EXPLANATORY STATEMENT
ISSUED BY THE MINISTER FOR FINANCE AND DEREGULATION
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
DECLARATION UNDER SECTION 3D
SUPERANNUATION (PRODUCTIVITY BENEFIT) (2012-2013 CONTINUING CONTRIBUTIONS) DECLARATION 2012
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 (SG Act), 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 SG Act. 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) (2012-2013 Continuing Contributions) Declaration 2012, 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 2012. These changes take account of the updated maximum contribution base in the SG Act 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 $3,370.77 to $3,519.23 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 $316.73 per week; and
(c) specify that the contributions for employees on salaries between $150.33 per week and $3,519.23 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 2012.
A Statement of Compatibility with Human Rights is at Attachment A.
ATTACHMENT A
Overview
The Superannuation (Productivity Benefit) Act 1988 was enacted to establish superannuation arrangements for certain Australian Government employees, office holders, and contractors, which were based on the minimum employer superannuation requirements outlined in the Superannuation Guarantee (Administration) Act 1992. These arrangements were closed to new employees from 1 July 2006, but continue to apply to those who were covered under the Act as of 30 June 2006 until they cease their employment or join an Australian Government superannuation scheme. The Act aims to provide a superannuation framework tailored to the unique employment conditions of these individuals. The Superannuation (Productivity Benefit) (2012-2013 Continuing Contributions) Declaration 2012, issued by the Minister for Finance and Deregulation under section 3D of the PB Act, updates the continuing contributions specified in the Act to reflect the changes in the maximum contribution base in the SG Act for the financial year commencing on 1 July 2012. This update is necessary to ensure the superannuation arrangements remain consistent with the broader superannuation framework in Australia.
Scope and Application
The Superannuation (Productivity Benefit) (2012-2013 Continuing Contributions) Declaration 2012 applies to Australian Government employees, office holders, and contractors who were already covered under the Superannuation (Productivity Benefit) Act 1988 as of 30 June 2006, and it specifies updated amounts for employer contributions under the Act. These superannuation arrangements were closed to new employees from 1 July 2006, but continue to apply to the existing covered persons until they cease relevant employment or become members of an Australian Government superannuation scheme. The Declaration is made under section 3D of the PB Act and adjusts the salary thresholds and contribution rates to reflect the updated maximum contribution base in the Superannuation Guarantee (Administration) Act 1992 for the financial year commencing on 1 July 2012. The changes include increasing the salary threshold from $3,370.77 to $3,519.23 per week, setting a flat dollar amount of $316.73 per week for contributions on salaries exceeding the new threshold, and maintaining a flat rate of 9 per cent for salaries between $150.33 and $3,519.23 per week. The Declaration is a legislative instrument under the Legislative Instruments Act 2003 and is effective from 1 July 2012.
Key Provisions
The main operative sections of the Superannuation (Productivity Benefit) (2012-2013 Continuing Contributions) Declaration 2012 (the Declaration) are found under section 3D of the Superannuation (Productivity Benefit) Act 1988 (PB Act). This section allows the Minister to update the amounts specified in the table of continuing contributions in the Schedule to the Act. The Declaration, issued under this section, modifies the table to account for the updated maximum contribution base in the Superannuation Guarantee (Administration) Act 1992 (SG Act) for the financial year commencing on 1 July 2012. These changes include an increase in the salary threshold from $3,370.77 to $3,519.23 per week, a flat dollar contribution amount of $316.73 per week for employees earning above the new threshold, and a 9 per cent contribution rate for those earning between $150.33 and $3,519.23 per week. The flat rate contribution of $13.53 per week is retained for employees earning less than $150.33 per week.
The obligations and requirements imposed by the Declaration on the parties it governs are primarily administrative. Employers who are subject to the PB Act must ensure they adhere to the new contribution rates specified in the Declaration. This includes calculating the correct superannuation contributions based on the updated salary thresholds and contribution rates. For example, employers must now contribute 9 per cent of the salary for employees earning between $150.33 and $3,519.23 per week, and a flat $316.73 per week for those earning more than $3,519.23. Failure to comply with these requirements could lead to legal and financial repercussions for the employer.
The Declaration also outlines potential civil and criminal consequences for non-compliance with its provisions. Breaches of the Act can lead to financial penalties, which are outlined in the PB Act. While the Declaration itself does not specify maximum penalties, the PB Act generally allows for fines that can be significant, particularly for repeated or deliberate non-compliance. Employers found in breach of their obligations under the Declaration may face legal action, which can include substantial fines and possibly even criminal charges for serious or wilful violations. It is important for employers to stay informed about their obligations under both the PB Act and the Declaration to avoid these potential consequences.