Superannuation (Interest) Regulations (Amendment)

EXPLANATORY STATEMENT

STATUTORY RULES 1984 NO.34

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 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 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 July 1976 to 1 July 1980. The Regulations also prescribe the rate of interest to apply from 1 July 1981 in respect of a person who has ceased to be an eligible employee on or after 1 July 1981.

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 11.655% included in the new Regulations for the financial year 1981/82 has regard to the earning rate of the Fund for that year based on 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 July 1982 but before interest rates based on audited accounts for the financial year 1982/83 and subsequent years are known. Because the Fund’s actual earning rates since 1 July 1982 have not yet been determined, an interest rate of 11.500% is prescribed for the period from 1 July 1982 based on draft accounts for financial year 1982/83 and budgetted 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:

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.