Superannuation (Productivity Benefit) (Approved Funds) Declaration 2006

Overview

The Superannuation (Productivity Benefit) Act 1988 was enacted to ensure that Australian Government employees and certain other individuals who do not have access to other employer-sponsored superannuation arrangements receive a minimum level of superannuation support through the Superannuation Guarantee (SG). Initially, this Act provided productivity superannuation benefits, but it was amended by the Superannuation (Consequential Amendments) Act 2005 to cease new enrolments into the scheme from 1 July 2006. The Superannuation (Productivity Benefit) (Approved Funds) Declaration 2006, issued by the Minister for Finance and Administration, was introduced to address the changes resulting from the merger of two approved funds into AustralianSuper. The declaration revokes previous declarations and lists six approved funds that continue to be compliant under the Act, ensuring that the scheme's administration remains streamlined and effective. The policy objective remains to maintain and regulate the approved funds to which SG contributions can be made for eligible employees.

Scope and Application

The Superannuation (Productivity Benefit) (Approved Funds) Declaration 2006 applies to superannuation funds listed within its provisions, specifically recognising AustralianSuper, the Construction and Building Unions Superannuation Fund, the Health Employees Superannuation Trust Australia, JUST SUPER, the Labour Union Co-operative Retirement Fund, and the TWU Superannuation Fund as approved funds under the Superannuation (Productivity Benefit) Act 1988. These funds are designated as approved funds in accordance with subsection 4C(1) of the Act, and they must comply with the criteria set out in section 4D of the same Act, which includes being a complying fund as defined by the Income Tax Assessment Act 1936. The declaration also revokes all previous declarations under the same subsection, thus consolidating the list of approved funds effective from 1 July 2006. The geographic reach of this declaration is aligned with the national jurisdiction of Australia, impacting the superannuation arrangements for employees covered under the PB Act, who are typically Australian Government employees or certain other persons without employer-sponsored superannuation cover. The declaration does not introduce any new approved funds but updates the list to reflect the merger of the Australian Retirement Fund and the Superannuation Trust of Australia into AustralianSuper.

Key Provisions

The Superannuation (Productivity Benefit) (Approved Funds) Declaration 2006, under section 4C(1) of the Superannuation (Productivity Benefit) Act 1988 (PB Act), designates six superannuation funds as approved funds. These funds are AustralianSuper, Construction and Building Unions Superannuation Fund, Health Employees Superannuation Trust Australia, JUST SUPER, Labour Union Co-operative Retirement Fund, and TWU Superannuation Fund. The Declaration revokes all previous declarations made under subsection 4C(1) of the PB Act and will apply from 1 July 2006. This Declaration is necessary due to the merger of two funds into AustralianSuper, while the other funds remain unchanged. The funds listed are all complying funds in accordance with section 4D of the PB Act, meaning they meet the criteria to be approved funds. The PB Act, as amended, imposes specific obligations on designated employers of employees covered by the Act. These employers must make periodic contributions to a superannuation fund nominated or approved by the Minister for Finance and Administration, as per section 4C(1) of the Act. If an employee is eligible, contributions can be made to another regulated superannuation fund as defined under the Superannuation Industry (Supervision) Act 1993. Employers are required to ensure that these contributions are made in accordance with the terms set out by the PB Act and any relevant regulations. This ongoing obligation continues until the employee ceases to meet the qualification criteria for PB Act coverage. Under the PB Act, there are specific consequences and penalties for non-compliance with the Act's provisions. Employers who fail to make the required periodic contributions may be subject to civil or criminal penalties, depending on the nature and extent of the breach. Civil penalties can include fines, while criminal penalties may involve imprisonment, particularly if the non-compliance is deemed to be wilful or involves significant financial loss to employees. The precise penalties are determined by the courts and can vary based on the specific circumstances of each case. However, the Act ensures that there are robust mechanisms in place to enforce compliance and protect the interests of employees. The Declaration itself is a legislative instrument under the Legislative Instruments Act 2003 and does not require consultation as it is considered minor or machinery in nature. It comes into effect on 1 July 2006, replacing all previous declarations and ensuring that the list of approved funds is current and reflects any necessary changes, such as mergers or consolidations. This update is essential for maintaining the integrity and effectiveness of the superannuation arrangements under the PB Act. The declaration has no impact on the existing membership of the approved funds and does not introduce any new funds into the list.