EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO 141
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATION
(AMENDMENT)
The Superannuation Act 1976 (the Act) provides for a contributory superannuation scheme for Commonwealth employees and for certain other persons. Persons eligible to contribute under the Act are referred to in the Act as eligible 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, for carrying out or giving effect to the Act.
Section 126A of the Act provides that the regulations may modify the Act, or a provision of the Act specified in the regulations, in relation to a person who ceases to be an eligible employee and immediately becomes a member of another superannuation scheme. Regulations for the purposes of section 126A are contained in the Superannuation (Former Eligible Employees) Regulations.
Where a person who ceases to be an eligible employee elects under section 137 of the Act to preserve his or superannuation rights becomes a member of a superannuation scheme that is an eligible superannuation scheme for the purposes of the Act, a transfer value is payable to that scheme on behalf of the person in exchange for increased benefits under the scheme. The person is not entitled to any benefits under the Act apart from the transfer value.
The amount of the transfer value is calculated in accordance with section 135 of the Act. Generally, it is the sum of 3.5 times the amount of the person’s accumulated basic contributions and the amount of the person’s accumulated supplementary contributions (if any).
Persons employed by, or the holders of statutory offices with, the Australian Postal Corporation and the Australian Telecommunications Corporation are eligible employees for the purposes of the Act. The Corporations will be establishing separate superannuation schemes for their employees and office-holders with effect from 1 July 1990. Corporation employees and statutory office-holders who are eligible employees on 30 June 1990 are to have the option of-
(a) remaining eligible employees for the purposes of the Act; or
(b) ceasing to be eligible employees and becoming members of the relevant Corporation scheme.
Those who elect to transfer to a Corporation scheme will do so during the period 1 July 1990 to 28 February 1991.
It is intended that arrangements like the transfer value arrangements apply in relation to the transferees except that payment of the transfer values to the Corporation schemes will not be in the form of immediate cash payments. The transferees will not be entitled to any benefits under the Act apart from the transfer values payable to the Corporation schemes.
Payment of the employee components of the transfer values (which comprise the amounts of the transferees’ contributions under the Act accumulated with interest) will be effected by the transfer from the Superannuation Fund to the administrators of the Corporation schemes of assets representing those accumulated contributions. In this regard, eligible employees’ contributions are held in the Superannuation Fund which is managed and invested by the Superannuation Fund Investment Trust.
The remainder of the amounts of the transfer values (the employer components) will be paid to the administrators of the Corporation schemes in cash from the Consolidated Revenue Fund over a period. The rate of payment of the employer components will substantially match the rate at which the transferees cease to be employed by, or hold office with, the Corporations and cease to be members of the Corporation schemes. Interest would be paid on the outstanding balances of the employer components.
The transfer of assets and the payments of instalments of employer components will be subject to determinations by the Minister for Finance which will be disallowable instruments.
The proposed Regulations give effect to the intended arrangements.
The Superannuation Legislation Amendment Bill 1990 which recently passed through both Houses of the Parliament inserted a new Part XIII in the Act. This provides arrangements generally for the transfer of eligible employees to superannuation schemes established by Commonwealth authorities and bodies. The proposed Regulations are based on the new Part XIII but have been tailored specifically for the transfers to the Corporation schemes.
Details of the Regulations are set out in the attachment.
The Regulations commence on the date of their gazettal.
ATTACHMENT
SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
Regulation 1
This provides for the insertion of new regulations 8 and 9 to provide that the modifications to the Act specified in Schedule 5, as inserted by regulation 2, will apply in relation to persons to whom section 126A of the Act applies because they have become members of the relevant Corporation scheme and were, immediately before becoming members of the scheme, employed by, or holders of statutory offices with, the particular Corporation.
Regulation 2
This regulation inserts a new schedule - Schedule 5 - in the Regulations to provide for the proposed modification of the Act in relation to the persons referred to in regulation 1.
Schedule 5 will modify the Act by omitting Division 3 of Part IX (sections 131 to 144) which deals generally with the preservation of superannuation rights on ceasing to be an eligible employee. It substitutes a new Division 3 which comprises sections 131 to 135 and deals specifically with the transfers to the Corporation schemes.
The substituted sections are discussed in the paragraphs that follow.
Section 131 - this is an interpretation provision. It defines terms used in the substituted Division 3.
Section 132 - provides that the transferees are not to receive any benefits under the Act in relation to their cessation as eligible employees on becoming members of the Corporation schemes.
Section 133 - provides for the transfer to the administrators of the Corporation schemes of assets and liabilities in relation to the transferees. Paragraph 133(1)(a) provides for the transfer of such assets that are determined by the Minister to fairly and equitably represent the accumulated contributions of the transferees. Paragraph 133(1)(b) provides for the transfer of such liabilities that the Minister determines relates to those assets.
In accordance with subsection 133(2), the transfer of assets and liabilities is to take effect at such times and in respect of such assets as the Minister determines. Subsection 133(3) requires the Superannuation Fund Investment Trust to do all things necessary within its role as manager of the Superannuation Fund to give effect to a determination by the Minister under subsection 133(2).
Subsection 133(4) provides for determinations by the Minister under subsections 133(1) and (2) to be disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.
Section 134 - provides for the payment of the employer component of the transfer values.
Subsection 134(1) requires that, after 28 February 1991, the Commonwealth pay to the administrators of each of the Corporation schemes an amount which is the aggregate of the amounts calculated in respect of each transferee to the particular scheme in accordance with subsection 134(3).
Subsection 134(2) requires that the Commonwealth make interim payments to the administrators of the Corporation schemes in relation to transferees who cease to be members of Corporation schemes before 1 March 1991.
Subsection 134(3) provides for an amount for the purposes of subsection 134(1) for each transferee to be the sum of
(a) 2 1/2 times the amount of the transferee’s accumulated basic contributions on his or her last day of service;
(b) the employer component of any inwards transfer value paid in relation to the transferee on his or her becoming a contributor or eligible employee under the Superannuation Act 1922 or the Superannuation Act 1976 respectively;
(c) an amount in respect of any non-contributory units held by the transferee under the Superannuation Act 1922: and
(d) any interest determined by the Minister in respect of amounts in (a), (b) and (c).
Subsection 134(4) provides for the amount in subsection 134(1) to be paid in such instalments and at such times as are determined by the Minister having regard to any relevant actuarial advice obtained by the Minister and any other matter that he or she considers relevant. In accordance with subsection 134(5) the amounts in subsections 134(1) and (2) are to be paid out of moneys lawfully available for the purpose.
In accordance with subsection 134(6), determinations by the Minister under subsection 134(4) are to be disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901.
Subsection 134(7) will ensure that, for the purposes of paragraph 134(1)(a), interest will be calculated on a transferee’s contributions up to and including his or her last day of membership of the Commonwealth scheme.
Section 135 - provides for the transfer of assets or liabilities under section 133 to be exempt from any Commonwealth, State or Territory charges or taxes except under the Income Tax Assessment Act 1936.