EXPLANATORY STATEMENT
Issued by the Minister for Finance
Superannuation (Productivity Benefit) Act 1988
Declaration under section 3D
Superannuation (Productivity Benefit) (Continuing Contributions) Amendment (Payday Superannuation) Declaration 2026
The Superannuation (Productivity Benefit) Act 1988 (PB Act) provides superannuation arrangements for certain Australian Government employees, office holders and contractors (employees) that broadly align with the minimum employer superannuation requirements in the Superannuation Guarantee (Administration) Act 1992 (SGAA).
The superannuation arrangements under the PB Act were closed to new employees from 1 July 2006. The arrangements 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, such as the Public Sector Superannuation Accumulation Plan.
For the purposes of section 3C of the PB Act, the Schedule to the Act contains a table establishing the amount of employer contributions, termed ‘continuing contributions’, that must be paid in respect of a fund employee each pay period. 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) is made for these purposes.
The Principal Declaration broadly aligns the continuing contribution rate to the minimum employer contributions necessary to avoid incurring the superannuation guarantee charge under the SGAA. It also includes a contribution ‘floor’ to provide minimum contributions for income under a certain level.
To this end, the table in subsection 3(1) of the Principal Declaration, which sets the calculation method for determining these continuing contribution amounts, incorporates two SGAA provisions, being:
- the relevant charge percentage for the relevant financial year (subsection 19(2)); and
- the ‘maximum contribution base’ for the relevant quarter (section 15).
Amendment Declaration
On 1 July 2026, amendments made to the SGAA by the Treasury Laws Amendment (Payday Superannuation) Act 2025 will commence. These amendments amend the manner in which minimum contributions are calculated under the SGAA and make changes to the provisions referenced in the Principal Declaration. In particular, from this date:
- the maximum contribution base, renamed ‘maximum contributions base’, will move from a quarterly base amount to an annual base amount, and will operate as a direct limit on contributions rather than on ordinary time earnings (OTE);
- contribution obligations will apply to employers by reference to an employee’s ‘qualifying earnings’ on a ‘QE day’ rather than on OTE in a quarter, and
- the variable ‘charge percentage’ previously specified by reference to particular financial years will be fixed at 12%.
The Amendment Declaration makes consequential amendments to recognise these changes. Following the amendments the method for calculating employer contributions under the Principal Instrument will be aligned with the SGAA employer contribution requirements.
The Amendment Declaration maintains the minimum weekly contribution amount at $13.53 for persons with a weekly superannuation salary of $112.75 or less on a pay period, which is the rate that applied immediately before the instrument was made. This is to ensure that the minimum superannuation contribution amount provided under the Principal Declaration, which exceeds the SGAA minimum contribution requirements, continues in operation.
Legislation Act 2003
The Amendment Instrument and the Principal Instrument are not subject to sunsetting because section 11 of the Legislation (Exemptions and Other Matters) Regulation 2015 specifies, via item 6 of the table in that section, ‘an instrument (other than a regulation) relating to superannuation’ to be a class of legislative instrument that is not subject to sunsetting under Part 4 of Chapter 3 of the Legislation Act 2003. The exemption was put in place because it was considered that sunsetting of instruments relating to superannuation could cause commercial uncertainty, as well as uncertainty for superannuation fund members and providers. These instruments are intended to have enduring operation, and it would not be appropriate to subject them to sunsetting.
The Declaration is a legislative instrument for the purposes of the Legislation Act 2003 (Legislation Act). Although section 44 of the Legislation Act exempts superannuation instruments from disallowance, the Declaration is subject to disallowance in accordance with section 9B of the PB Act.
The details of the Declaration are explained in Attachment A.
Consultation
No consultation was considered necessary because the instrument is of a minor or machinery nature and does not detrimentally alter existing arrangements and entitlements.
Commencement
The Amendment Declaration commences on 1 July 2026.
Statement of Compatibility with Human Rights
A Statement of Compatibility with Human Rights is at Attachment B.
Attachment A
Superannuation (PRODUCTIVITY BENEFIT) (CONTINUING CONTRIBUTIONS) Amendment (PAYDAY SuperANNUATION) Declaration 2026
Section 1 – Name of Declaration
This section provides that the name of this Declaration is the Superannuation (Productivity Benefit) (Continuing Contributions) Amendment (Payday Superannuation) Declaration 2026.
Section 2 – Commencement
This section provides for this Declaration to commence on 1 July 2026.
Section 3 – Authority
This section provides that the authority for the Declaration is section 3D of the PB Act.
Section 4 – Amendment of Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013
This section provides that Schedule 1 of this Declaration amends the Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013 (the Principal Declaration).
Section 5 – Application of amendments in Schedule 1
This section provides for the application of amendments made by Schedule 1. Section 5(1) provides that the amendments made by this Declaration commence in respect of pay periods ending on or after 1 July 2026.
Section 5(2) provides that the amendments made by Schedule 1 do not repeal or alter the application of the Principal Instrument as in force immediately before 1 July 2026 for pay periods that ended before 1 July 2026.
Schedule 1 – Amendments
Item 1 omits “1 July 2014” as the date of the first financial year from which the Table has effect, and replaces it with “1 July 2026”.
Item 2 omits the table in subsection 3(1) and inserts the new table establishing continuing contributions requirements from financial years beginning on or after 1 July 2026.
Item 3 omits subsection 3(2) which sets out definitions that were used in the table, which are no longer required.
The effect of the new table is to maintain the existing minimum contribution floor, while aligning other contribution requirements with contribution requirements under the Superannuation Guarantee (Administration) Act 1992 (SGAA) from 1 July 2026. Relevantly, from this date, the SGAA terms used in the existing table in subsection 3(1) will change in meaning.
- The previous table specified salary thresholds, and the required contribution percentage, by reference in part to the ‘charge percentage’ under subsection 19(2) of the SGAA. This provision is repealed from 1 July 2026 and instead the charge percentage by which minimum contributions are calculated is 12 % (subsection 17A(2)).
- The previous table also specified maximum continuing contributions by reference to the charge percentage multiplied by the weekly equivalent of the quarterly ‘maximum contribution base’ under section 15 of the SGAA. This provision is repealed from 1 July 2026 and instead the new ‘maximum contributions base’ (MCB) will operate as a cap on annual contributions (section 10A(6)).
The new table will take into account these changes while broadly preserving the same outcomes for relevant employees as under the existing arrangements.
Minimum contributions for low income earners
Under the new table, for each pay period, where a fund employee’s weekly rate of salary is less than $112.75, the weekly continuing contribution amount that the employer must pay for that period is $13.53. This is the same rate as under the existing table, but expressed as a numerical salary rate rather than by reference to the charge percentage under the SGAA.
Fixing this weekly rate of salary threshold at $112.75 ensures that the contribution rate provided to lower paid wage earners is maintained in keeping with the rate provided immediately before the commencement of this Declaration. The effective rate of the contribution amount is higher than the 12 percent contribution (‘charge percentage’) required by the SGAA.
Contributions for other employees
For fund employees (employees) whose weekly rate of salary is $112.75 or more, the table provides for the weekly continuing contribution for the relevant pay period to be calculated in accordance with the minimum employer contribution requirements under the SGAA from 1 July 2026.
From this date, the SGAA provides that on a ‘QE day’ (defined under the SGAA as the day on which an employer pays an employee their superannuable earnings), employers must pay superannuation contributions equal to the ‘individual superannuation guarantee amount’ to avoid a superannuation guarantee shortfall. A superannuation guarantee charge is payable on an employer’s superannuation guarantee shortfall.
The ‘individual superannuation guarantee amount’ as defined under the SGAA is the amount of superannuable earnings (‘qualifying earnings’) of an employee for the relevant pay period multiplied by the charge percentage (12%).
Where an employee’s cumulative earnings reach the MCB for that employer in a relevant year, the amount of qualifying earnings is treated as being reduced (including to nil) for the purpose of determining the ‘individual superannuation guarantee amount’ under the SGAA. Continuing contributions under the PB Act will consequently also be reduced to nil once the employee’s qualifying earnings have reached the MCB for the year.
ATTACHMENT B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Superannuation (Productivity Benefit) (Continuing Contributions) Amendment (Payday Superannuation) Declaration 2026
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
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.
The purpose of Superannuation (Productivity Benefit) (Continuing Contributions) Amendment (Payday Superannuation) Declaration 2026, made under section 3D of the PB Act, is to update the method for calculating continuing contributions set out in Superannuation (Productivity Benefit) (Continuing Contributions) Declaration 2013 in relation to financial years commencing from 1 July 2026. These changes will ensure that employer contributions provided by the PB Act continue to align with employer contribution requirements under the SGAA.
Human Rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Senator the Hon Katy Gallagher, Minister for Finance