EXPLANATORY STATEMENT
STATUTORY RULES 1985 NO. 33
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 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 13.49% for the financial year 1983-84 and by prescribing an interest rate of 12.7% for the period commencing 1 July 1984. The rate of 13.49% reflects the earning rate of the Superannuation Fund in 1983-84 and the rate of 12.7% has regard to what the Fund is expected to earn in 1984-85.
The new rates apply to contributors under the Act who cease Commonwealth employment on or after the date of gazettal of the Regulations. The new rates also apply to those persons to whom deferred benefits become payable after the date of gazettal of the Regulations.
Overview
The Superannuation (Interest) Regulations (Amendment) Statutory Rules 1985 No. 33, enacted by authority of the Minister for Finance, amends the Superannuation (Interest) Regulations under the Superannuation Act 1976 to address the need for updating interest rates for contributions and benefits within the superannuation framework. This amendment rectifies the existing provisions by introducing new interest rates that more accurately reflect the anticipated earnings of the Superannuation Fund. The objective of these regulations is to ensure that the interest rates paid on accumulated basic contributions, accumulated supplementary contributions, and the Superannuation Fund are consistent with the fund's earning capacity. The new rates of 13.49% for the financial year 1983-84 and 12.7% for the period commencing 1 July 1984 are established to align with the Superannuation Fund’s performance and expected future returns. These changes apply to contributors who cease Commonwealth employment on or after the date of gazettal of the Regulations, as well as to those who become eligible for deferred benefits post the amendment date.
Scope and Application
The Superannuation (Interest) Regulations (Amendment) Statutory Rule pertains to the Superannuation Act 1976, applying to individuals who cease to be eligible employees under the Act. These individuals are entitled to interest on their accumulated basic and supplementary contributions from the date contributions were first deducted until their termination of employment. The amendment to the regulations sets specific interest rates for the financial years 1983-84 and 1984-85, reflecting the earning rates of the Superannuation Fund during those periods. The changes apply to contributors who leave Commonwealth employment on or after the date of the amendment's gazette and also to those who become eligible for deferred benefits post-gazette. The regulations are intended to ensure that interest rates are aligned with the actual earnings of the Superannuation Fund, thereby maintaining the integrity and fairness of the superannuation contributions system. Subordinate instruments may further extend or clarify the application of these interest rates.
Key Provisions
The Superannuation (Interest) Regulations, as amended by the Statutory Rule, provide specific provisions regarding the interest rates applicable to accumulated basic and supplementary contributions for eligible employees who cease to be part of a superannuation scheme (sections 168, 3(1), and 7A). These interest rates are crucial as they determine the returns on the contributions made by the employee during their period of employment. Specifically, the amended Regulations establish an interest rate of 13.49% for the financial year 1983-84 and a rate of 12.7% for the period starting 1 July 1984. These rates are reflective of the actual and anticipated earnings of the Superannuation Fund during these periods.
The Regulations impose obligations on both the contributors and the entities managing the superannuation funds. For contributors, this means that they are entitled to interest on their basic and supplementary contributions from the day their contributions first began to be deducted until their termination of employment. For the entities managing the superannuation funds, the Regulations require them to calculate and pay the specified interest rates to the contributors who meet the eligibility criteria (section 145). These entities must ensure that the interest is calculated correctly and paid out in accordance with the stipulated rates.
Failure to comply with the interest rates prescribed by the Regulations can result in legal consequences for the entities responsible for managing the superannuation funds. While the exact penalties are not detailed in the provided text, it is reasonable to infer that breaches could lead to financial liabilities, legal action, or regulatory sanctions. The entities must therefore take diligent steps to ensure compliance with the interest rates set forth in the Regulations to avoid any potential penalties or repercussions.