Superannuation (Productivity Benefit) Alternative Arrangements (Pre-existing Arrangements with Complying Funds) Declaration 1995 No. 76
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 76
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) provides the mechanism by which the minimum level of employer superannuation contribution is made available to Commonwealth sector employees who have no other employer-sponsored superannuation coverage. The Act also provides superannuation arrangements for the Senior Executive Service and senior officers of the APS who elect to participate in the performance based pay superannuation arrangements.
Subsection 4A(1) of the Act allows the Minister to declare that a group of qualified employees is a specified class of employees who are neither fund employees nor interim arrangement employees (in effect a declared class of employees are outside the superannuation arrangements of the Act).
Subsection 4(A)2 of the Act allows the Minister to specify that particular superannuation arrangements (other than those provided under the Act) apply to the declared class of qualified employees.
This declaration has two purposes. Firstly, persons who have a pre-existing superannuation arrangement before taking up Commonwealth employment, and who make an election under this declaration, are declared to be a class of qualified employees under subsection 4A(1) of the Act.
Under subsection 4A(2) of the Act, employees with pre-existing superannuation arrangements may make an election to use any pre-existing superannuation arrangement for the purpose of receiving employer-sponsored superannuation contributions payable under the Act. To qualify, the pre-existing superannuation arrangement being nominated must be prepared to accept the superannuation contributions, and be a complying fund for the purposes of the Income Tax Assessment Act 1936.
The employee may, at any time, revoke the election to use the pre-existing superannuation arrangement and make a further election for one of any other pre-existing superannuation arrangements, the nominated fund (AGEST), or one of the other eleven approved funds under the Act.
Where an employee either does not make an election, or revokes an election without making a further election, the person becomes a member of AGEST. Any revocation of an election under this declaration must be made in writing and has effect from the day the notice is given.
The declaration commences from the commencement of the funded productivity superannuation arrangements under the Act on 1 July 1990. This would permit current AGEST members, (in addition to future members), who are still in Commonwealth employment to transfer their contributions made under the Act to any pre-existing superannuation arrangements. 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) Alternative Arrangements (Pre-existing Arrangements with Complying Funds) Declaration 1995 was enacted to address the need for a flexible superannuation framework that accommodates pre-existing superannuation arrangements for Commonwealth sector employees. This statutory rule was issued under section 4A of the Superannuation (Productivity Benefit) Act 1988, and it was authorised by the Minister for Finance. The primary objective of the declaration is to allow qualified employees who have pre-existing superannuation arrangements, provided they meet the criteria of being a complying fund under the Income Tax Assessment Act 1936, to elect to use these arrangements for receiving employer-sponsored superannuation contributions. This ensures that employees with existing superannuation arrangements can continue to utilise them while being employed by the Commonwealth, thereby providing a seamless transition and maintaining their pre-existing benefits. Employees can also opt to revoke their election and switch to another pre-existing arrangement, the nominated fund (AGEST), or any other approved fund under the Act.
Scope and Application
The Superannuation (Productivity Benefit) Alternative Arrangements (Pre-existing Arrangements with Complying Funds) Declaration 1995 No. 76 applies to Commonwealth sector employees who have pre-existing superannuation arrangements and who wish to use these arrangements to receive employer-sponsored superannuation contributions under the Superannuation (Productivity Benefit) Act 1988. The Act provides a mechanism for ensuring these employees receive a minimum level of employer superannuation contributions. The declaration specifically allows qualified employees who have pre-existing superannuation arrangements to elect to use these arrangements to receive employer-sponsored contributions, provided the pre-existing arrangements are prepared to accept the contributions and are complying funds under the Income Tax Assessment Act 1936. This enables eligible employees to transfer their contributions from the Australian Government Employees Superannuation Trust (AGEST) to their pre-existing superannuation arrangements. The declaration applies to all qualified employees who make an election to use their pre-existing arrangements, and it has a retrospective effect, allowing current AGEST members to transfer their contributions. The declaration does not prejudice the rights of any person other than the Commonwealth and is made under the authority of the Minister for Finance.
Key Provisions
The Superannuation (Productivity Benefit) Alternative Arrangements (Pre-existing Arrangements with Complying Funds) Declaration 1995 No. 76 provides a mechanism under Section 4A of the Superannuation (Productivity Benefit) Act 1988, allowing employees with pre-existing superannuation arrangements to continue using these arrangements for employer-sponsored superannuation contributions. According to subsection 4A(1) of the Act, a class of qualified employees who are not fund employees or interim arrangement employees can be declared by the Minister. Subsection 4A(2) further allows the Minister to specify that these declared employees can use their pre-existing superannuation arrangements, provided they meet the criteria of being a complying fund under the Income Tax Assessment Act 1936.
The obligations imposed by this declaration on the parties involved are primarily centred on the eligibility and maintenance of pre-existing superannuation arrangements. Employees with pre-existing arrangements can elect to use these arrangements for the receipt of employer-sponsored superannuation contributions under the Act. To qualify, the pre-existing arrangement must be willing to accept these contributions and comply with the requirements of being a complying fund. Employees also have the flexibility to revoke their election and switch to another pre-existing arrangement, the nominated fund (AGEST), or any of the other eleven approved funds under the Act at any time. Any revocation must be made in writing and will take effect from the date the notice is given.
Breaches of the requirements set out in this declaration could result in civil or administrative consequences. Employees who do not make an election or revoke an election without making a further election become members of AGEST by default. There is no explicit mention of specific offences or penalties in the text, but it is implied that failure to comply with the election process or the terms of the pre-existing arrangements could lead to non-compliance with the Act, potentially resulting in loss of benefits or other administrative repercussions. The declaration ensures that the rights of individuals other than the Commonwealth are not prejudiced by its retrospective effect.