EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO 16
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUBJECT: SUPERANNUATION ACT 1976 - SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)
The Superannuation Act 1976 (the Act) provides for a contributory superannuation scheme, known as the Commonwealth 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, or that are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
Section 126A of the Act provides that the regulations may make provision for modifying the Act, or a provision of the Act specified in the regulations, in the application of the Act or that provision to or in respect of a person who has ceased, or is to cease, to be an eligible employee and who became, or will become, immediately after ceasing to be an eligible employee, a member of a superannuation scheme other than the scheme constituted under the Act, or to or in respect of a class of such persons. Regulations for the purposes of section 126A are contained in the Superannuation (Former Eligible Employees) Regulations.
Aerospace Technologies of Australia Pty Ltd (ASTA), a Commonwealth-owned company, is an approved authority for the purposes of the Act and certain of its employees are eligible employees for the purposes of the Act. ASTA also operates a separate superannuation scheme for its employees who are not members of the Commonwealth Scheme. ASTA employees who are members of the Commonwealth Scheme and who have not attained age 60 have the option, to be exercised before 1 April 1989, of remaining eligible employees for the purposes of the Act or ceasing to be eligible employees for the purposes of the Act and becoming members of the ASTA superannuation scheme.
Those who elect to transfer to the ASTA scheme will then have the option of:
(a) receiving, in accordance with section 80 of the Act, immediate payment of a lump sum benefit of the amount of their Commonwealth Scheme contributions accumulated with interest; or
(b) electing under section 137 of the Act that, instead, the preservation of superannuation rights provisions of Division 3 of Part IX of the Act apply to them.
In accordance with the preservation of superannuation rights provisions, where the person makes an election under section 137 and becomes employed in public employment and 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 in respect of the person in accordance with section 138 of the Act. Where a transfer value is not payable, deferred benefits become applicable in respect of the person under section 139 of the Act where the person becomes employed in public employment or where, at the time he or she ceased to be an eligible employee, the person had completed 5 years’ eligible employment for the purposes of the Act. The deferred benefits then become payable under section 139 on a date selected by the person that is not earlier than the date on which the person would have attained the minimum retiring age that would have applied to him or her for the purposes of the Act or on the person’s earlier death or invalidity.
Because the transferees will not be changing employment, and thus will not “become” employed in public employment, transfer values will not become payable. Also, deferred benefits will only become applicable in respect of them where they have completed 5 years’ eligible employment for the purposes of the Act at the time they cease to be eligible employees.
It is intended that deferred benefits become applicable in respect of those transferring on or after 1 March and before 1 April 1989 who make an election under section 137, where they have completed 1 years’ eligible employment for the purposes of the Act at the time they cease to be eligible employees. It is also intended that the deferred benefits become payable to, or in respect of, the person concerned in the same circumstances as presently provided in section 139 of the Act but subject to the person having ceased employment with ASTA.
The Superannuation (Former Eligible Employees) Regulations (Amendment) will modify the provisions of section 139 of the Act in relation to the persons concerned to give effect to those intentions. They also modify the Act by omitting subsections 137(3) and (4) and sections 138, 139A and 141 which are not required in relation to the transferees.
The Regulations come into operation on 1 March 1989.
Overview
The Superannuation Act 1976 was enacted to establish a contributory superannuation scheme, known as the Commonwealth Superannuation Scheme, for Commonwealth employees and certain other individuals. This legislation was introduced to address the need for a structured retirement savings plan for eligible employees, ensuring financial security upon retirement. The Act allows the Governor-General to make regulations necessary for the effective implementation and management of the superannuation scheme. One such regulation, the Superannuation (Former Eligible Employees) Regulations, was amended to address the unique circumstances of employees transitioning from the Commonwealth Scheme to other superannuation schemes. These amendments were made to ensure that former eligible employees who transfer to other schemes are provided with appropriate superannuation benefits, taking into account their years of service and employment status. The regulatory changes were issued by the authority of the Minister for Finance, aiming to maintain the integrity and functionality of the superannuation system for those transitioning out of the Commonwealth Scheme.
Scope and Application
The Superannuation Act 1976 applies to eligible employees of the Commonwealth and certain other persons, including employees of Commonwealth-owned entities like Aerospace Technologies of Australia Pty Ltd (ASTA), which is an approved authority for the purposes of the Act. The Act facilitates the establishment of the Commonwealth Superannuation Scheme, providing a contributory superannuation arrangement for these individuals. Eligible employees who cease their employment and become members of a superannuation scheme other than the Commonwealth Scheme have the option to remain eligible employees or transfer to the new scheme. The Superannuation (Former Eligible Employees) Regulations, particularly as amended, govern the conditions under which these employees can transfer their superannuation rights and the circumstances under which deferred benefits become applicable. These regulations specify that transferees who cease employment with ASTA will have deferred benefits applicable if they have completed one year of eligible employment at the time of cessation, with benefits payable under the same conditions as outlined in section 139 of the Act but with the added condition of having ceased employment with ASTA. The regulations also streamline the Act by omitting certain sections that are no longer relevant to transferees, ensuring that the legislative framework remains efficient and tailored to the specific needs of the affected employees. These regulations are set to come into effect on 1 March 1989, providing a clear and timely adjustment to the superannuation arrangements for the specified individuals.
Key Provisions
The Superannuation (Former Eligible Employees) Regulations (Amendment) primarily focus on amending the Superannuation Act 1976 (the Act) to modify the provisions related to employees of Aerospace Technologies of Australia Pty Ltd (ASTA) who transfer from the Commonwealth Superannuation Scheme to the ASTA superannuation scheme. Section 126A of the Act allows for the creation of such regulations to modify the Act in relation to former eligible employees. Specifically, section 139 of the Act is amended to ensure that deferred benefits are applicable to certain transferees under specific conditions (section 126A). The Regulations also omit subsections 137(3) and (4), and sections 138, 139A, and 141 of the Act, as these sections are no longer required for the transferees (section 168).
The obligations imposed by these Regulations are primarily on ASTA, as it is the entity facilitating the transfer of its employees from the Commonwealth Superannuation Scheme to its own scheme. ASTA must ensure that eligible employees who choose to transfer are informed of their options, including the immediate payment of a lump sum benefit or the preservation of superannuation rights. Furthermore, ASTA must ensure that the amendments to section 139 of the Act are correctly applied to those employees who have completed at least one year of eligible employment at the time they cease to be eligible employees. This involves ensuring that deferred benefits are applicable and payable under the correct circumstances.
The Superannuation (Former Eligible Employees) Regulations (Amendment) do not explicitly state any offences or penalties for non-compliance. However, the broader Superannuation Act 1976 does provide for various penalties and enforcement mechanisms. For instance, section 173 of the Act allows for the imposition of fines and imprisonment for breaches of the Act or its regulations, with the maximum penalties varying depending on the specific offence. Section 174 provides for the recovery of unpaid benefits, and section 175 allows for the issuance of compliance notices and the imposition of administrative penalties. Therefore, while the specific Regulations do not detail penalties, any failure by ASTA to comply with the Act's requirements could result in significant civil or criminal consequences.