EXPLANATORY STATEMENT
Issued by authority of the Minister for Finance
Superannuation Act 1990
Superannuation Amendment (PSS Trust Deed) Instrument 2026 (No. 1)
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 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 amendments in most circumstances.
Amendment Instrument
The Minister for Finance has amended the Trust Deed by signed instrument titled the Superannuation Amendment (PSS Trust Deed) Instrument 2026 (No. 1) (the Amendment Instrument).
The purpose of the Amendment Instrument is to make minor and technical amendments to the PSS Rules, including to remove a redundant provision and correct drafting errors. The Amendment Instrument also makes minor amendments consequential to the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024 and the Treasury Laws Amendment (Payday Superannuation) Act 2025, including changes to rules governing the transfer of amounts to the PSS scheme and to definitions. In addition, the Amendment Instrument makes minor amendments consequential to the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026.
Details of the Amendment Instrument are at Attachment A.
CSC Approval
Section 5 of the Superannuation Act 1990 requires CSC to consent to amendments proposed by the Minister in most circumstances. CSC has consented to the amendments contained in the Amendment Instrument.
Legislation Act 2003
The Amendment Instrument is a legislative instrument. The amendments to the Rules are subject to disallowance in accordance with section 45 of the Superannuation Act 1990.
The Amendment Instrument and the principal instrument that it amends 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. The Trust Deed is intended to operate on an enduring basis because the superannuation entitlements provided by the PSS accrue during Commonwealth employment and are paid throughout retirement. It is important that members’ superannuation entitlements are not exposed to uncertainty. Once the Amendment Instrument has been made it will be automatically repealed under section 48A of the Legislation Act 2003.
Consultation
Section 17 of the Legislation Act 2003 specifies that rule makers should consult before making legislative instruments. CSC, the trustee of the PSS, was consulted on the amendments contained in the Amendment Instrument and advised they have no concerns.
Commencement
Sections 1 to 4 and Parts 1 and 2 of Schedule 1 of the Amendment Instrument come into effect on the day after registration on the Federal Register of Legislation (FRL).
Part 3 of Schedule 1 comes into effect on the later of the same time as the Treasury Laws Amendment (Payday Superannuation) Act 2025 commences and the day after the Amendment Instrument is registered on FRL.
Part 4 of Schedule 1 comes into effect on the later of 1 July 2026 and the day after the Amendment Instrument is registered on FRL.
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 2026 (No. 1).
Commencement
2 Section 2 sets out the commencement provisions in the Amendment Instrument.
- Item 1of the table in subsection 2(1) provides that sections 1 to 4 and anything in the Amendment Instrument not covered elsewhere by the table commences on the day after the instrument is registered on the Federal Register of Legislation (FRL);
- Item 2 of the table provides that Parts 1 and 2 of Schedule 1 commence on the day after the instrument is registered on FRL;
- Item 3 of the table provides that Part 3 of Schedule 1 commences on the later of the same time as the Treasury Laws Amendment (Payday Superannuation) Act 2025 commences and the day after the instrument is registered on FRL; and
- Item 4 of the tables provides that Part 4 of Schedule 1 commences on the later of 1 July 2026 and the day after the Amendment Instrument is registered on FRL.
3. The note at the end of the table clarifies that the table relates only to the provisions of the Amendment Instrument as originally made and will not be amended to deal with any later amendments of the instrument. Subsection 2(2) provides that the information in column 3 of the table is not part of the Amendment Instrument.
Authority
4. Section 3 identifies the authority for the instrument as subsection 5(1) of the Superannuation Act 1990.
Schedules
5. Section 4 provides that each instrument that is specified in a Schedule to the Amendment Instrument is amended or repealed as set out in the applicable items in the Schedule, and any other item in the Schedule to the instrument has effect according to its terms.
Schedule 1 – Amendments of the PSS Trust Deed Rules
Part 1 – Minor and Technical Amendments
6. Rule 4.2.1 of the PSS Trust Deed broadly sets out circumstances when a member must pay contributions during continuous periods of leave without pay exceeding 12 weeks. Item 1 amends paragraph 4.2.1(f) by replacing the semi-colon at the end of the paragraph with a full stop. The amendment is consequential to item 2, which repeals paragraph 4.2.1(g), making paragraph (f) the final paragraph in the rule.
7. Item 2 repeals paragraph 4.2.1(g). This paragraph broadly enabled the Minister and CSC to agree that a period of leave of absence without pay exceeding 12 weeks could be treated as an excluded period of leave of absence. Where such an agreement was made, the member was required to continue making contributions during the leave of absence, thereby maintaining accrual of benefits in the PSS. The provision is no longer required. Since 2003, Rule 4.1.1 has enabled a member’s usual employer (or the Secretary if they are employed in a department) to continue to pay contributions in respect of a member who is on a continuous leave of absence exceeding 12 weeks that is not an excluded period of leave of absence. In these circumstances, the member must continue paying contributions and they continue to accrue benefits throughout the period of leave.
8. Rules 17.1.1 to 17.1.9 deal with the release of benefits to meet a deferred tax liability under Division 293 of the Income Tax Assessment Act 1997. Item 3 replaces Rule 17.1.1, which provides for the release of benefits under a release authority, with an updated rule that is operationally the same but clarifies that Subdivision 135-B, referenced in the rule, is contained in Schedule 1 to the Taxation Administration Act 1953. For simplification, the revised rule omits bracketed text describing the matters dealt with by Rule 17.1.2, which is referenced in the rule.
9. Item 4 inserts a new note at the end of Rule 17.1.2, which requires a person who gives CSC a release authority to meet a deferred Division 293 tax liability to make an election specifying which of their lump sum benefit and/or pension benefit is to be reduced to reflect the release authority paid in compliance with the release authority. The note advises, for the benefit of readers, that an election to reduce a pension benefit to reflect a release authority lump sum is, in effect, an election to commute the relevant part of that pension benefit.
10. Item 5 replaces the heading before Rule 17.1.6 with a new heading “Calculation of benefits after payment of release authority lump sum”. The revised heading more accurately describes the matters dealt with by Rules 17.1.6 to 17.1.9.
11. Item 6 makes a minor correction to the definition of “Conversion Factor” in Rule 17.1.7 by replacing the capital “F” in the initial reference to the term with a lower case “f”. This is consistent with the way the term is represented in the formula in Rule 17.1.7.
12. Item 7 replaces the definition of “Pre-Reduction Rate” in Rule 17.1.7 with a revised definition of the term that amends the initial reference to the term by replacing the capital “R” in “Reduction” and “Rate” with a lower case “r”, to accord with the way the term is represented in the formula in Rule 17.1.7. The revised definition also corrects a drafting error by replacing a reference to “this section” with a reference to “Rules 17.1.6 to 17.1.9”.
13. Item 8 replaces the definition of the term “Reduced release authority lump sum” in Rule 17.1.7, which relates only to the calculation of reduced pensions, with an updated definition that, among other things, corrects a drafting error by replacing a reference to “this section” with a reference to “Rule 17.1.6”. The updated definition also clarifies that the reduced release authority lump sum used in the calculation is the amount of the release authority lump sum reduced by the total of the reductions made to a lump sum benefit (not a pension benefit) under a previous application of Rule 17.1.6. The changes ensure that the calculation reflects the intended operation of the relevant rules.
14. Item 9 inserts a new note at the end of Rule 17.1.7 advising the reader that a reduction in the annual rate of pension under the rule is permanent.
Part 2 – Amendments consequential to the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024
15. Part 2 of Schedule 1 makes amendments to the Rules consequential to the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024. The Act amended, among other legislation, the Paid Parental Leave Act 2010, to provide government-funded Paid Parental Leave superannuation contributions.
16. Item 10 replaces Rule 11.1.1, which enables members to transfer certain amounts into the PSS scheme as a transfer amount, with an updated rule that expands the kinds of amounts that may be transferred under the rule. Specifically, the updated rule includes new paragraph (e) which allows an amount payable for the person in accordance with Chapter 3A of the Paid Parental Leave Act 2010 (i.e. Paid Parental Leave superannuation contributions) to be transferred to the PSS scheme and makes stylistic word changes.
17. Item 11 repeals Rule 11.1.1A, which governs the amounts that preserved benefit members may transfer to the PSS scheme as a transfer amount, and substitutes an updated rule. Consistent with changes made by item 10, the new rule expands the amounts that may be transferred under Rule 11.1.1A to include an amount payable for the person under Chapter 3A of the Paid Parental Leave Act 2010 where the amount – whether in full or in part - relates to a period where the person was a PSS member and makes stylistic word changes.
Part 3 – Amendments consequential to the Treasury Laws Amendment (Payday Superannuation) Act 2025
18. Part 3 of Schedule 1 makes amendments to the Rules consequential to the Treasury Laws Amendment (Payday Superannuation) Act 2025. The Act is part of a package of legislation that is intended to create a strong incentive for employers to make superannuation contributions for their employees at the same time as they pay their employees’ qualifying earnings (that is, on a qualifying earnings day (QE day)).
19. Rule 1.2.1 defines words and phrases that have a special meaning in the Rules. Item 12 inserts a new definition of the term “QE day” in the rule, after the existing definition of “PSS scheme”. QE day is defined as having the same meaning as in the Superannuation Guarantee (Administration) Act 1992.
20. Item 13 repeals the definition of “superannuation guarantee additional amount” in Rule 1.2.1, and substitutes an updated definition. The updated definition incorporates new terminology – for example “individual base superannuation guarantee shortfall” and “QE day” – to align with the amended superannuation guarantee framework that will apply from 1 July 2026.
Part 4 – Amendments consequential to the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026
21. Part 4 of Schedule 1 makes amendments to Part 17 of the Rules, dealing with the release of benefits to pay a deferred tax liability. The amendments are consequential to the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026. This Act and the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Imposition Act 2026 reduces tax concessions for people with total superannuation balances over $3 million via a new tax known as the Division 296 tax. For defined benefit interests that are not in the retirement phase, Division 296 tax liabilities may be deferred until retirement, with interest. The amendments in Part 4 of Schedule 1 update rules in Part 17 to provide for the release of benefits to pay a Division 296 tax liability.
22. Item 14 amends the definition of “release authority” in Rule 1.2.1, as it applies to Part 17 (which deals with release of benefits to pay deferred tax liabilities). The amendment expands the definition to include a release authority issued by the Commissioner of Taxation under item 4 of the table in subsection 135-10(1) of Schedule 1 to the Taxation Administration Act 1953. Item 4 of the table, provided for by the Bill, requires the Commissioner to issue a release authority to a person who becomes liable to pay a Division 296 debt account discharge liability for a superannuation interest.
23. Item 15 replaces the note following Rule 17.1.1 (dealing with the release of benefits under a release authority), with an updated note that adds a reference to a release authority to meet a debt under proposed new Subdivision 134-C of the Taxation Administration Act 1953, which makes the payment of Division 296 tax compulsory when a superannuation benefit becomes payable from a superannuation interest. The updated note also explains the updated meaning of release authority for the purposes of Part 17, as provided for by item 14.
24. Item 16 repeals the definition of “Reduced release authority lump sum” in Rule 17.1.7, which sets out the formula for calculating a person’s reduced annual rate of pension if they elect to commute a portion of their pension to pay a release authority lump sum. The item substitutes an updated definition designed to cater for potential scenarios arising from the introduction of Division 296 tax, whereby multiple release authority lump sums may be paid under different release authorities issued to the same person. Specifically, paragraph (b) of the updated definition provides that if more than one release authority lump sum is paid, the term “reduced release authority lump sum” refers to the total of those lump sums, reduced by any prior reductions applied under Rule 17.1.6 to a lump sum benefit before the last payment is made. This ensures that the calculation of a person’s reduced annual pension rate reflects all relevant pension commutations, including those to pay deferred Division 293 and Division 296 tax debts. Prior reductions to lump sum benefits under Rule 17.1.6 are excluded because they are not relevant to a person’s pension benefit.
25. Item 17 repeals the note at the end of Rule 17.1.7 (inserted by item 9 of Schedule 1) and replaces it with two new notes. The first note, which explains that a reduction in the annual rate of pension at the end of Rule 17.1.7 is permanent, is identical to the repealed note. The second note provides an example to illustrate the meaning of the terms “pre-reduction rate” (of pension) and “reduced release authority lump sum” in Rule 17.1.7 in a scenario where two release authorities are issued to a PSS member. The example is provided to assist readers in understanding how the calculation in Rule 17.1.7 operates when multiple release authorities apply.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation Amendment (PSS Trust Deed) Instrument 2026 (No. 1)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Overview of the Legislative Instrument
The Minister for Finance has amended the Public Sector Superannuation Scheme Trust Deed (PSS Trust Deed) by signed instrument titled the Superannuation Amendment (PSS Trust Deed) Instrument 2026 (No. 1).
The purpose of the Legislative Instrument is to make minor and technical amendments to the PSS Rules, including to remove a redundant provision and correct drafting errors. The Legislative Instrument also makes minor amendments consequential to the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Act 2024 and the Treasury Laws Amendment (Payday Superannuation) Act 2025, including changes to rules governing the transfer of amounts to the PSS scheme and to definitions. In addition, the Legislative Instrument makes minor amendments consequential to the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026.
Human Rights Implications
The Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
The Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Senator the Hon Katy Gallagher, Minister for Finance