Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003 2003 No. 174
EXPLANATORY STATEMENT
STATUTORY RULES 2003 No. 174
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE AND ADMINISTRATION
DECLARATION UNDER SECTION 3D
VARIATION OF TABLE
Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003
The Superannuation (Productivity Benefit) Act 1988 (the PB Act) provides the mechanism by which the Superannuation Guarantee (SG) minimum employer superannuation contribution is made for Commonwealth employees (and certain other employees) who have no other employer-sponsored superannuation cover. Prior to 1 July 1992, the PB Act provided productivity superannuation to these employees.
Since 1 July 1990, the designated employers of employees covered by the PB Act arrangements have been required to pay periodic contributions in respect of those employees to a superannuation fund nominated or approved by the Minister for Finance and Administration. More recently, where the employee is eligible, employers have been able to pay contributions to another regulated superannuation fund as defined by the Superannuation Industry (Supervision) Act 1993.
The amount to be contributed by an employer is determined from the table in the Schedule to the PB Act. The table is structured so that a proportionately greater benefit is provided to lower paid wage earners. The amount to be contributed is adjusted where the employee is not employed full-time.
The benefits provided under the PB Act comply with the minimum level of employer superannuation support envisaged in the SG legislation.
This Declaration, made under section 3D of the PB Act and cited as the Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003 substitutes a new table in the Schedule to the PB Act in relation to the financial year commencing on 1 July 2003.
The major effect of the substituted table is to increase the salary threshold from $2,247.69 to $2,350.77 per week above which the superannuation contribution payable is a flat dollar amount, equal to 9 per cent of the threshold amount. The substituted table will mean that employees on salaries in excess of $2,350.77 per week ($122,240 per annum) will receive a flat contribution equivalent to 9 per cent or $211.57 per week.
The substituted table also sets superannuation contributions for employees on salaries between $150.33 per week and $2,350.77 per week as being 9 per cent of the employee's salary.
The substituted table continues to provide for a flat rate superannuation contribution of $13.53 per week for lower paid wage earners whose weekly rate of salary is less than $150.33, and for whom 9 per cent of weekly salary would be less than this amount.
The substituted table continues the historical arrangements whereby contribution rates under the PB Act have been skewed so that low income earners receive more than the SG minimum rate and higher income earners receive less.
The Declaration commences on gazettal.
Overview
The Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003, enacted by the Minister for Finance and Administration under the authority of the Superannuation (Productivity Benefit) Act 1988, is a legislative instrument designed to address the need for updating the table of contributions for superannuation guarantee payments in the financial year commencing on 1 July 2003. This Declaration aims to ensure that the contributions made by designated employers for employees without other employer-sponsored superannuation cover continue to comply with the minimum level of employer superannuation support as envisioned in the Superannuation Guarantee legislation. The primary objective of this Declaration is to adjust the salary threshold above which a flat dollar amount superannuation contribution is made, thereby ensuring that the contributions reflect current economic conditions and appropriately support lower paid wage earners.
Scope and Application
The Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003 applies to employers who are designated under the Superannuation (Productivity Benefit) Act 1988 and who employ Commonwealth employees or certain other employees not covered by other employer-sponsored superannuation arrangements. The legislation is a Commonwealth Act and applies nationally across Australia. This Declaration amends the table in the Schedule to the PB Act to adjust the salary threshold and corresponding superannuation contribution rates for the financial year commencing 1 July 2003. The primary change is the increase of the salary threshold above which a flat contribution rate applies, from $2,247.69 to $2,350.77 per week. For employees earning above this threshold, the superannuation contribution is fixed at 9 per cent of the threshold amount, equivalent to $211.57 per week. For employees earning between $150.33 and $2,350.77 per week, the contribution remains 9 per cent of their salary. Employees earning less than $150.33 per week continue to receive a flat rate superannuation contribution of $13.53 per week. The Declaration, made under section 3D of the PB Act, modifies the contribution structure to maintain a balance whereby lower income earners receive a higher proportionate benefit compared to the Superannuation Guarantee minimum. The Declaration is effective from the date of its gazettal.
Key Provisions
The Superannuation (Productivity Benefit) (2003-2004 Continuing Contributions) Declaration 2003, made under section 3D of the Superannuation (Productivity Benefit) Act 1988, replaces the existing table in the Schedule to the PB Act with a new table effective from 1 July 2003. The main change is the increase in the salary threshold from $2,247.69 to $2,350.77 per week, above which the superannuation contribution payable is a flat amount of 9 per cent of the threshold, equivalent to $211.57 per week. For employees earning between $150.33 and $2,350.77 per week, the contribution rate is 9 per cent of their weekly salary. Lower-paid employees, earning less than $150.33 per week, continue to receive a flat superannuation contribution of $13.53 per week. The new table maintains the existing structure where lower income earners receive a higher rate of contribution compared to the Superannuation Guarantee minimum rate, and higher income earners receive a lower rate.
Under this Act, designated employers of employees covered by the PB Act must ensure that they make periodic contributions to a superannuation fund nominated or approved by the Minister for Finance and Administration. These contributions are calculated based on the employee's weekly salary and adhere to the rates set out in the substituted table of the Declaration. Employers must also ensure that the superannuation contributions are paid to an approved fund, as defined by the Superannuation Industry (Supervision) Act 1993. This requirement is critical to ensure compliance with the statutory obligations set out in the PB Act.
Failure to comply with the obligations under the Superannuation (Productivity Benefit) Act 1988 and the Declaration can lead to civil and criminal penalties. Employers who fail to make the required contributions may be subject to financial penalties, which could include the payment of back contributions, interest, and penalties as prescribed by the legislation. In addition, if the non-compliance is found to be willful or negligent, it could result in criminal charges, which may include fines and, in severe cases, imprisonment. The specific penalties and consequences for breach are outlined in the relevant sections of the PB Act and the Superannuation Industry (Supervision) Act 1993.