EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 226
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 because the person was 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 a person prior to the 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, 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, e.g., on the policies maturing while the person is still a contributor or on the contributor attaining the minimum retiring age applicable to such a 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 rates 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.
Under the Regulations, a person who ceases to be an eligible employee is entitled to interest on his or her basic and supplementary contributions for the period commencing on the person’s first day of interest (in general, the day contributions were first deducted) and ending on the person’s termination day.
CONTENT OF THE AMENDMENT TO THE REGULATIONS
The Regulations contained in the Statutory Rule amend the Superannuation (Interest) Regulations by prescribing an interest rate of 13.8% for the period commencing 1 July 1984. The rate of 13.8% is based on the time-weighted average of the estimated earning rate of the Superannuation Fund for 1984-85 and the first quarter of the estimated earning rate for 1985-86 and is predicated on the market value based accounting policy that has applied in the operation of the Fund since the commencement of the 1984-85 financial year.
The 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.
Overview
The Superannuation (Interest) Regulations (Amendment) is a statutory rule issued under the authority of the Minister for Finance in 1985, amending the existing Superannuation (Interest) Regulations. These regulations are made under section 168 of the Superannuation Act 1976, which allows the Governor-General to make regulations that are necessary for carrying out or giving effect to the Act. The primary objective of these regulations is to prescribe the rates of interest payable on accumulated basic contributions and supplementary contributions, as well as interest payable into the Superannuation Fund from the proceeds on the maturity or surrender of life assurance policies. The amendment introduces a new interest rate of 13.8% for the period starting from 1 July 1984, based on the average of the estimated earning rate of the Superannuation Fund for 1984-85 and the first quarter of 1985-86. This new rate applies to contributors who cease Commonwealth employment on or after the date of the gazettal of the regulations and to those to whom deferred benefits become payable after this date.
Scope and Application
The Superannuation (Interest) Regulations (Amendment) Statutory Rules 1985 No. 226, issued under the authority of the Minister for Finance, amends the existing Superannuation (Interest) Regulations to alter the interest rate payable on accumulated basic and supplementary contributions for contributors who cease Commonwealth employment or to whom deferred benefits become payable, effective from 1 July 1984. These regulations are made under Section 168 of the Superannuation Act 1976, which allows the Governor-General to prescribe matters necessary for the operation of the Act. The amendment sets a new interest rate of 13.8%, calculated based on the time-weighted average of the estimated earning rate of the Superannuation Fund for the 1984-85 financial year and the first quarter of the 1985-86 financial year. This new rate applies to any person who ceases to be an eligible employee on or after the date of gazettal of these Regulations, ensuring that interest is calculated from the first day of contributions up until the termination of employment.
Key Provisions
The Superannuation (Interest) Regulations (Amendment) Statutory Rule 1985 No. 226, issued by authority of the Minister for Finance, introduces an amendment to the Superannuation (Interest) Regulations (F1996B02275). The key provision of this amendment, as referenced in the Explanatory Statement, is the introduction of a new interest rate of 13.8% for the period beginning 1 July 1984. This amendment is based on the time-weighted average of the estimated earning rate of the Superannuation Fund for the financial years 1984-85 and the first quarter of 1985-86, and it is aligned with the market value based accounting policy that has been in effect since the start of the 1984-85 financial year. The new interest rate applies to contributors who cease Commonwealth employment on or after the date of gazettal of these Regulations and to those who become eligible for deferred benefits after the same date.
Under the Superannuation Act 1976, the amended Regulations impose specific obligations on the parties involved. For contributors who cease to be eligible employees, these Regulations entitle them to interest on their basic and supplementary contributions from the first day of interest (generally the day contributions were first deducted) until their termination day. Additionally, for contributors who were previously members of a superannuation scheme based on life assurance policies, the Regulations mandate that upon cessation of membership from such a scheme, the Commissioner for Superannuation must pay the contributor's share of the surrender value of the policies, along with any applicable interest, to the Superannuation Fund.
The Superannuation (Interest) Regulations (Amendment) also outline potential consequences for non-compliance. While the Explanatory Statement does not specify detailed offences or penalties, it is implied that any failure to adhere to the prescribed interest rates and payment obligations could lead to legal repercussions. Such non-compliance might be considered a breach of the statutory requirements set forth by the Superannuation Act 1976, potentially resulting in civil or administrative penalties as stipulated by the Act. These penalties could include financial fines or other corrective actions to ensure compliance with the mandated interest rates and payment procedures.