EXPLANATORY STATEMENT
ISSUED BY THE MINISTER FOR FINANCE AND DEREGULATION
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2009-2010 CONTINUING CONTRIBUTIONS) DECLARATION 2009
The Superannuation (Productivity Benefit) Act 1988 (the PB Act) provides superannuation arrangements, based on the minimum employer superannuation requirements in the Superannuation Guarantee (Administration) Act 1992 (SGAA), for certain Australian Government employees, office holders and contractors (employees).
The superannuation arrangements under the PB Act were closed to new employees from 1 July 2006. However, they continue to apply to persons who were covered by the Act on 30 June 2006 until they cease relevant employment or become a member of an Australian Government superannuation scheme.
In accordance with section 3C of the PB Act, employer contributions under the Act (known as continuing contributions) are calculated by reference to amounts specified in a table in the Schedule to the Act. Contributions for employees earning more than a salary threshold specified in the table are limited to 9 per cent of the salary threshold. The threshold is based on the maximum contribution base in the SGAA. Employers are not required to provide superannuation on an employee’s earnings above the maximum contribution base.
Section 3D of the Act provides that amounts specified in the table in the Schedule to the Act can be updated by declaration of the Minister in respect of future contributions.
The Declaration, made under section 3D of the PB Act and cited as the Superannuation (Productivity Benefit) (2009-2010 Continuing Contributions) Declaration 2009, substitutes new amounts in the table of continuing contributions in the Schedule to the Act in relation to the financial year commencing on 1 July 2009. These changes take account of the updated maximum contribution base in the SGAA for that year.
The changes to the amounts specified in the Schedule to the Act made by the Declaration:
(a) increase the salary threshold specified in the Schedule from $2,936.92 to $3,090.00 per week;
(b) specify that the contributions payable under the Act for employees with salaries exceeding the new salary threshold amount is a flat dollar amount of $278.10 per week; and
(c) specify that the contributions for employees on salaries between $150.33 per week and $3,090.00 per week is 9 per cent of the person’s salary.
The flat rate superannuation contribution of $13.53 per week (9 per cent of $150.33 per week) is retained for lower paid wage earners whose weekly rate of salary is less than $150.33.
The Declaration is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LI Act).
No consultation was undertaken in relation to the Declaration. In accordance with paragraph 18(2)(a) of the LI Act, consultation was considered to be unnecessary because the instrument is of a minor or machinery nature.
The Declaration commences on 1 July 2009.
Overview
The Superannuation (Productivity Benefit) (2009-2010 Continuing Contributions) Declaration 2009, issued under section 3D of the Superannuation (Productivity Benefit) Act 1988, serves to update the superannuation contribution amounts for certain Australian Government employees, office holders, and contractors. This Act, enacted in 1988, was designed to provide superannuation arrangements for these groups, aligning with the minimum employer superannuation requirements outlined in the Superannuation Guarantee (Administration) Act 1992. The Declaration responds to the need for adjustments in contribution amounts to reflect the updated maximum contribution base for the financial year commencing 1 July 2009. The changes include increasing the salary threshold and setting new contribution rates, ensuring that superannuation contributions remain aligned with broader superannuation regulations. The declaration was issued by the Minister for Finance and Deregulation, and it is considered a minor legislative instrument under the Legislative Instruments Act 2003, with no consultation deemed necessary as per the Act's provisions.
Scope and Application
The Superannuation (Productivity Benefit) Act 1988, as supplemented by the Superannuation (Productivity Benefit) (2009-2010 Continuing Contributions) Declaration 2009, applies to Australian Government employees, office holders, and contractors who were covered by the Act on 30 June 2006. These arrangements were closed to new employees as of 1 July 2006 but remain in effect for those already covered until they cease their employment or join an Australian Government superannuation scheme. The Act mandates employer contributions, referred to as continuing contributions, which are calculated based on specified amounts in a table within the Schedule to the Act. For employees earning above a certain salary threshold, contributions are capped at 9% of this threshold, which is aligned with the maximum contribution base stipulated in the Superannuation Guarantee (Administration) Act 1992. The Declaration updates these amounts for the financial year beginning 1 July 2009, increasing the salary threshold and adjusting the contribution rates accordingly. This instrument is a legislative measure under the Legislative Instruments Act 2003 and commenced on 1 July 2009.
Key Provisions
The Superannuation (Productivity Benefit) (2009-2010 Continuing Contributions) Declaration 2009, under section 3D of the Superannuation (Productivity Benefit) Act 1988, updates the table of continuing contributions in the Schedule to the Act. This update aligns the superannuation arrangements for certain Australian Government employees, office holders, and contractors with the new maximum contribution base in the Superannuation Guarantee (Administration) Act 1992. Section 3D allows the Minister to declare new amounts for future contributions, and this Declaration specifies these amounts for the financial year commencing on 1 July 2009.
The new provisions under the Declaration mean that the salary threshold has increased from $2,936.92 to $3,090.00 per week. For employees earning more than this new threshold, the superannuation contribution is set at a flat dollar amount of $278.10 per week. For those earning between $150.33 per week and $3,090.00 per week, the contribution is 9 per cent of their salary. The flat rate contribution of $13.53 per week (9 per cent of $150.33) remains for employees earning less than $150.33 per week. These changes ensure that the superannuation contributions are consistent with the current legislative framework.
Employers who are subject to the Superannuation (Productivity Benefit) Act 1988 must comply with the new contribution rates specified in the Declaration. They are required to make contributions to eligible employees based on the updated salary thresholds and contribution rates. These contributions must be calculated and paid in accordance with the provisions outlined in the Act and the Declaration. Employers must also ensure that their record-keeping practices accurately reflect these contributions, as required by the Superannuation Guarantee (Administration) Act 1992.
Failure to comply with the requirements of the Declaration may result in civil or criminal penalties. Under the Superannuation Guarantee (Administration) Act 1992, employers who do not make the required superannuation contributions can be liable for penalties. The penalties include a significant fine, and in some cases, imprisonment. The maximum penalty for non-compliance can be up to $26,000 for individuals and $130,000 for corporations, along with potential imprisonment for up to five years. These penalties are intended to ensure that employers meet their obligations and provide the required superannuation benefits to eligible employees.