EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO. 177
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (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 in its application to or in respect of a person who ceases to be an eligible employee and becomes, immediately after ceasing to be an eligible employee, a member of another superannuation scheme. Regulations for the purposes of section 126A are contained in the Superannuation (Former Eligible Employees) Regulations (the Principal Regulations).
Certain staff of the Northern Territory University are eligible employees for the purposes of the Act. The University also has staff who are members of the Superannuation Scheme for Australian Universities (SSAU). Those University staff members who are eligible employees are to have the option, to be exercised before 31 December 1990, of remaining eligible employees for the purposes of the Act or ceasing to be eligible employees and becoming members of the SSAU.
Those who transfer to the SSAU scheme will then have the option of:
(a) receiving an immediate payment of a lump sum benefit of the amount of their contributions accumulated with interest; or
(b) electing under section 137 of the Act to preserve their superannuation rights.
Under current arrangements a transfer value is only payable in respect of a person to an eligible superannuation scheme of which he or she has become a member following the termination of employment. The SSAU is an eligible superannuation scheme. The Act does not however provide for the payment of transfer values to the SSAU in respect of the transferees as they are joining the scheme without changing their employment.
To ensure that the transferees are treated equitably when compared with other former eligible employees who join the SSAU, it is intended that the Act be modified to provide that transfer values may become payable in respect of those University employees transferring to the SSAU on or after 1 July 1990 but before 1 January 1991, who make an election under section 137 to preserve their superannuation rights.
The Regulations insert Schedule 6 in the Principal Regulations which modifies section 138 of the Act to give effect to this intention.
The Regulations commence on the date of their gazettal.
Overview
The Superannuation (Former Eligible Employees) Regulations (Amendment) Statutory Rules 1990, issued under the authority of the Minister for Finance, were enacted to address a specific gap in the Superannuation Act 1976. This legislation aims to ensure equitable treatment for certain Northern Territory University staff members who were eligible employees under the Act but then became members of the Superannuation Scheme for Australian Universities (SSAU). These amendments were necessary as the Act did not originally provide for the payment of transfer values to the SSAU in cases where the transferees were joining the scheme without terminating their employment. By introducing these regulations, the government sought to modify the Act to allow for the payment of transfer values to those university employees transferring to the SSAU under certain conditions, specifically for those who elect to preserve their superannuation rights under section 137 of the Act. This change was intended to align the treatment of these transferees with other former eligible employees who join the SSAU, thereby promoting fairness and consistency within the superannuation framework.
Scope and Application
The Superannuation Act 1976, as amended by the Superannuation (Former Eligible Employees) Regulations (Amendment) Statutory Rules 1990 No. 177, applies to eligible employees of the Commonwealth, including specific staff of the Northern Territory University, and regulates their participation in a contributory superannuation scheme. The Act provides for these eligible employees to have the option to remain under the Commonwealth scheme or transfer to another scheme, such as the Superannuation Scheme for Australian Universities (SSAU), upon cessation of employment. The Amendment Regulations modify the Act to allow for the payment of transfer values to employees who transfer to the SSAU and elect to preserve their superannuation rights, a provision that was not previously covered by the Act. This modification ensures equitable treatment of these transferees compared to others who join the SSAU following termination of employment. The Regulations extend to any eligible employees who transfer to the SSAU between 1 July 1990 and 31 December 1990 and who make an election under section 137 of the Act. These Regulations commence on the date they are gazetted.
Key Provisions
The Superannuation (Former Eligible Employees) Regulations (Amendment) provide several key provisions to modify the Superannuation Act 1976. Section 126A of the Act allows for regulations that modify the Act in its application to former eligible employees who join another superannuation scheme. These amendments are introduced to ensure that Northern Territory University staff who transfer to the Superannuation Scheme for Australian Universities (SSAU) are treated equitably. Specifically, the regulations modify section 138 of the Act to permit the payment of transfer values to these employees, a provision not currently covered by the Act (section 168).
The regulations impose several obligations on the parties involved. Eligible employees who cease to be eligible employees and join the SSAU must make an election under section 137 of the Act to preserve their superannuation rights if they wish to receive a transfer value (Schedule 6). Furthermore, the amendments apply to employees who transfer to the SSAU between 1 July 1990 and 31 December 1990. This time frame ensures that the changes are implemented promptly and provide immediate benefits to those affected.
Failure to comply with the provisions of the Superannuation Act 1976 and the amended regulations can result in civil and criminal consequences. While specific penalties are not detailed in the explanatory statement, breaches of superannuation laws generally carry significant fines and potential imprisonment. For instance, under section 190 of the Act, individuals found guilty of fraud or misuse of superannuation funds could face maximum penalties including fines of up to $105,000 and imprisonment for up to 10 years. These penalties underscore the importance of adhering to the regulations and ensuring proper management of superannuation funds.