EXPLANATORY STATEMENT
ISSUED BY THE MINISTER FOR FINANCE AND DEREGULATION
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2010-2011 CONTINUING CONTRIBUTIONS) DECLARATION 2010
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) (2010-2011 Continuing Contributions) Declaration 2010, 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 2010. 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 $3,090.00 to $3,247.69 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 $292.29 per week; and
(c) specify that the contributions for employees on salaries between $150.33 per week and $3,247.69 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 2010.
Overview
The Superannuation (Productivity Benefit) (2010-2011 Continuing Contributions) Declaration 2010, issued under section 3D of the Superannuation (Productivity Benefit) Act 1988, serves to update the superannuation contributions for certain Australian Government employees, office holders, and contractors for the financial year commencing on 1 July 2010. The Act, enacted by the Australian Parliament, aims to provide superannuation arrangements for eligible employees based on the minimum employer superannuation requirements set out in the Superannuation Guarantee (Administration) Act 1992. This legislation was introduced to address the need for consistent and updated superannuation contributions for covered employees, ensuring compliance with changes in the maximum contribution base.
The Declaration, which is a legislative instrument under the Legislative Instruments Act 2003, specifies new amounts in the table of continuing contributions in the Schedule to the Superannuation (Productivity Benefit) Act 1988. The changes include increasing the salary threshold for superannuation contributions, setting a flat dollar amount for higher-paid employees, and maintaining a 9% contribution rate for salaries between specified limits. The policy objective is to ensure that superannuation contributions remain aligned with the updated maximum contribution base, thus maintaining the integrity of the superannuation arrangements for the affected employees.
Scope and Application
The Superannuation (Productivity Benefit) (2010-2011 Continuing Contributions) Declaration 2010 amends the superannuation arrangements outlined in the Superannuation (Productivity Benefit) Act 1988, specifically updating the table of continuing contributions in the Schedule to the Act to reflect changes in the maximum contribution base in the Superannuation Guarantee (Administration) Act 1992. The Declaration applies to Australian Government employees, office holders, and contractors who were covered by the superannuation arrangements on 30 June 2006, and it continues to apply until these individuals cease their relevant employment or become members of an Australian Government superannuation scheme. The updated contributions are based on the new salary threshold of $3,247.69 per week, with a flat dollar amount of $292.29 per week for those exceeding this threshold and a 9 per cent contribution rate for salaries between $150.33 and $3,247.69 per week. Lower-paid employees continue to receive a flat rate superannuation contribution of $13.53 per week. The changes made by this Declaration are effective from 1 July 2010 and do not require consultation as they are considered minor or of a machinery nature under the Legislative Instruments Act 2003.
Key Provisions
The Superannuation (Productivity Benefit) (2010-2011 Continuing Contributions) Declaration 2010, made under section 3D of the Superannuation (Productivity Benefit) Act 1988 (PB Act), adjusts the amounts in the Schedule to the Act for the financial year starting on 1 July 2010. This adjustment aligns with the updated maximum contribution base in the Superannuation Guarantee (Administration) Act 1992 (SGAA). Section 3D of the PB Act allows the Minister to update these amounts by declaration, which this instrument does by substituting new figures in the table of continuing contributions. Specifically, the salary threshold increases from $3,090.00 to $3,247.69 per week, and contributions for employees earning above this new threshold are capped at $292.29 per week. For those earning between $150.33 and $3,247.69 per week, contributions are set at 9 per cent of their salary. Employees earning less than $150.33 per week continue to receive a flat rate contribution of $13.53 per week, which is 9 per cent of the $150.33 threshold.
The Declaration imposes specific obligations on employers who are subject to the PB Act. These employers must now adhere to the updated contribution rates and thresholds as outlined in the Declaration. This includes calculating superannuation contributions for relevant employees based on the new salary thresholds and contribution rates. Employers are required to ensure that these contributions are made in accordance with the Act, and they must maintain records to demonstrate compliance with these obligations. Failure to do so may result in penalties or other consequences under the SGAA or other relevant legislation.
There are potential consequences for non-compliance with the requirements set out in the Declaration. Employers who fail to make the correct superannuation contributions as specified may be subject to penalties. Under the SGAA, the penalties for non-compliance can be severe, including financial penalties that may be calculated based on the amount of unpaid superannuation and interest. Additionally, employers may face legal action, which could result in further financial penalties or court-ordered contributions. It is important for employers to understand and comply with these obligations to avoid any adverse legal or financial consequences.