EXPLANATORY STATEMENT
STATUTORY RULES 1989 NO 33
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
SUBJECT: SUPERANNUATION ACT 1976 - SUPERANNUATION
(INTEREST) REGULATIONS (AMENDMENT)
Section 168 of the Superannuation Act 1976 (the Act) provides that the Governor-General may make Regulations, not inconsistent with the Act, prescribing all 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.
Subsection 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 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 contributions.
Section 7A ensures that where a contributor’s period of contributory service has, in certain circumstances, not been continuous, the person’s accumulated contributions on again ceasing to be a contributor will include the contributions made by the person prior to the break in service together with interest calculated in accordance with the Regulations.
Section 145 of the Act provides for the Commissioner for Superannuation to pay to the Superannuation Fund out of the proceeds of any life assurance policies assigned to the Commissioner, and maintained on behalf of any contributor, the amount of the contributor’s share of the surrender value of the policies together with the amount of any interest that, in accordance with the regulations, is payable in respect of that amount.
Prior to the making of the Statutory Rule, the Superannuation (Interest) Regulations (the Principal Regulations) prescribed 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, for the financial years 1976-77 to 1987-88.
With effect from the quarter commenced on 1 July 1988, instead of prescribing a rate of interest for a full financial year, the Principal Regulations prescribe an annual rate of interest per quarter, the rate for the quarter ending 30 September 1988 being 5.279% per annum. The Principal Regulations also prescribed the rate of interest which applied for the period of interest from 1 October 1988, which was 12.42% per annum.
To establish interest rates in respect of particular quarters the Superannuation Fund Investment Trust (the Trust) advises the Commissioner for Superannuation of the amount of income available for allocation to contributors in respect of that quarter. The Commissioner then calculates the rate of interest that, when applied to the opening balances of contributors’ accumulations according to his records and net contributions to the Superannuation Fund during the quarter, will apportion amongst contributors to the Fund in that quarter the amount of income to be allocated.
The amount of income to be allocated to contributors for the quarter ending 31 December 1988 is $63,975,627 and the Commissioner has calculated that the appropriate rate of interest to apportion this amount amongst contributors is 5.415% per annum. The Statutory Rule amends the Principal Regulations to provide that this rate of interest applies in respect of the period commencing 1 October 1988 and ending 31 December 1988.
So that the benefits of contributors leaving the Fund can be determined it is also necessary to prescribe a rate of interest to apply from 1 January 1989. The Statutory Rule therefore prescribes the rate of 13.76%
per annum, which was the assessed secondary market weighted average yield for 10-year non-rebatable Treasury bonds as published by the Reserve Bank for 27 February 1989, to apply in respect of the period commencing on 1 January 1989 in lieu of the previous rate of 12.42% per annum which was prescribed on 15 December 1988.
The regulations contained in the Statutory Rule operate from the date of gazettal. The provisions of the regulations contained in the Statutory Rule are outlined in the attachment.
ATTACHMENT
Summary of Provisions of Superannuation (Interest) Regulations (Amendment)
Regulation 1 provides that, in the Regulations, the term “Principal Regulations” means the Superannuation (Interest) Regulations.
Regulation 2 provides for the amendment of subregulations 6(1) and 6(2) of the Principal Regulations to provide a new rate of interest of 13.76% per annum. This rate will apply for the period commencing 1 January 1989 and will replace the rate of 12.42% per annum which applied for the period commencing 1 October 1988.
Regulation 3 amends Part II of the Schedule in the Principal Regulations to provide for a new rate of interest of 5.415% per annum to apply for the quarter commencing 1 October 1988 and ending 31 December 1988.
Regulation 4 provides that the interest rates and other amendments prescribed by Regulations 2 and 3 apply in relation to the interest available to persons who cease to contribute under the Act or whose deferred benefits cease to be applicable but do not become payable on or after the date of gazettal of the Regulations and to persons to whom deferred benefits under the Act become payable after the date of gazettal of the Regulations.