EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO. 415
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988 (THE ACT)
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
DECLARATION UNDER SECTION 4A OF THE ACT
The Superannuation (Productivity Benefit) Act 1988 (the Act) is the mechanism by which a 3 per cent benefit is provided to Commonwealth employees without other superannuation coverage. The benefit is funded by contributions made by employers and is provided through either the “Nominated Fund” or an “Approved Fund” declared by the Minister for Finance under sections 4B or 4C of the Act respectively.
The amount to be contributed in respect of an employee is related to the weekly rate of salary for that employee. Where the employee is employed on a part-time basis, the amount to be contributed is calculated by pro-rating either salary or hours worked against a full-time equivalent in accordance with section 3C of the Act.
A problem arises where the amount to be contributed in respect of an employee is insufficient to meet the administrative charges and (where it is compulsory for fund members) the insurance charge. The problem is exacerbated where a casual employee is employed sporadically because the Funds will usually continue to levy their periodic charges even where no contribution is made.
A related difficulty arises in relation to employees who are engaged to complete some relatively short-term task (e.g. vote counting officers after an election or persons who conduct surveys for the Australian Bureau of Statistics). While the amount required to be contributed in any pay period might be substantial, it will attract both the regular administrative and (where applicable) insurance charge and, usually, a further charge upon a benefit becoming payable.
The Declaration would effectively allow individuals in the groups listed below to opt for exclusion from having contributions made to a Fund on their behalf and get instead an equivalent benefit in cash:
any employee earning less than one-quarter of the minimum amount at which graduated 3 per cent contributions are required to be paid (currently $440 per week) ; or
any employee employed with a view to terminating employment within three months.