EXPLANATORY STATEMENT
STATUTORY RULES 1984 NO. 240
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 the person having been at some stage an invalidity pensioner or a person to whom deferred benefits were applicable, the person’s accumulated contributions on again ceasing to be a contributor will include the contributions made by such person prior to the break in service, 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, such policies may be assigned to the Commissioner for Superannuation who will arrange for them to be maintained 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 the minimum retiring age applicable to such person, the policies cease to be available to the contributor. In these circumstances, the Commissioner is required, in accordance with sub-sections 145(8) and 145(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 membership from 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 July 1976 to 1 July 1982, The Regulations also prescribe the rate of interest to apply from 1 July 1983 in respect of a person who has ceased to be an eligible employee on or after 1 July 1983. This rate is currently 11.5%.
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.
Because audited financial statements are not yet available it is not yet possible to determine an interest rate for the year ended 30 June 1984 although the earning rate for that year is estimated to be of the order of 13%. An interest rate of 12.700% is now prescribed to apply to the period from 1 July 1983. This rate reflects the estimated earning rate of the Superannuation Fund in 1983-84 and the estimated earning rate for 1984-85 in the period to October 1984.
CONTENT OF THE PROPOSED AMENDMENT OF THE REGULATIONS
The Regulations contained in the Statutory Rule amend the Superannuation (Interest) Regulations by prescribing an interest rate of 12.700% for the period commencing 1 Jul 1983.
This new rate applies to contributors under the Act who cease Commonwealth employment on or after the date of gazettal of the Regulations. The new rate also applies to those persons to whom deferred benefits become payable after the date of gazettal of the Regulations.