EXPLANATORY STATEMENT
Issued by the Minister for Finance
Superannuation (Productivity Benefit) Act 1988
Declaration under Section 3D
Superannuation (Productivity Benefit) (Continuing Contributions) Amendment Declaration 2014 (No. 1)
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 (SGAA), 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 PB 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 PB Act (known as continuing contributions) are calculated by reference to amounts specified in a table in the Schedule to the PB Act. Contributions for employees earning more than a salary threshold specified in the table are limited to the applicable superannuation guarantee charge percentage of the salary threshold. The threshold is based on the maximum contribution base in the SGAA. Employers are not required to provide superannuation on an employee’s earnings above the maximum contribution base.
Section 3D of the PB Act provides that amounts specified in the table in the Schedule to the Act can be updated by declaration made by the Minister.
The Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013 (the Principal Declaration) introduced a mechanism for calculating amounts in the table in the Schedule to the PB Act for future years commencing from 1 July 2013. That mechanism set out a table that specified a percentage to be used for each financial year in calculating the required contributions.
The main purpose of the Superannuation (Productivity Benefit) (Continuing Contributions) Amendment Declaration 2014 (No. 1) (the Declaration), is to amend the mechanism for calculating amounts in the table of continuing contributions set out in the Principal Declaration to directly link the specified percentage with the superannuation guarantee charge percentage as set out in the SGAA.
This change will allow the Principal Declaration to have perennial application, removing the need for future declarations to be made.
In relation to sections 17 and 18 of the Legislative Instruments Act 2003, no consultation was considered necessary because the instrument is of a minor or machinery nature and does not substantially alter existing arrangements.
The Office of Best Practice Regulation (OBPR) assessed that the changes to be made by the Declaration will have a nil or low impacts and no further analysis in the form of a Regulation Impact Statement was required (OBPR ID: ID 17087).
The Declaration is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LI Act). Although section 44 of the LIA exempts superannuation instruments from disallowance, the Declaration is subject to disallowance in accordance with section 9B of the PB Act.
The Declaration commences on 1 July 2014.
The details of the Declaration are explained in Attachment A. A Statement of Compatibility with Human Rights is at Attachment B.
Attachment A
Superannuation (PRODUCTIVITY BENEFIT) (CONTINUING CONTRIBUTIONS) Amendment Declaration 2014 (no. 1)
Section 1 – Name of Declaration
This section provides that the name of the Declaration is the Superannuation (Productivity Benefit) (Continuing Contributions) Amendment Declaration 2014 (No. 1).
Section 2 – Commencement
This section provides for the Declaration to commence on 1 July 2014.
Section 3 – Amendment of Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013
This section provides that Schedule 1 of the Declaration amends the Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013 (the Principal Declaration).
Schedule 1 – Amendments
Item 1 omits “1 July 2013” and replaces it with “1 July 2014”. This reflects the commencement date of the Declaration which is 1 July 2014.
Item 2 inserts the amended table of continuing contributions. The variable “C%” is introduced into the table of continuing contributions.
Item 3 sets out and amends the definitions of the variables used in table of continuing contributions.
The variable “C%” is introduced to the table of continuing contributions. “C%” denotes the relevant superannuation guarantee charge percentage as set out in the SGAA.
The “$B” variable denotes the relevant maximum contribution base as set out in the SGAA.
The “$A” variable links the flat rate superannuation contribution of $13.53 per week to the relevant superannuation guarantee charge percentage in the SGAA. The “$A” variable will capture increases to the charge percentage.
The flat rate superannuation contribution of $13.53 per week is retained for lower paid wage earners whose weekly rate of salary is less than the minimum threshold represented by the variable “$A”.
ATTACHMENT B