EXPLANATORY STATEMENT
STATUTORY RULES 1983 NO 76
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976 - SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
The Superannuation Act 1976 (the Act) provides a contributory superannuation scheme for Commonwealth employees.
Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters that the Act requires or permits to be prescribed, or that are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
Persons eligible to contribute under the Act are referred to in the Act as “eligible employees”.
Sub-section 3(1) of the Act defines the term “eligible employee”. In accordance with the definition, the term does not include a person included in a prescribed class of persons. Thus, certain classes of employees may be excluded by regulation from becoming contributors. The classes of persons so excluded are prescribed in the Superannuation (Eligible Employees) Regulations.
In certain circumstances, persons who have become employed by the Commonwealth (including a Commonwealth authority or body) are permitted to remain members of the superannuation scheme of a previous employer. In such cases, the Commonwealth reimburses the other employers for the employer superannuation liability that accrues while those persons are in Commonwealth employment. Clearly, it would be appropriate for such persons to be excluded from becoming “eligible employees” but not all are so excluded by the current regulations.
This has not been a problem in the past as the persons concerned have been appointed to positions with the Commonwealth as temporary employees or as the holders of a statutory office for a term of years. Appointees to these positions may become “eligible employees” only if, inter alia, the Commissioner for Superannuation, in the exercise of a discretion given to him under the Act, issues a direction to that effect. Given the existence of the Commissioner’s discretionary power to refuse to issue such a direction, it has not been considered necessary in the past to amend the regulations to exclude these appointees from becoming “eligible employees”.
Were the Commonwealth to employ persons in circumstances similar to those referred to above but on a permanent basis, however, they would automatically come within the definition of “eligible employee” and would therefore be required to contribute under the Act. The Commonwealth would then be in the position of having to meet the accruing employer superannuation liability under two schemes for the one employee; likewise, the employee would be in the position of being required to pay contributions to two schemes simultaneously. This, of course, would be inappropriate.
The amendments to the Superannuation (Eligible Employees) Regulations therefore exclude from becoming “eligible employees” under the Act those persons:
(a) who become employed by the Commonwealth and, as a result of that employment, would be, or would be eligible to become, “eligible employees”;
(b) who remain members of a superannuation or retirement scheme of a previous employer; and
(c) in respect of whom the Commonwealth makes payments to the previous employer in respect of the accruing employer superannuation liability under that other scheme.
These amendments apply to temporary employees and statutory office-holders as well as to permanent employees.
The Statutory Rule also makes two minor drafting amendments to the Superannuation (Eligible Employees) Regulations, one to insert a definition of the term “superannuation scheme” and the other to clarify a reference to the Superannuation Act 1976.
Overview
The Superannuation (Eligible Employees) Regulations (Amendment) Statutory Rules 1983 No 76, issued by the authority of the Minister for Finance, amends the Superannuation Act 1976 to address a gap in the regulation of superannuation contributions for certain Commonwealth employees. This regulation was enacted to prevent the inappropriate double contribution to superannuation schemes when an employee moves from a previous employer to the Commonwealth and remains a member of the previous employer’s superannuation scheme. The problem this regulation seeks to address is the potential for Commonwealth employees to be required to contribute to two superannuation schemes simultaneously, which would be both financially burdensome and administratively complex. The policy objective is to ensure that such employees are appropriately excluded from becoming "eligible employees" under the Act, thereby preventing dual contributions and ensuring the scheme operates efficiently and effectively.
Scope and Application
The Superannuation Act 1976, which establishes a contributory superannuation scheme for Commonwealth employees, is supplemented by the Superannuation (Eligible Employees) Regulations, which specify who qualifies as an “eligible employee” for the purposes of the scheme. The Act applies to eligible employees within the Commonwealth, including authorities and bodies, and its regulations can exclude certain classes of employees from becoming contributors. The recent amendments to these regulations aim to prevent dual contributions by excluding from the scheme those employees who remain members of a superannuation scheme from a previous employer while being employed by the Commonwealth, thereby ensuring that neither the Commonwealth nor the employees are burdened with liabilities under two different superannuation schemes. These amendments apply to temporary and permanent employees alike, and they introduce minor drafting changes to the regulations for clarity. The Act’s scope is thus extended through these subordinate instruments to appropriately manage the superannuation contributions of Commonwealth employees.
Key Provisions
The Superannuation (Eligible Employees) Regulations, as amended by Statutory Rule 1983 No. 76, address the eligibility of certain employees under the Superannuation Act 1976 by excluding specific classes of persons from becoming "eligible employees." Section 3(1) of the Act defines "eligible employee," excluding those prescribed by regulation. The regulations now exclude employees who remain members of a previous employer's superannuation scheme, those who are reimbursed by the Commonwealth for their employer superannuation liability, and those who would otherwise become eligible due to their employment with the Commonwealth. These amendments apply to temporary employees, statutory office-holders, and permanent employees alike.
The regulations impose obligations on the Commonwealth to ensure that employees who remain members of another superannuation scheme or for whom the Commonwealth makes payments to a previous employer for accruing employer superannuation liability do not become "eligible employees." This means that these employees are excluded from the Commonwealth's superannuation scheme, preventing the Commonwealth from incurring dual superannuation liabilities and avoiding the situation where employees contribute to two different schemes simultaneously. The regulations also require that the Commissioner for Superannuation's discretion under the Act be exercised to ensure that temporary employees and statutory office-holders do not become eligible employees unless directed otherwise.
Breach of these regulations can lead to significant consequences. Employees who are erroneously included as "eligible employees" may find themselves required to contribute to both their previous employer's scheme and the Commonwealth's scheme, leading to financial hardship and administrative confusion. Similarly, the Commonwealth may face dual superannuation liabilities, which could result in financial mismanagement and legal challenges. The regulations do not explicitly state penalties for breaches but imply that such breaches could lead to administrative corrections, financial restitution, and potential legal actions under the Superannuation Act 1976.