EXPLANATORY STATEMENT
ISSUED BY THE MINISTER FOR FINANCE AND DEREGULATION
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2011-2012 CONTINUING CONTRIBUTIONS) DECLARATION 2011
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) (2011-2012 Continuing Contributions) Declaration 2011, 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 2011. 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 $3,247.69 to $3,370.77 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 $303.37 per week; and
(c) specify that the contributions for employees on salaries between $150.33 per week and $3,370.77 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 2011.
Overview
The Superannuation (Productivity Benefit) (2011-2012 Continuing Contributions) Declaration 2011, enacted under section 3D of the Superannuation (Productivity Benefit) Act 1988, aims to update the superannuation contribution amounts for Australian Government employees, office holders, and contractors who were covered by the Act prior to 30 June 2006. This legislative instrument addresses the need to align superannuation contributions with changes in the maximum contribution base specified in the Superannuation Guarantee (Administration) Act 1992, ensuring that the benefits provided under the Superannuation (Productivity Benefit) Act remain consistent with broader superannuation regulations. The declaration was issued by the Minister for Finance and Deregulation and is effective from 1 July 2011, reflecting adjustments to the salary threshold and corresponding contributions. The policy objective is to maintain the integrity of superannuation benefits while accommodating changes in the economic environment.
Scope and Application
The Superannuation (Productivity Benefit) (2011-2012 Continuing Contributions) Declaration 2011 applies to certain Australian Government employees, office holders, and contractors who were already covered by the Superannuation (Productivity Benefit) Act 1988 (PB Act) as of 30 June 2006. It specifies the employer contributions, known as continuing contributions, to be made under the PB Act for the financial year beginning on 1 July 2011. These contributions are based on the maximum contribution base outlined in the Superannuation Guarantee (Administration) Act 1992 (SGAA). Notably, the Declaration updates the salary thresholds and the corresponding contribution rates to reflect changes in the SGAA, ensuring alignment with the broader superannuation framework. While the PB Act itself is no longer open to new employees from 1 July 2006, this Declaration ensures that existing covered employees continue to receive appropriate superannuation contributions in line with the updated legislative standards.
Key Provisions
The Superannuation (Productivity Benefit) (2011-2012 Continuing Contributions) Declaration 2011 (sections 3D) updates the schedule of the Superannuation (Productivity Benefit) Act 1988 (PB Act) to reflect changes in the maximum contribution base under the Superannuation Guarantee (Administration) Act 1992 (SGAA) for the financial year starting on 1 July 2011. These updates include raising the salary threshold for which continuing contributions are calculated, setting a flat rate for contributions on salaries exceeding this threshold, and maintaining a 9 per cent rate for contributions on salaries within a specific range. The changes also retain a flat rate contribution for employees earning less than $150.33 per week. The new salary threshold is set at $3,370.77 per week, up from $3,247.69, with a flat contribution of $303.37 per week for salaries over this amount.
The Declaration imposes specific obligations on employers under the PB Act to ensure compliance with the updated superannuation contribution rates. Employers must adhere to the new salary thresholds and contribution rates outlined in the Declaration when calculating and making contributions for eligible employees. This includes ensuring that contributions for employees earning more than $3,370.77 per week are capped at $303.37 per week and that contributions for employees earning between $150.33 and $3,370.77 per week are calculated at 9 per cent of their salary. Employers are also required to maintain accurate records of these contributions to demonstrate compliance with the PB Act.
Failure to comply with the provisions of the PB Act and the Declaration may result in legal consequences. Although the Explanatory Statement does not specify penalties for non-compliance, the Superannuation Guarantee (Administration) Act 1992 generally imposes penalties for non-compliance with superannuation laws. These can include both civil and criminal penalties, depending on the nature and extent of the breach. Civil penalties can include fines and other monetary penalties, while criminal penalties can include imprisonment. The specific penalties are detailed in the SGAA and related regulations.