Superannuation (Productivity Benefit) (2009-2010 Second Interest Factor) Declaration 2009

Overview

The Superannuation (Productivity Benefit) (2009-2010 Second Interest Factor) Declaration 2009, issued by the Minister for Finance and Deregulation under the Superannuation (Productivity Benefit) Act 1988, establishes the second interest factor for the 2009-2010 financial year in accordance with the requirements of the Act. This legislative instrument is necessary to ensure that the formula used to calculate the second interest factor aligns with the specified formula outlined in the PB Act, which in turn is based on the 10 year Treasury Bond rate for April 2009 of 4.57 per cent. This declaration ensures that employers who fail to make the required superannuation contributions to participating employees will be liable for additional interest payments, calculated using the specified formula. The declaration is considered minor and of a machinery nature, hence no consultation was deemed necessary in its development.

Scope and Application

The Superannuation (Productivity Benefit) (2009-2010 Second Interest Factor) Declaration 2009 applies to certain Australian Government employees, office holders, and contractors who are covered by the Superannuation (Productivity Benefit) Act 1988, with the arrangements ceasing for new employees from 1 July 2006 but continuing for those who were already covered by the Act on 30 June 2006 until they leave their employment or join an Australian Government superannuation scheme. The Act provides for employer superannuation contributions that are guaranteed to employees if employers fail to direct those contributions to a fund, with additional amounts payable by the employer in respect of interest that could have been earned. The Declaration sets out the second interest factor to be applied for the 2009-2010 financial year, calculated based on the 10 year Treasury Bond rate for April 2009, and is to be read in conjunction with the Superannuation (Productivity Benefit) (2009-2010 First Interest Factor) Declaration 2009. The Declaration is a legislative instrument under the Legislative Instruments Act 2003 and commences on 1 July 2009.

Key Provisions

The Superannuation (Productivity Benefit) (2009-2010 Second Interest Factor) Declaration 2009, as a legislative instrument, sets forth the second interest factor to be applied under the Superannuation (Productivity Benefit) Act 1988 (PB Act) for the financial year 2009-2010. This factor is crucial for calculating the additional amounts employers must pay when they fail to make required superannuation contributions to a fund. Specifically, section 8A of the PB Act requires this second interest factor to accrue interest on unpaid employer contributions for previous financial years, as well as on the interest that has already been applied to those amounts using the first interest factor or the second interest factor for those years. The second interest factor is determined by the Minister, based on the formula specified in the Declaration, which for 2009-2010 is calculated using the 10-year Treasury Bond rate for April 2009, which was 4.57 percent. Under the PB Act, employers are obligated to ensure that superannuation contributions are made for eligible employees, office holders, and contractors. These contributions are based on the minimum employer superannuation requirements outlined in the Superannuation Guarantee (Administration) Act 1992. For employees who were covered under the PB Act as of 30 June 2006, the superannuation arrangements continue to apply until they cease their relevant employment or become members of an Australian Government superannuation scheme. Employers are required to join their employees to a fund to receive these contributions. In cases where an employer fails to do so, the PB Act mandates that additional amounts be paid to the employee. These additional amounts are calculated by applying the appropriate interest factors to the unpaid contributions and accrued interest, ensuring that employees are not disadvantaged by the employer's failure to meet their obligations. The Superannuation (Productivity Benefit) Act 1988 imposes significant obligations on employers who are covered by the Act. They must ensure timely and accurate superannuation contributions for their employees, office holders, and contractors. The obligations extend to joining employees to a fund to receive these contributions. Failure to do so results in the employer having to pay additional amounts, which include the unpaid contributions and the interest that would have been earned if the contributions had been paid to a fund. The Minister's role, as per section 3E(1)(b) of the PB Act, is to declare the second interest factor before each financial year, ensuring that the calculation of these additional amounts is transparent and based on a specified formula. Employers must be aware of these obligations to avoid any legal repercussions and to ensure compliance with the Act. The Act also delineates the consequences for non-compliance. While the specific offences, penalties, or consequences for breach are not detailed in the Declaration, it is implied that failure to meet the obligations outlined in the PB Act could result in civil or criminal penalties. These might include financial penalties, corrective actions, or other enforcement measures as provided under the relevant Acts. The precise penalties would be determined by the applicable laws and the severity of the breach. Given the importance of superannuation contributions in ensuring financial security for employees, the penalties for non-compliance are likely to be significant, reflecting the seriousness of the obligations under the Act.