Superannuation (CSS) Former Eligible Employees Regulations (Amendment) 1997 No. 327
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 327
Issued by the authority of the Minister for Finance and Administration
Superannuation Act 1976
Superannuation (CSS) Former Eligible Employees Regulations (Amendment)
The Superannuation Act 1976 (the Act) makes provision for, and in relation to, an occupational superannuation scheme for certain Commonwealth employees and other persons.
Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
Persons eligible to contribute under the Act are referred to as "eligible employees". The term "eligible employee" is defined under subsection 3(1) of the Act.
Section 126A of the Act provides that regulations may modify the Act in its application to, or in respect of, a person who ceases to be an eligible employee and who, immediately after ceasing, becomes a member of another superannuation scheme. Regulations for the purposes of Section 126A of the Act are contained in the Superannuation (CSS) Former Eligible Employees Regulations (the principal Regulations).
The purpose of Regulations 15 and 15A is to provide for modification of the Act as it applies to certain employees affected by privatisation or outsourcing. Regulation 15 of the principal Regulations provides for the Act to be amended in accordance with Schedule 11 of the Regulations in order to provide an additional preservation option referred to as Delayed Updated Pension (DUP). This preservation option is available to members affected by asset sales or outsourcing of Commonwealth owned operations. Section 144H of the Act as amended then provides a methodology for the Consumer Price Index (CPI) update of final salary of those affected in order to calculate this Delayed Updated Pension.
Regulation 15A of the principal Regulations provides for the Act to be amended in accordance with Schedule 11A of the Regulations in order to update final salary by CPI for former employees of nominated facilities retrenched within 3 years of transfer day. Section 61AA of the Act as amended then provides a methodology for the CH update of final salary of those affected from the date of sale or outsourcing to the date of retrenchment.
Paragraphs 144H(1)(b) and 61AA(1)(b) of the Act provide that preserved benefits may fluctuate with CH variations. In circumstances where CPI falls this can result in a fall in the value of benefits. This is inconsistent with other superannuation legislation that ensures preserved benefits are protected from suffering a decrease in value.
pararagraphs 144H(1)(b) and 61AA(1)(b) also provide for salary to be updated from the end of the last quarter to the date that the benefit is paid using an assumed rate of CPI increase equal to that over the last completed quarter. Where the CPI has fallen in the completed quarter prior to the date on which the benefit is paid, the final CPI figure for benefit calculation purposes to be that which has been, published. as at the end of that quarter.
Under the amendments, the relevant adjustments to final salary contained in Schedules 11 and 11A of the-principal Regulations will become the difference between:
* the last published CPI before the member ceases to be an eligible employee; and
* the highest CPI in the published series that commences with the last published CPI before the member ceases to be an eligible employee and finishes. with the last published CPI prior to the date on which the person ceases employment or the date on which the person is retrenched,
where this difference is expressed as a percentage of the last published CPI before the member ceases to be an eligible employee.
There will be no adjustment for, the period -between the end of the quarter immediately preceding commencement of the pension and the pension commencement date.
The amendments will come into effect on 1 January 1998.
Overview
The Superannuation (CSS) Former Eligible Employees Regulations (Amendment) 1997 No. 327, issued under the authority of the Minister for Finance and Administration, amends the existing regulations to address issues arising from privatisation or outsourcing of Commonwealth operations, particularly in relation to the superannuation benefits of affected employees. These regulations update the Superannuation Act 1976 to introduce a new preservation option called the Delayed Updated Pension (DUP) for employees impacted by asset sales or outsourcing. The amendments ensure that the preserved benefits of these employees are protected from decreases in value due to fluctuations in the Consumer Price Index (CPI), aligning with the protections provided under other superannuation legislation. This amendment aims to provide a fair and consistent treatment of preserved benefits for employees who experience changes in their employment status due to privatisation or outsourcing activities.
Scope and Application
The Superannuation (CSS) Former Eligible Employees Regulations (Amendment) 1997 No. 327 applies to the Commonwealth superannuation scheme established under the Superannuation Act 1976. It specifically addresses eligible employees who cease to be members of the scheme due to privatisation or outsourcing of Commonwealth-owned operations. The amendments introduced by this instrument are designed to provide an additional preservation option known as Delayed Updated Pension (DUP), which is available to those affected by such transitions. This legislation amends the principal Superannuation (CSS) Former Eligible Employees Regulations to ensure that the final salary of these former employees is updated by the Consumer Price Index (CPI) in a manner that is consistent with other superannuation legislation, thereby protecting the value of preserved benefits from decreasing. The regulations modify the CPI update methodology to ensure that the benefit calculation is based on the difference between the last published CPI before the member ceases to be an eligible employee and the highest CPI in the published series that commences with the last published CPI before the member ceases to be an eligible employee and finishes with the last published CPI prior to the date on which the person ceases employment or is retrenched.
The jurisdictional reach of this Act is limited to the Commonwealth level, applying to employees affected by changes in the ownership or management of Commonwealth-owned operations. The Act does not specify any exclusions or exemptions, but it does establish certain thresholds for the application of the CPI update methodology. The application of the Act may be further extended or restricted through subordinate instruments such as schedules and further regulations, as detailed in the principal Regulations. The amendments are set to come into effect on 1 January 1998, providing a clear timeline for their implementation.
Key Provisions
The Superannuation (CSS) Former Eligible Employees Regulations (Amendment) 1997 No. 327 (the Regulations) introduces significant changes to the application of the Superannuation Act 1976 (the Act) in relation to former eligible employees, particularly those affected by privatisation or outsourcing. The Regulations primarily modify the Act through Regulation 15 and Regulation 15A. Regulation 15 introduces a new preservation option known as the Delayed Updated Pension (DUP) for employees affected by asset sales or outsourcing of Commonwealth operations (Regulation 15, Schedule 11). This amendment ensures that these employees have a preserved benefit that can be updated according to a specified methodology (Section 144H, amended by Regulation 15). Regulation 15A, on the other hand, updates the final salary of former employees of nominated facilities who were retrenched within three years of the transfer day (Regulation 15A, Schedule 11A). This is achieved through a Consumer Price Index (CPI) update methodology (Section 61AA, amended by Regulation 15A).
The Regulations impose specific obligations on both the Commonwealth and the affected employees. For the Commonwealth, it mandates the provision of a DUP option and ensures that the CPI updates for final salaries are calculated according to the specified methodology (Regulation 15, Schedule 11; Regulation 15A, Schedule 11A). For the employees, the Regulations require them to understand and possibly elect the DUP option if applicable and ensure that their preserved benefits are correctly updated in accordance with the CPI variations (Section 144H and Section 61AA as amended). The Regulations also clarify that preserved benefits may fluctuate with CPI variations, but they provide a mechanism to ensure that these benefits are protected from a decrease in value (Paragraphs 144H(1)(b) and 61AA(1)(b)).
There are no specific offences or penalties mentioned in the Regulations themselves. However, non-compliance with the Act and the Regulations could potentially lead to civil or criminal consequences, depending on the severity of the breach. For instance, under the Superannuation Act 1976, there are provisions for penalties in case of non-compliance, which may include fines and imprisonment, although the exact penalties are not detailed within the explanatory statement of these Regulations. The exact penalties would be governed by the broader provisions of the Superannuation Act 1976 and related Commonwealth legislation. The Regulations come into effect on 1 January 1998, ensuring that the changes are applied uniformly across all affected entities.