EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO. 451
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
The Commonwealth Superannuation Scheme (the CSS) established by the Superannuation Act 1976 (the Act) provided the superannuation scheme for Commonwealth employees until 1 July 1990 when the Public Sector Superannuation Scheme, constituted under the Superannuation Act 1990. was introduced.
Persons eligible to contribute under the Act are defined to be eligible employees. The CSS was closed to new entrants on 1 July 1990 but continues to provide benefits for eligible employees.
Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
Section 126A of the Act provides that the regulations may modify the Act in its application to or in respect of a person who ceases to be an eligible employee and who becomes, immediately after ceasing to be an eligible employee, a member of another superannuation scheme. Regulations for the purposes of section 126A of the Act are contained in the Superannuation (Former Eligible Employees) Regulations.
Australian Defence Industries Ltd, and Coselco Mimotopes Pty Ltd, are approved authorities for the purposes of the Act. Certain employees of both companies are eligible employees for the purposes of the Act.
By virtue of prescription in Statutory Rules 1990 No 163 of Approved Authority Exclusion Declaration No. 1 under the Superannuation Act 1990, employees of these companies are not eligible to join the Public Sector Superannuation Scheme. Instead, each company has introduced separate superannuation arrangements for its employees.
Those employees of each company who are eligible employees under the Act are to have the option, to be exercised within twelve months of the date of these regulations, of remaining eligible employees or of transferring to the scheme introduced by the relevant company and ceasing to be eligible employees.
Under existing legislative provisions the transferees would be entitled on their transfer to the relevant company scheme:
to receive, in accordance with section 80 of the Act, immediate payment of a lump sum of their contributions to the CSS accumulated with interest; or.
to elect, under section 137 of the Act, that the preservation of superannuation rights provisions of Division 3 of Part IX of the Act, in the form of deferred benefits, apply to them; or,
in the case of those over age 60 with one year of eligible employment, to receive an age retirement benefit under Division 1 of Part 5 of the Act.
Deferred benefits become applicable under section 139 of the Act where the person is or becomes employed in public employment and a transfer value to another scheme is not payable or, at the time of ceasing to be an eligible employee, the person had completed five years eligible employment for the purposes of the Act. The deferred benefits are then payable on a date selected by the person but not earlier than the date on which the person would have attained the minimum retiring age previously applicable for the purposes of the Act. The benefits are also payable on the person’s earlier death or invalidity.
Transfer values are not applicable in the case of eligible employees transferring to the company schemes.
It is intended that transferees to the company schemes within the period of twelve months of these regulations being made, who have completed one year of eligible employment, be regarded as having made an election for deferred benefits under section 137 of the Act. For these eligible employees, resignation and age retirement benefits will not be available.
The deferred benefits will become payable in the same circumstances that are presently provided for in section 139 of the Act, but subject to the person having ceased employment with the relevant company.
In respect of transferees employed by Australian Defence Industries Ltd it is also intended that the deferred benefits not include CSS productivity superannuation benefits under Part VIA of thev Act. Productivity benefits for ADI employees are provided in separate arrangements.
The proposed Superannuation (Former Eligible Employees) Regulations (Amendment) will modify the provisions of of the Act in relation to the persons concerned to give effect to the above intentions. Details of the proposed amendments are outlined in the Attachment.
The proposed amendments will come into operation on the date of the regulation.
Authority: Section 168 of the Superannuation Act 1976
ATTACHMENT
SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
Regulation 11
This regulation provides that the amendments set out in schedule 7 will apply in respect of CSS member employees of Australian Defence Industries Ltd who have one year of eligible employment and who become members of the scheme(s) introduced by the company within one year of commencement of the regulations.
Regulation 12
This regulation provides that the amendments set out in Schedule 8 will apply in respect of CSS member employees of Coselco Mimotopes Pty Ltd who have one year of eligible employment and who become members of the scheme introduced by the company within one year of commencement of the regulations.
Schedule 7
Paragraphs 1 to 17 inclusive amend section 136 of the Act to clarify that the deferred benefits applicable to transferees to the ADI schemes do not include amounts in respect of productivity superannuation benefits accumulated under Part VIA of the Act (productivity benefits for ADI employees are provided in separate arrangements).
Paragraph 18 amends subsection 139(1) of the Act so that transferees to the ADI schemes to whom the Schedule applies are treated as if they had elected to defer their benefits under section 137 of the Act.
Paragraph 19 amends subparagraph 139(2)(b) of the Act so that deferred benefits will apply in the event of death without the need for transferees to the ADI schemes who have deferred their CSS benefits to have completed five years eligible employment or to be employed in public employment at that time.
Paragraphs 20 and 21 amend subsection 139(2) of the Act to ensure that deferred benefits are not applicable unless the transferee has ceased to be employed by ADI Ltd.
Paragraphs 22 and 24 amend the Act by omitting those provisions that would otherwise conflict with the application of deferred benefits after one year of eligible employment.
Paragraph 23 amends the Act by omission of section 139A to clarify that transfer value provisions do not apply in respect of transferees to the ADI schemes.
Schedule 8
Paragraph 1 amends subsection 139(1) of the Act so that transferees to the Coselco scheme to whom the Schedule applies are treated as if they had elected to defer their benefits under section 137 of the Act.
Paragraph 2 amends subparagraph 139(2)(b) of the Act so that deferred benefits will apply in the event of death without the need for transferees to the Coselco scheme who have deferred their CSS benefits to have completed five years eligible employment or to be employed in public employment at that time.
Paragraphs 3 and 4 amend subsection 139(2) of the Act to ensure that deferred benefits are not applicable unless the transferee has ceased to be employed by Coselco.
Paragraphs 5 and 7 amend the Act by omitting those provisions that would otherwise conflict with the application of deferred benefits after one year of eligible employment.
Paragraph 6 amends the Act by omission of section 139A to clarify that transfer value provisions do not apply in respect of transferees to the Coselco scheme.