EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO 178
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
The Superannuation Act 1976 (the Act) provides for the current superannuation scheme for Commonwealth employees. Persons eligible to contribute under the Act are referred to in the Act as “eligible employees”.
The Superannuation Act 1990 provides for a new superannuation scheme for Commonwealth employees which is to come into operation on 1 July 1990. Eligible employees are to have the option, to be exercised during the period of 12 months from 1 July 1990, of remaining members of the current scheme or of transferring to the new scheme. The current scheme will continue in operation under the Act to accommodate those who opt to remain eligible employees and the limited number of persons who will be able to become eligible employees.
Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all 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.
Subsection 3(1) of the Act defines to the term “eligible employee”. Certain persons may be excluded by regulation from becoming, or remaining, eligible employees. The persons so excluded are prescribed in the Superannuation (Eligible Employees) Regulations (the Regulations).
Paragraphs 4(a), 4(aa) and 4(o) of the Regulations exclude from becoming, or remaining, eligible employees certain persons who are members of other superannuation schemes applicable to their employment. The term “superannuation scheme” is defined in regulation 3 of the Regulations.
It is not appropriate that paragraphs 4(a), 4(aa) and 4(o) apply so that a person who is to receive his or her 3% productivity superannuation benefit otherwise than under the Act be excluded from becoming, or remaining, an eligible employee. Regulation 2 will amend the definition of “superannuation scheme” in regulation 3 to exclude from the meaning of the term a scheme, or part of a scheme, that has been established solely to provide the productivity benefit.
In accordance with section 51 of the Act, a person who is on leave without pay for a period in excess of 12 weeks remains an eligible employee but, unless the Minister for Finance otherwise directs, is neither required nor permitted to contribute during the period of the leave. As paragraphs 4(aa) and 4(o) of the Regulations presently operate, such a person who is employed and a member of a superannuation scheme applicable to the employment is excluded from remaining an eligible employee. This is not appropriate and regulation 3 will amend paragraphs 4(aa) and 4(o) so that they will not apply in such circumstances.
The amendments will come into operation on 1 July 1990.
Overview
The Superannuation (Eligible Employees) Regulations (Amendment) was enacted as Statutory Rules 1990 No 178 issued by the authority of the Minister for Finance under the Superannuation Act 1976. The regulation addresses a gap in the existing superannuation scheme for Commonwealth employees, specifically concerning the eligibility of employees who are members of other superannuation schemes or who are on leave without pay for more than 12 weeks. The policy objective of the amendment is to ensure that employees who are to receive their 3% productivity superannuation benefit under schemes established solely for that purpose are not excluded from becoming or remaining eligible employees. Furthermore, it seeks to rectify the inappropriate exclusion of employees on leave without pay for over 12 weeks from remaining eligible employees if they are members of other applicable superannuation schemes. These amendments were designed to come into operation on 1 July 1990 to align with the new superannuation scheme introduced by the Superannuation Act 1990.
Scope and Application
The Superannuation Act 1976, as amended by the Superannuation (Eligible Employees) Regulations (Amendment), governs the superannuation scheme for Commonwealth employees, providing a framework for contributions and benefits applicable to eligible employees. These employees are individuals who are eligible to contribute under the Act and can choose to remain in the current superannuation scheme or transfer to a new scheme introduced by the Superannuation Act 1990. The Act’s jurisdiction is Commonwealth-wide, affecting all employees within the federal public service who meet the eligibility criteria. The eligibility criteria include specific exclusions, such as employees who are members of other superannuation schemes applicable to their employment, as defined in the Superannuation (Eligible Employees) Regulations. The amendments to these regulations, particularly those concerning the definition of "superannuation scheme" and the exclusion of certain schemes established solely to provide productivity benefits, ensure that eligible employees on extended leave without pay are not unfairly excluded from remaining eligible employees. The regulations also allow for further specification and implementation through subordinate instruments, ensuring the Act's provisions are effectively carried out.
Key Provisions
The Superannuation Act 1976 provides the framework for the superannuation scheme applicable to Commonwealth employees, with Section 168 allowing the Governor-General to make regulations necessary for the operation of the Act. The Superannuation (Eligible Employees) Regulations (the Regulations) further define who qualifies as an "eligible employee" under the Act, including provisions to exclude certain individuals from eligibility based on their membership in other superannuation schemes (Regulations 4(a), 4(aa), and 4(o)). These exclusions are designed to avoid duplication of benefits, ensuring that individuals are not enrolled in multiple schemes simultaneously.
The Regulations also include provisions to ensure that employees who are on leave without pay for more than 12 weeks remain eligible to participate in the superannuation scheme, although they are not required to make contributions during their leave (Section 51). However, current regulations inadvertently exclude employees who are members of other applicable superannuation schemes while on leave, which is deemed inappropriate. Consequently, Regulations 2 and 3 will amend the definition of "superannuation scheme" to exclude schemes established solely for the purpose of providing productivity benefits, and will modify Regulations 4(aa) and 4(o) to ensure that employees on leave without pay are not erroneously excluded from the scheme.
Entities and individuals governed by the Act must comply with the updated Regulations to ensure that eligible employees are correctly identified and that their superannuation entitlements are managed appropriately. This includes ensuring that employees who are on leave without pay for more than 12 weeks are not excluded from the scheme and that those who receive productivity benefits through schemes not established under the Act are not disqualified from being eligible employees.
Failure to comply with the Act and the Regulations can result in legal consequences. Although the explanatory statement does not specify particular offences or penalties, breaches of superannuation laws can generally lead to civil or criminal penalties under the Superannuation Industry (Supervision) Act 1993. These penalties can include fines and imprisonment for criminal offences, as well as compensation and pecuniary penalties for civil breaches. The exact penalties would depend on the nature and severity of the breach, as outlined in the relevant sections of the Superannuation Industry (Supervision) Act 1993.