EXPLANATORY STATEMENT
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE AND ADMINISTRATION
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2005-2006 CONTINUING CONTRIBUTIONS) DECLARATION 2005
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 Australian Government 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) (2005-2006 Continuing Contributions) Declaration 2005 substitutes a new table in the Schedule to the PB Act in relation to the financial year commencing on 1 July 2005.
The major effect of the substituted table is to increase the salary threshold from $2,475.38 to $2,593.85 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 $2,593.85 per week ($134,880 per annum) will receive a flat contribution equivalent to 9 per cent of that threshold amount or $233.45 per week.
The substituted table also sets superannuation contributions for employees on salaries between $150.33 per week and $2,593.85 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 is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Office of Regulation Review has advised that a Regulation Impact Statement is not necessary for this Declaration because the declaration will not have a direct or substantial indirect effect on business or competition, as it is minor or machinery in nature and does not substantially alter existing arrangements.
No consultation was undertaken in relation to this Declaration. Consultation was considered to be unnecessary because the instrument is minor or machinery in nature.
The Declaration commences on the day after it is registered on the Federal Register of Legislative Instruments.
Overview
The Superannuation (Productivity Benefit) Act 1988 was enacted to provide a mechanism for the Superannuation Guarantee minimum employer superannuation contributions for Australian Government employees and certain other employees who do not have other employer-sponsored superannuation cover. This Act ensures that these employees receive an adequate level of retirement benefits, supplementing the broader superannuation framework. The legislation is overseen by the Parliament of Australia, with the policy objective being to maintain equitable and adequate retirement benefits for a specific group of employees. The 2005-2006 Continuing Contributions Declaration made under section 3D of the Act adjusts the superannuation contribution rates, primarily by increasing the salary threshold above which a flat dollar amount is contributed and modifying the contribution rates for various salary brackets. This Declaration aims to ensure the benefits provided under the Act remain aligned with the minimum level of employer superannuation support required by the Superannuation Guarantee legislation.
Scope and Application
The Superannuation (Productivity Benefit) (2005-2006 Continuing Contributions) Declaration 2005, made under the authority of the Minister for Finance and Administration, amends the Superannuation (Productivity Benefit) Act 1988 by adjusting the table that dictates the periodic contributions employers must make into the superannuation funds of eligible employees. This Act applies to designated employers who must contribute to the superannuation funds of Australian Government employees and certain other employees who do not have other employer-sponsored superannuation cover. The amendments to the contribution rates are designed to ensure compliance with the minimum level of employer superannuation support as envisaged in the Superannuation Guarantee legislation. The changes introduced by this Declaration include increasing the salary threshold above which the superannuation contribution becomes a flat dollar amount, as well as setting new contribution rates for employees with salaries between specified thresholds. These changes apply nationally across Australia and will affect all employers who are required to make contributions under the PB Act for the financial year commencing on 1 July 2005. The Declaration does not exempt any persons or entities from its provisions, and no consultation was deemed necessary due to the minor nature of the changes.
Key Provisions
The Superannuation (Productivity Benefit) (2005-2006 Continuing Contributions) Declaration 2005 (section 1) amends the Superannuation (Productivity Benefit) Act 1988 by substituting a new table in the Schedule to the PB Act in relation to the financial year commencing on 1 July 2005. This Declaration, made under section 3D of the PB Act, modifies the rates of superannuation contributions that employers must make for certain employees. The most significant change is an increase in the salary threshold above which a flat dollar amount is contributed, rising from $2,475.38 per week to $2,593.85 per week (sections 2 and 3). For employees earning above this threshold, employers will now contribute a flat amount equivalent to 9% of $2,593.85, or $233.45 per week. For those earning between $150.33 per week and $2,593.85 per week, the contribution remains 9% of their weekly salary. For lower-paid employees earning less than $150.33 per week, the contribution remains a flat rate of $13.53 per week.
Employers under the PB Act must ensure they are paying the correct rates as per the updated table. This involves calculating the correct contribution based on the employee's salary and ensuring it is paid to a superannuation fund nominated or approved by the Minister for Finance and Administration, or another regulated superannuation fund as defined by the Superannuation Industry (Supervision) Act 1993. Employers must also adjust the contributions for part-time employees proportionally (section 4). They are required to keep records of these contributions for compliance and auditing purposes.
Failure to comply with the requirements of this Declaration can result in legal consequences. Employers who do not pay the correct amount of superannuation contributions may be liable for penalties under the Superannuation Guarantee Charge Act 1992, which can include interest and additional charges. Additionally, they may face enforcement actions from the Australian Taxation Office, including fines and potential prosecution. The specific penalties can vary, but they are designed to ensure compliance with the mandated contribution rates.