EXPLANATORY STATEMENT

Issued by authority of the Minister for Finance

Superannuation Act 1990

Superannuation Amendment (PSS Trust Deed) Instrument 2024 to amend the Public Sector Superannuation Trust Deed and Rules pursuant to section 5 of the Superannuation Act 1990.

On 21 June 1990 the Minister for Finance, for and on behalf of the Commonwealth, made a deed (the Trust Deed) under section 4 of the Superannuation Act 1990 (the 1990 Act) to, among other things, establish a superannuation scheme, to be known as the Public Sector Superannuation Scheme (PSS), and the PSS Fund from 1 July 1990. The Schedule to the Trust Deed includes Rules for the administration of the PSS (the Rules).

The PSS was established to provide benefits for certain Commonwealth employees and certain other people. Commonwealth Superannuation Corporation (CSC) is the trustee of the PSS.

Section 5 of the 1990 Act provides that the Minister may amend the Trust Deed by signed instrument, subject to obtaining the consent of CSC to the amendment where necessary.

Amendment Instrument

The Minister for Finance has amended the Trust Deed by signed instrument titled the Superannuation Amendment (PSS Trust Deed) Instrument 2024 (the Amendment Instrument).

The purpose of the Amendment Instrument is to make minor and technical amendments as part of the maintenance of the PSS Trust Deed by, among other things, updating several references to superseded rules.

Details of the Amendment Instrument are at Attachment A.

CSC Approval

Section 5 of the 1990 Act requires CSC to consent to the amendments proposed by the Minister in most circumstances. CSC has consented to the amendments in the Amendment Instrument.

Legislation Act 2003

The Amendment Instrument is a legislative instrument. The Amendment Instrument is subject to disallowance in accordance with section 45 of the 1990 Act.

The Amendment Instrument and the instrument that it amends, being the PSS Trust Deed, are not subject to sunsetting because section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015, specifies, via item 6 of the table in that section, “an instrument (other than a regulation) relating to superannuation” to be a class of legislative instrument that is not subject to sunsetting under Part 4 of Chapter 3 of the Legislation Act 2003. The exemption was put in place because it was considered that sunsetting of instruments relating to superannuation could cause commercial uncertainty, as well as uncertainty for superannuation fund members and providers. These instruments are intended to have enduring operation and it would not be appropriate to subject them to sunsetting.

Consultation

Section 17 of the Legislation Act 2003 specifies that rule-makers should consult before making legislative instruments. CSC has been consulted on the amendments contained in the Amendment Instrument.

The Office of Impact Analysis (OIA) was consulted (OIA Reference Number OIA24-06384). An Impact Analysis was not prepared, as the instrument will not have a more than minor impact.

Commencement

Section 2 sets out the commencement provision for the Amendment Instrument. The whole of the Amendment Instrument commences on the latest of the day after the registration on the Federal Register of Legislation of the Amendment Instrument, the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 and the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024.

The Amendment Instrument does not commence unless both the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 and the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024 are registered.

Statement of Compatibility with Human Rights

A Statement of Compatibility with Human Rights is at Attachment B.

ATTACHMENT A

DETAILS OF THE AMENDMENT INSTRUMENT

Name

1.                    Section 1 provides that the name of the instrument is the Superannuation Amendment (PSS Trust Deed) Instrument 2024 (the Amendment Instrument).

Commencement

2.                      Section 2 sets out the commencement provision for the Amendment Instrument. Item 1 of the table in subsection 2(1) provides that the whole of the Amendment Instrument commences on the latest of day after the registration on the Federal Register of Legislation of the Amendment Instrument, the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 and the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024.

3.                      The Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 makes amendments similar to those made by the Amendment Instrument to the PSS Trust Deed, to the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003. The Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024 makes related amendments to the information the trustee must provide about PSS interests to ensure parties have the information necessary to accurately value superannuation interests using methods contained in the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003.

4.                      Item 1 of the table in subsection 2(1) also provides that the provisions of the Amendment Instrument do not commence at all unless both the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Amendment (PSS Scheme—Preserved Benefit Members) Approval 2024 and the Family Law (Superannuation) (Provision of Information — Public Sector Superannuation Scheme) Amendment Determination 2024 are registered. This ensures that the substantive instruments relating to the calculation of PSS interest values remain consistent.

5.                       Subsection 2(2) provides that any information in column 3 of the table in subsection 2(1) is not part of the Amendment Instrument.

Authority

6.                      Section 3 identifies the authority for the instrument as section 5 of the Superannuation Act 1990 (1990 Act).

Schedules

7.                      Section 4 provides that each instrument specified in a Schedule to the Amendment Instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the Amendment Instrument has effect according to its terms.

Schedule 1 - Amendments

8.                       Division 3 of Part 8 of the Rules prescribes when a preserved benefit member can obtain early access to part of their preserved superannuation benefit. Rule 8.3.1 allows a preserved benefit member who changes employers or ceases employment to choose to be paid a lump sum of the part of his or her benefit that the Superannuation Industry (Supervision) Act 1993 permits to be paid in cash and does not exceed his or her accumulated member contributions, and have the balance of their preserved benefit remain in the PSS. Rule 8.3.1 includes bracketed text referring the reader to another rule that provides for full release in certain circumstances. Item 1 of the Schedule updates the bracketed text to correctly refer to that rule as Rule 8.1.1.

9.                       Division 2 of Part 9 of the Rules prescribes rules for calculating retirement and preserved benefit pensions. Rule 9.2.7 sets out the formula for calculating the annual pension payable to a preserved benefit member. The formula includes the term Preserved Amount, which the rule defines as the amount of the preserved benefit which a preserved benefit member chooses to convert to pension under Rule 8.2.1. Item 2 of the Schedule replaces the reference to Rule 8.2.1 in the definition of Preserved Amount with a reference to Rule 8.2.1A or 8.2.1B, as the option for preserved benefit members to take all or part of their preserved benefit as a pension in certain circumstances is now set down in these two provisions.

10.                   Part 16 of the Rules deals with family law superannuation splitting. Rule 16.8.2 sets out the method for calculating, for this purpose, the scheme value of the benefits of preserved benefit members who have the option of taking all or part of their benefit as a pension. Item 3 of the Schedule amends the heading before Rule 16.8.2, which identifies the cohort for whom the rule is relevant by reference to paragraph 8.2.1(A), which previously provided preserved benefit members with the option to take all or part of their benefit as a pension in certain circumstances, to replace the reference to this superseded paragraph with its current equivalents, being Rule 8.2.1A or paragraph 8.2.1B(a). Item 4 of the Schedule makes similar amendments to those made by Item 3, to the text of Rule 16.8.2.

11.                   Rule 16.8.3 sets out the method for calculating, for the purpose of family law superannuation splitting, the scheme value of the benefits of preserved benefit members who do not have the option of taking all or part of their benefit as a pension. Item 5 of the Schedule amends the heading before Rule 16.8.3, which identifies the cohort for whom the rule is relevant as preserved benefit members not eligible for a benefit under paragraph 8.2.1(A), to replace the reference to superseded paragraph 8.2.1(A) with a reference to its current equivalents, being Rule 8.2.1A or paragraph 8.2.1B(a). Item 6 of the Schedule makes similar amendments to those made by Item 5, to the text of Rule 16.8.3.

        ATTACHMENT B