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) (2006-2007 CONTINUING CONTRIBUTIONS) DECLARATION 2006
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 persons (employees) who have no other employer-sponsored superannuation cover. Prior to 1 July 1992, the PB Act provided productivity superannuation to these employees.
The PB Act was amended by the Superannuation (Consequential Amendments) Act 2005 to close the superannuation arrangements under that Act to new employees from 1 July 2006. However, the PB Act will continue to apply to employees covered by the Act at 30 June 2006 until they no longer meet the qualifications for PB Act coverage (i.e. because they cease all relevant employment or, if eligible, become members of an Australian Government
superannuation scheme). The annual revision of instruments setting amounts payable by employers on behalf of employees will therefore need to continue until those employees no longer meet the qualifications for PB Act coverage.
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) (2006-2007 Continuing Contributions) Declaration 2006 substitutes a new table in the Schedule to the PB Act in relation to the financial year commencing on 1 July 2006.
The major effect of the substituted table is to increase the salary threshold from $2,593.85 to $2,710.77 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 $2,710.77 per week ($140,960 per annum) will receive a flat contribution equivalent to 9 per cent of that threshold amount or $243.97 per week.
The substituted table also sets superannuation contributions for employees on salaries between $150.33 per week and $2,710.77 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 percentage rate of 9 per cent and higher income earners receive less in line with the threshold limit of the SG.
The Declaration is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
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 address the need for a superannuation scheme for Australian Government employees and certain other individuals who do not have access to employer-sponsored superannuation cover. The Act was amended by the Superannuation (Consequential Amendments) Act 2005 to cease the scheme for new employees from 1 July 2006, but it continues to apply to existing participants until they no longer meet the eligibility criteria. This Act was passed by the Australian Parliament and is intended to provide a minimum level of employer superannuation support, aligning with the broader Superannuation Guarantee (SG) legislation. The Superannuation (Productivity Benefit) (2006-2007 Continuing Contributions) Declaration 2006, made under section 3D of the Act, varies the table in the Schedule to the PB Act, updating the superannuation contributions for the 2006-2007 financial year. The changes include increasing the salary threshold for flat-rate contributions and adjusting the contribution rates to maintain the scheme's progressive nature, ensuring that lower-paid employees receive a proportionately higher benefit.
Scope and Application
The Superannuation (Productivity Benefit) (2006-2007 Continuing Contributions) Declaration 2006 amends the Superannuation (Productivity Benefit) Act 1988, applying to employers who are required to make periodic contributions to a superannuation fund for employees covered by the Act. The Act applies to Australian Government employees and certain other individuals who do not have other employer-sponsored superannuation cover, specifically those who were covered by the Act as of 30 June 2006. The geographic reach of the Act is national, applying across Australia. The Act extends to designated employers who must make contributions to a superannuation fund nominated or approved by the Minister for Finance and Administration or, where the employee is eligible, to another regulated superannuation fund as defined by the Superannuation Industry (Supervision) Act 1993. The Declaration updates the table in the Schedule to the PB Act, adjusting the salary threshold and contribution rates for the financial year commencing on 1 July 2006. This includes increasing the salary threshold above which a flat contribution is payable and adjusting the rates for contributions based on the employee's salary.
Key Provisions
The Superannuation (Productivity Benefit) (2006-2007 Continuing Contributions) Declaration 2006, made under section 3D of the Superannuation (Productivity Benefit) Act 1988, introduces changes to the superannuation contribution table effective from 1 July 2006. The primary change is the adjustment of the salary threshold above which a flat dollar amount of superannuation is contributed, increasing it from $2,593.85 to $2,710.77 per week (section 3D). This threshold adjustment means that employees earning more than $2,710.77 per week will have a flat superannuation contribution of 9 per cent of this threshold amount, equating to $243.97 per week. For employees earning between $150.33 and $2,710.77 per week, the contribution remains 9 per cent of their salary. For lower paid wage earners, a flat rate superannuation contribution of $13.53 per week continues to be applicable.
Employers covered by the Superannuation (Productivity Benefit) Act 1988 have the obligation to make periodic superannuation contributions on behalf of their employees who are not covered by another employer-sponsored superannuation scheme (section 3A). These contributions must be made to a superannuation fund that is either nominated or approved by the Minister for Finance and Administration, or to another regulated superannuation fund as defined by the Superannuation Industry (Supervision) Act 1993 (section 3B). The amount of the contribution is determined by the table in the Schedule to the PB Act, which is now updated by the 2006 Declaration, ensuring that the contributions continue to align with the productivity benefit framework while reflecting the new threshold and contribution rates.
Failure to comply with the requirements of the Superannuation (Productivity Benefit) Act 1988, including the obligation to make the specified superannuation contributions, can result in civil or criminal consequences. Although specific penalties are not detailed in the explanatory statement, breaches of superannuation laws generally carry substantial penalties under Australian law. For employers, penalties can include fines up to thousands of dollars, depending on the severity and frequency of the breach, as well as potential criminal charges for wilful default. Employees affected by non-compliance may also have recourse through the Fair Work Ombudsman or other relevant authorities to seek remedies or compensation for unpaid superannuation contributions.