of compliance.