Superannuation (Productivity Benefit) (2004-2005 Continuing Contributions) Declaration 2004 2004 No. 198
EXPLANATORY STATEMENT
STATUTORY RULES 2004 No. 198
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE AND ADMINISTRATION
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2004-2005 CONTINUING CONTRIBUTIONS) DECLARATION 2004
VARIATION OF TABLE
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) (2004-2005 Continuing Contributions) Declaration 2004 substitutes a new table in the Schedule to the PB Act in relation to the financial year commencing on 1 July 2004.
The major effect of the substituted table is to increase the salary threshold from $2,350.77 to $2,475.38 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 $2,475.38 per week ($128,720 per annum) will receive a flat contribution equivalent to 9 per cent or $222.78 per week.
The substituted table also sets superannuation contributions for employees on salaries between $150.33 per week and $2,475.38 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 percentage rate of 9% of salary and higher income earners receive less.
The Declaration commences on gazettal.
Overview
The Superannuation (Productivity Benefit) (2004-2005 Continuing Contributions) Declaration 2004 was enacted to adjust the table in the Superannuation (Productivity Benefit) Act 1988, thereby varying the superannuation contribution rates for the financial year commencing on 1 July 2004. This Act was issued by the authority of the Minister for Finance and Administration and was made under section 3D of the PB Act. The primary objective of this legislation is to ensure that the productivity benefit complies with the minimum level of employer superannuation support as stipulated in the Superannuation Guarantee legislation. This Declaration modifies the salary threshold above which the superannuation contribution is a flat dollar amount, thereby affecting the contributions for employees with varying salary levels.
Scope and Application
The Superannuation (Productivity Benefit) (2004-2005 Continuing Contributions) Declaration 2004 applies to employers who are designated under the Superannuation (Productivity Benefit) Act 1988, which includes Commonwealth employees and certain other employees without other employer-sponsored superannuation cover. The Act's jurisdiction extends to the Commonwealth of Australia, and its purpose is to determine the specific amount of superannuation contributions that these employers must make to a superannuation fund for their eligible employees. This Declaration, issued under section 3D of the PB Act, modifies the table in the Schedule to the PB Act, adjusting the salary thresholds and contribution rates for the financial year commencing on 1 July 2004. The Act does not specify any exclusions or exemptions; however, it does stipulate that the contributions are calculated based on the employee's salary, with a proportionally greater benefit for lower-paid wage earners. The Declaration's provisions are effective from the date of its gazettal.
Key Provisions
The Superannuation (Productivity Benefit) (2004-2005 Continuing Contributions) Declaration 2004 (section 3D) amends the schedule of the Superannuation (Productivity Benefit) Act 1988 by introducing a new table that adjusts the superannuation contribution rates for the financial year starting 1 July 2004. This change primarily impacts the salary threshold above which the superannuation contribution becomes a flat dollar amount. Specifically, the new threshold has been increased from $2,350.77 to $2,475.38 per week. Employees earning above this new threshold will receive a flat superannuation contribution of 9 per cent of $2,475.38, equating to $222.78 per week. For employees earning between $150.33 and $2,475.38 per week, the contribution rate is set at 9 per cent of their salary. Lower-paid wage earners, those with a weekly salary below $150.33, continue to receive a flat rate contribution of $13.53 per week, as 9 per cent of their salary would be less than this amount.
Under the Superannuation (Productivity Benefit) Act 1988, employers of Commonwealth employees or certain other employees without other employer-sponsored superannuation cover are obligated to make periodic contributions to a superannuation fund approved by the Minister for Finance and Administration. These contributions are designed to meet the minimum level of employer superannuation support as stipulated in the Superannuation Guarantee legislation. The obligation includes adjusting the contribution rate based on the employee’s salary, with a focus on providing greater benefit to lower-paid wage earners. Employers must ensure that contributions are made to the specified fund or another regulated superannuation fund as defined by the Superannuation Industry (Supervision) Act 1993. The table in the schedule to the PB Act determines the amount to be contributed, taking into account full-time or part-time employment status.
Breaching the obligations set forth in the Superannuation (Productivity Benefit) Act 1988 may result in significant legal consequences. Employers who fail to make the required superannuation contributions can be subject to civil and criminal penalties. Civil penalties may include fines and the requirement to back-pay the contributions owed, along with interest. Criminal penalties can apply to more severe or repeated breaches, potentially leading to imprisonment. The exact penalties are not specified in the explanatory statement, but they are significant enough to enforce compliance with the Act's provisions.