EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 328
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 receiving both standard and additional invalidity pension 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
The Regulations contained in the Statutory Rule amend the Superannuation (Interest) Regulations by prescribing an interest rate of 15.6% for the period commencing 1 July 1984. The rate of 15.6% is based on the time-weighted average of the estimated earning rate of the Superannuation Fund for 1984-85 and one-half of the estimated earning rate for 1985-86 and is predicated on the market value based accounting policy that has been applied in relation to the Fund from 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) was issued under the authority of the Minister for Finance in 1985 and amends the Superannuation (Interest) Regulations to set a new interest rate of 15.6% for the period starting from 1 July 1984. The amendment was enacted by the Parliament of Australia to address the need for adjusting the interest rates applied to superannuation contributions in light of the estimated earning rates of the Superannuation Fund. The policy objective behind this amendment is to ensure that the interest rates reflect the actual earnings of the Superannuation Fund, thereby providing accurate and fair interest accruals for contributors who cease to be eligible employees. This amendment ensures that the interest rates prescribed are aligned with the economic conditions and performance of the superannuation fund.
Scope and Application
The Superannuation (Interest) Regulations (Amendment) Statutory Rules 1985 No. 328, issued under the authority of the Minister for Finance, amend the Superannuation (Interest) Regulations by setting a new interest rate of 15.6% for contributions made by individuals who cease to be eligible employees under the Superannuation Act 1976, effective from 1 July 1984. This regulation applies to all contributors under the Act who terminate their Commonwealth employment on or after the date of the gazettal of the Regulations, as well as to individuals for whom deferred benefits become payable after this date. The amendment is grounded in the legislative basis provided by Section 168 of the Superannuation Act, which allows the Governor-General to make regulations not inconsistent with the Act that are necessary for carrying out or giving effect to the Act. The new interest rate is calculated based on the time-weighted average of the estimated earning rate of the Superannuation Fund for 1984-85 and half of the estimated earning rate for 1985-86, aligning with the market value-based accounting policy applied to the Fund since the start of the 1984-85 financial year. This amendment ensures that the interest payable on accumulated basic and supplementary contributions is adjusted to reflect the actual performance of the Superannuation Fund.
Key Provisions
The Superannuation (Interest) Regulations (Amendment) Statutory Rules 1985 No. 328, issued under the authority of the Minister for Finance, amend the existing Superannuation (Interest) Regulations. These regulations are grounded in Section 168 of the Superannuation Act 1976, which empowers the Governor-General to make regulations necessary for carrying out the Act, including those that prescribe interest rates on accumulated contributions. The primary focus of these amendments is to set a new interest rate for the period starting 1 July 1984, which is 15.6%. This rate is determined based on the time-weighted average of the estimated earning rate of the Superannuation Fund for the financial years 1984-85 and 1985-86.
The new interest rate applies to two categories of individuals under the Act: those who cease to be Commonwealth employees on or after the date of the gazettal of these Regulations, and those to whom deferred benefits become payable after the same date. This amendment ensures that the interest rate on accumulated basic and supplementary contributions is consistently applied, reflecting the financial performance of the Superannuation Fund as of the specified financial years.
Entities and individuals governed by the Superannuation Act 1976 are required to adhere to these new interest rate provisions. This includes employers ensuring that employees who cease to be contributors are credited with interest at the newly prescribed rate and the Commissioner for Superannuation accurately calculating and paying interest to contributors as per the regulations. The Commissioner is also obligated to manage the proceeds from life assurance policies in accordance with the Act, including the calculation of interest payable from these proceeds.
There are no explicit offences, penalties, or consequences for breach detailed in the provided text. However, it is implied that non-compliance with these regulations could result in legal ramifications, as with any statutory regulation. The implications of such non-compliance might include financial penalties or legal actions aimed at enforcing adherence to the prescribed interest rates and ensuring the proper administration of superannuation funds.