Superannuation (Productivity Benefit) Alternative Arrangements Declaration No. 6 1993 No. 34
EXPLANATORY STATEMENT
STATUTORY RULES 1993 No. 34
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
DECLARATION UNDER SUBSECTIONS 4A (1) AND (2)
PERFORMANCE PAY SUPERANNUATION
The Superannuation (Productivity Benefit) Act 1988 (the Act) provides the mechanism by which the minimum level employer superannuation contribution is made available to Commonwealth sector employees who have no other employer-sponsored superannuation coverage.
The designated employers of such employees are required to pay to either the superannuation fund nominated by the Minister for Finance or a fund approved by the Minister periodic contributions based on the salary of the employee as well as a once only payment of entitlements accrued under the Act in respect of service prior to the date when the employees join the fund.
Subsection 4A(1) of the Act allows the Minister to declare that a group of employees who come within the ambit of the Act (qualified employees) is a specified class of employees to which the normal provisions of the Act relating to fund membership and benefit accrual do not apply.
Subsection 4(A)2 of the Act allows the Minister to specify that particular superannuation arrangements apply to declared classes of qualified employees.
This Declaration provides that qualified employees who are entitled to receive performance pay are a class of employees (members) who may elect to have performance pay taken into account for superannuation purposes. If members wish to do so they must elect by written notice; if no election is made, superannuation is not provided. The Declaration provides that the superannuation payments of members who make such an election, and who are not fixed term appointees to the Senior Executive Service to whom superannuation benefits are provided under section 45 of the Public Service Act 1922 subject to the Minister's approval under the Superannuation Benefits (Supervisory Mechanisms) Act 1990, must be made to a fund approved under the Act. Employees in the latter category may have their performance pay superannuation paid either in accordance with the arrangement approved for them tinder the Superannuation Benefits (Supervisory Mechanisms) Act 1990 or to a fund approved under the Act.
Members who receive performance pay before 25 February 1993 and who wish to take the superannuation option must elect to do so within 3 months of receiving that performance pay. Members receiving performance pay after that date must make an election before the performance pay is paid.
If a member makes an election his or her designated employer must pay 5 per cent of the member's performance pay, together with an amount additional to the performance pay and equal to 15 per cent of the performance pay to an approved fund.
Any member entitled under the Act to receive continuing contributions otherwise than in respect of performance pay remains entitled to receive those contributions as if this Declaration did not apply.
The declaration takes effect from 17 December 1992. The retrospective effect of this declaration does not affect in a prejudicial manner the rights of any person other than the Commonwealth.
Overview
The Superannuation (Productivity Benefit) Act 1988, enacted by the Parliament of Australia, was introduced to address the problem of ensuring Commonwealth sector employees without employer-sponsored superannuation coverage receive the minimum level of employer superannuation contributions. This Act facilitates the payment of these contributions to a fund nominated or approved by the Minister for Finance, based on the employee's salary and any accrued entitlements prior to joining the fund. The Superannuation (Productivity Benefit) Alternative Arrangements Declaration No. 6 1993 further refines the Act by allowing qualified employees entitled to performance pay to elect for this pay to be considered for superannuation purposes. The declaration mandates that if an employee elects to have performance pay included in their superannuation, their designated employer must contribute 5 per cent of the performance pay, plus an additional 15 per cent, to an approved superannuation fund. This arrangement is designed to ensure that eligible employees receive appropriate superannuation benefits, while also providing flexibility in how these benefits are structured and paid.
Scope and Application
The Superannuation (Productivity Benefit) Alternative Arrangements Declaration No. 6 1993 No. 34 applies to qualified employees within the Commonwealth sector who are entitled to receive performance pay and have no other employer-sponsored superannuation coverage. This includes employees who are entitled to receive superannuation benefits under the Superannuation (Productivity Benefit) Act 1988. Employers designated by the Minister for Finance must pay periodic contributions to either the superannuation fund nominated by the Minister or an approved fund based on the employee's salary, as well as a once-only payment of entitlements accrued under the Act in respect of service prior to the employee joining the fund. The Declaration allows for the superannuation payments of members who make an election to have their performance pay taken into account for superannuation purposes to be made to an approved fund. The declaration applies to employees who receive performance pay before 25 February 1993 and who wish to take the superannuation option, provided they elect to do so within three months of receiving that performance pay. Members receiving performance pay after that date must make an election before the performance pay is paid. The declaration takes effect from 17 December 1992, and its retrospective effect does not affect the rights of any person other than the Commonwealth.
Key Provisions
The Superannuation (Productivity Benefit) Alternative Arrangements Declaration No. 6 1993 No. 34 outlines provisions under the Superannuation (Productivity Benefit) Act 1988, particularly concerning how certain employees receive their superannuation contributions. Section 4A(1) allows the Minister to declare a specific class of employees who, while still eligible for the minimum level of employer superannuation contributions, are exempt from the normal provisions of the Act relating to fund membership and benefit accrual. Section 4A(2) enables the Minister to specify alternative superannuation arrangements for these declared employees. For employees receiving performance pay, they may choose to have this included in their superannuation benefits. If they wish to do so, they must notify their employer in writing; otherwise, no superannuation will be provided for this pay.
The obligations under this declaration are quite clear. Designated employers must ensure that employees who make the election to include performance pay in their superannuation are paid accordingly. Employers must remit 5% of the performance pay, plus an additional amount equal to 15% of the performance pay, to a fund approved by the Minister. This applies to employees receiving performance pay before and after 25 February 1993, though those receiving it before this date must make their election within three months of receiving the pay, while those receiving it after must elect before the pay is disbursed. Employees who are entitled to receive continuing contributions under the Act remain unaffected by this declaration.
Breach of the obligations set out in this Declaration can result in various consequences. Employers failing to remit the required superannuation contributions to the approved fund can be subject to enforcement actions. The Act does not specify exact penalties within the Declaration itself but generally, failure to comply with superannuation obligations can lead to fines and legal action. Employers must ensure compliance to avoid these repercussions.