EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO. 156
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (INTEREST) REGULATIONS (AMENDMENT)
LEGISLATIVE BASIS FOR THE REGULATIONS
Section 168 of the Superannuation Act 1976 (the Act) provides that the Governor-General may make Regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Sub-section 3(1) of the Act defines “accumulated basic contributions” and “accumulated supplementary contributions” in relation to a person who has ceased to be a contributor, as:
(a) an amount equal to the sum of the relevant contributions paid by the person and the amount of any interest that, in accordance with the Regulations, is payable in respect of those contributions; and
(b) in the case of a person who has previously ceased to be a contributor, any amount that, under section 7A of the Act, is to be added to the amount of the person’s accumulated relevant contributions.
Section 7A ensures that, where a contributor’s period of contributory service has not been continuous owing to his having been at some stage an invalidity pensioner or a person to whom deferred benefits were applicable, his accumulated contributions on again ceasing to be a contributor will include the contributions made by him prior to his break in service, together with interest calculated in accordance with the Regulations.
Section 145 of the Act provides that where a contributor was previously a member of a superannuation scheme based on life assurance policies, he may assign them to the Commissioner for Superanuation who will arrange for them to be maintaind on behalf of the contributor. In certain circumstances eg on the policies maturing while the person is still a contributor or on the contributor attaining his minimum retiring age, the policies cease to be available to the contributor. In these circumstances, the Commissioner is required, in accordance with sub-sections 145(8) and (9), to pay to the Fund, out of the proceeds of the policies, the amount of the contributor’s share of the surrender value of the policies as at the date of cessation of his membership of the previous scheme together with the amount of any interest that, in accordance with the Regulations, is payable in respect of that amount.
BACKGROUND
The Superannuation (Interest) Regulations prescribe the rate of interest payable on accumulated basic contributions and accumulated supplementary contributions, and interest payable into the Superannuation Fund out of the proceeds on maturity or surrender of life assurance policies for the financial years commencing 1 Jul 1976 to 1 Jul 1981. The Regulations also prescribe the rate of interest to apply from 1 Jul 1982 in respect of a person who has ceased to be an eligible employee on or after 1 Jul 1982.
Under the Regulations, a person who ceases to be an eligible employee is entitled to interest on his basic and supplementary contributions for the period commencing on his first day of interest (in general, the day contributions were first deducted) and ending on the person’s termination day.
The interest rate of 10.787% included in the new Regulations for the financial year 1982/83 has regard to the earning rate of the Fund for that year based on the audited accounts of the Fund. It is also necessary to prescribe an interest rate to apply to contributors who leave the Fund on or after 1 Jul 1983 but before interest rates based on audited accounts for the financial year 1983/84 and subsequent years are known. Because the Fund’s actual earning rate since 1 Jul 1983 cannot be determined at this time, an interest rate of 11.500% is proposed for the period from 1 Jul 1983 based on budgeted figures for financial year 1983/84.
CONTENT OF THE REGULATIONS
The Regulations contained in the Statutory Rule amend the Superannuation (Interest) Regulations by prescribing the following interest rates for the periods shown:
• financial year that commenced on 1 Jul 1982 | 10.787% pa |
• for the period commencing 1 Jul 1983 | 11.500% pa |
The new rates apply to contributors under the Act who cease Commonwealth employment on or after the date of gazettal of the Regulations. Also the new rates apply to those persons to whom deferred benefits become payable after the date of gazettal of the Regulations.
Overview
The Superannuation (Interest) Regulations (Amendment) were enacted under the authority of the Minister for Finance to amend the existing Superannuation (Interest) Regulations, which were originally established by the Superannuation Act 1976. The primary objective of these regulations is to address the need to specify interest rates on accumulated basic and supplementary contributions for superannuation funds, particularly in response to changes in financial years and to ensure that the interest rates reflect the actual or estimated earnings of the superannuation funds. This legislative action aims to maintain the integrity and predictability of superannuation interests as contributors transition out of employment or when their superannuation policies mature or are surrendered. The regulations are designed to provide a clear and consistent framework for calculating interest on superannuation contributions, ensuring that both current and future retirees receive interest rates that accurately reflect the performance of their superannuation funds.
Scope and Application
The Superannuation (Interest) Regulations (Amendment) under the Superannuation Act 1976 applies to individuals who have ceased to be contributors to a superannuation scheme. These regulations specifically pertain to the interest rates applicable to accumulated basic and supplementary contributions and to interest payable into the Superannuation Fund from the proceeds on maturity or surrender of life assurance policies. The amendments update the interest rates for financial years commencing from 1 July 1982, with 10.787% prescribed for the financial year 1982/83 and 11.500% proposed for the period from 1 July 1983 onwards. The Act applies across the Commonwealth of Australia, and the regulations are made under the authority of the Minister for Finance. The interest rates prescribed are for contributors who cease Commonwealth employment on or after the date of gazettal of the Regulations and for those persons to whom deferred benefits become payable after this date. The regulations extend their application through subordinate instruments to ensure that the interest rates are accurately reflected in the financial records and benefits of contributors.
Key Provisions
The Superannuation (Interest) Regulations (Amendment) establish specific interest rates for accumulated basic and supplementary contributions under the Superannuation Act 1976. Section 168 of the Act allows the Governor-General to issue these regulations, which are not inconsistent with the Act and are necessary for its implementation. The new regulations specify the interest rates for financial years starting from 1 July 1982 and for the period beginning 1 July 1983. The interest rate for the financial year 1982/83 is set at 10.787% per annum, based on the Superannuation Fund's earnings for that year, while the rate for the period from 1 July 1983 is set at 11.500% per annum, derived from budgeted figures for the financial year 1983/84.
These regulations impose specific obligations on the parties involved, including the requirement for the Commissioner for Superannuation to calculate and pay interest on accumulated contributions and surrender values of life assurance policies based on the prescribed rates. Employers and contributors must ensure that contributions are correctly calculated and interest is applied according to the stipulated rates. For those who cease to be eligible employees, the regulations ensure that interest is calculated from the first day of contribution deduction up until their termination date. Additionally, the regulations mandate that the Commissioner for Superannuation must manage the assignment and maintenance of life assurance policies on behalf of contributors and make payments to the Superannuation Fund from the proceeds of these policies upon cessation of membership.
Failure to comply with these regulations can result in various consequences. While specific penalties are not outlined in the provided text, breaches of the Superannuation Act 1976 generally may lead to civil or criminal penalties, depending on the nature and severity of the breach. Civil penalties can include fines and other monetary penalties, while criminal penalties might involve imprisonment. The exact penalties would depend on the specific sections of the Act that are contravened and the discretion of the court.
The regulations are designed to ensure transparency and fairness in the calculation of interest on superannuation contributions, providing clear guidelines for both contributors and the Commissioner for Superannuation. The prescribed interest rates aim to reflect the actual or expected performance of the Superannuation Fund, thereby maintaining the integrity and reliability of superannuation benefits for contributors.