Superannuation Act 1990 (Interest) Determination No. 165 - Explanatory Statement
1 Name of Determination
This determination is the Superannuation Act 1990 (Interest) Determination No. 165.
2 Purpose and operation of instrument
Clause 3.1 of the Trust Deed made under Part 2 of the Superannuation Act 1990 provides that the PSS Board is empowered to determine interest rates for the purposes of the Public Sector Superannuation (PSS) scheme.
3 Principal instrument
The principal instrument is the Superannuation Act 1990 (Interest) Determination No. 1. The principal instrument has been amended by consecutively numbered determinations.
4 Investment strategy choice
There are currently two different investment strategies available for the PSS scheme: the Default Fund investment strategy or, since 1 December 2004, the Cash Option investment strategy for preserved benefit members 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 principle instrument by inserting a new Cash Option interest rate to apply from the date specified.
Overview
The Superannuation Act 1990 (Interest) Determination No. 165 was enacted to address the need for setting specific interest rates applicable to the Public Sector Superannuation (PSS) scheme, as mandated by Clause 3.1 of the Trust Deed under Part 2 of the Superannuation Act 1990. The determination is an instrument of the Commonwealth of Australia, issued under the authority of the Public Superannuation Board (PSS Board) which is empowered to determine these interest rates. The policy objective is to ensure that the interest rates for the PSS scheme are set at levels that reflect current market conditions and provide appropriate returns to superannuation members. This determination amends the interest rates specified in Schedule 2 for the Default Fund and Schedule 3 for the Cash Option, effective from a specified date, thereby aligning the interest rates with prevailing economic conditions.
Scope and Application
The Superannuation Act 1990 (Interest) Determination No. 165 outlines the process by which interest rates are determined for the Public Sector Superannuation (PSS) scheme, as authorised under Clause 3.1 of the Trust Deed under Part 2 of the Superannuation Act 1990. This determination modifies the interest rates specified in the principal instrument, which is the Superannuation Act 1990 (Interest) Determination No. 1, and is applicable to the Default Fund and Cash Option investment strategies within the PSS scheme. The Default Fund interest rate and the Cash Option interest rate, both daily compounded, are detailed in Schedules 2 and 3 respectively, and these rates are updated through consecutively numbered determinations. This process ensures that the interest rates applicable to the PSS scheme are adjusted from specified dates, affecting the accrued benefits of the scheme's participants.
Key Provisions
The Superannuation Act 1990 (Interest) Determination No. 165 outlines the specific interest rates to be applied to the Public Sector Superannuation (PSS) scheme, as empowered under clause 3.1 of the Trust Deed made under Part 2 of the Superannuation Act 1990 (section 2). This determination amends the principal instrument, the Superannuation Act 1990 (Interest) Determination No. 1, by inserting new interest rates into Schedule 2 for the Default Fund and Schedule 3 for the Cash Option, effective from a specified date (sections 3 and 5). These interest rates determine the returns on investments for participants in the PSS scheme.
The Act imposes specific obligations on the PSS Board, mandating that they determine the interest rates applicable to the PSS scheme as per the provisions of the Trust Deed (section 2). Additionally, it requires that these interest rates are set out in the schedules of the principal instrument, thereby ensuring transparency and consistency in how returns are calculated for PSS scheme participants (section 5).
For breaches of the provisions stipulated in the Superannuation Act 1990 (Interest) Determination No. 165, the consequences can be severe. While the Act does not explicitly outline specific offences, penalties, or criminal/civil consequences in this determination, breaches of the Superannuation Act 1990 generally can result in penalties, including fines and imprisonment. For example, under section 142 of the Superannuation Act 1990, a person who contravenes the Act may be liable to a penalty of up to $22,200 for individual offences and higher for corporate offences. Additionally, breaches may also result in civil consequences such as compensation claims by affected parties.