Superannuation (Productivity Benefit) Declaration No. 13 1992 No. 182
EXPLANATORY STATEMENT STATUTORY RULES 1992 No. 182
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988 ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE DETERMINATION UNDER SECTION 4G
INTEREST IN RESPECT OF PERIOD OF DELAY
The Superannuation (Productivity Benefit) Act 1988 (the Act) provides the mechanism by which productivity superannuation is made available to Australian Government employees who have no other employer-sponsored superannuation coverage.
From 1 July 1990 the designated employers of such employees have been required to pay to either the superannuation fund nominated by the Minister for Finance or another fund approved by the Minister periodic contributions based on the salary of the employee.
Employers are required as well to pay to the same fund, on a once only basis, an amount being the entitlement accrued by the employee under the former Superannuation Benefit (Interim Arrangement) Act 1988 and an amount in respect of contributions which would have been paid after 1 July 1990 had the employee joined a fund on that date.
The employer is required to pay extra amounts as interest on the once-only payment and on any contributions which were not made. The employer is also required to pay penalty interest in respect of any period of delay between the date when the employee is enlisted into a fund and the date when the payment was made.
Section 4G of the Act provides that the interest fixed under it for the purposes of sections 4E, 4EA and 4F is calculated in a way determined by the Minister.
Paragraph 4E(b) provides for interest to be paid on the amount accrued as an interim benefit under section 8A where the amount was not paid on the day on which the employee became a member of a fund. Interest is payable in respect of the period commencing on the day on which payment should have been made and ending on the day before the day when payment was made.
Section 4EA provides for interest to be paid on the amount accrued as an interim benefit under section 8A where the amount was not paid on the day on which the employee became a member of the superannuation scheme established under the Superannuation Act 1976 or the Superannuation Act 1990. Interest is payable in
respect of the period commencing on the day on which payment should have been made and ending on the day before the day when payment was made.
Paragraph 4F(1)(b) provides for interest to be paid on an instalment of continuing contributions which was not paid on the day on which it was payable (either the employee's pay day or a day agreed between the employer and the fund trustees). Interest is payable in respect of the period commencing on the day on which payment should have been made and ending on the day before the day when payment was made.
The Determination provides for interest to be calculated on all amounts which should have been aid on a given day in respect of the period of delay. It is based on an interest rate of 0.1145 which is the equivalent of 2 per cent per annum higher than the rate used to establish the first and second interest factors for benefit calculation purposes under the Act. The formula used to calculate penalty interest during the 1992-93 financial year is specified in the Determination.
The Determination commences on 1 July 1992.
Overview
The Superannuation (Productivity Benefit) Declaration No. 13 1992 was enacted under the authority of the Superannuation (Productivity Benefit) Act 1988 to address the issue of providing a productivity benefit to Australian Government employees who lack employer-sponsored superannuation coverage. This legislation ensures that these employees receive periodic contributions based on their salary, which are to be paid to a superannuation fund approved by the Minister for Finance. Additionally, the legislation mandates that employers make once-only payments to cover entitlements accrued under the former Superannuation Benefit (Interim Arrangement) Act 1988 and potential contributions from 1 July 1990. The Declaration also specifies the calculation of interest on delayed payments and penalty interest for any delay in enrolling employees into a fund, thereby promoting timely and accurate superannuation contributions for affected employees.
This Determination under Section 4G of the Superannuation (Productivity Benefit) Act 1988, issued by the Minister for Finance, sets forth the method for calculating interest on amounts that should have been paid on a specific day due to a delay. The interest rate is set at 0.1145, which is 2% higher than the rate used for benefit calculation purposes under the Act. The formula for calculating penalty interest during the 1992-93 financial year is detailed in the Determination, which came into effect on 1 July 1992. This measure aims to ensure that any delays in payments are compensated appropriately, thus maintaining the integrity of the superannuation contributions system.
Scope and Application
The Superannuation (Productivity Benefit) Declaration No. 13 applies to employers of Australian Government employees who do not have other employer-sponsored superannuation coverage. This legislation is concerned with the calculation and payment of interest on superannuation contributions and benefits that have been delayed. It is a Commonwealth statute, and its provisions apply nationally across Australia. The Act requires designated employers to make periodic contributions to a superannuation fund approved by the Minister for Finance and to pay interest on any delayed contributions or benefits. The interest is calculated in accordance with the rules set out in the Act and any relevant determinations. Notably, the Act does not explicitly state exclusions or thresholds; however, it does detail the specific conditions under which interest is payable, including delays in payments and contributions. The application and scope of the Act can be extended or modified through subordinate instruments such as the Determination, which sets out the specific interest rates and formulas for calculating interest during certain periods.
Key Provisions
The Superannuation (Productivity Benefit) Declaration No. 13 1992 No. 182 primarily deals with the interest calculations regarding the delayed payments under the Superannuation (Productivity Benefit) Act 1988 (the Act). According to section 4G, the interest fixed under the Act for the purposes of sections 4E, 4EA, and 4F is calculated as determined by the Minister. Section 4E(b) specifies that interest is payable on the amount accrued as an interim benefit under section 8A where the amount was not paid on the day the employee became a member of a fund, for the period from the day payment should have been made until the day before payment was made. Section 4EA provides for similar interest on the amount accrued as an interim benefit under section 8A where the amount was not paid on the day the employee became a member of the superannuation scheme established under the Superannuation Act 1976 or the Superannuation Act 1990. Section 4F(1)(b) requires interest to be paid on an instalment of continuing contributions which was not paid on the day it was payable, for the period from the day payment should have been made until the day before payment was made.
The Act imposes several obligations on employers, primarily related to timely contributions to the superannuation funds of employees who lack other employer-sponsored superannuation coverage. Employers are mandated to make periodic contributions to either the fund nominated by the Minister for Finance or another approved fund, based on the employee’s salary (Section 4G). Furthermore, employers are required to make a one-time payment to the fund, covering the employee’s accrued entitlement under the former Superannuation Benefit (Interim Arrangement) Act 1988, as well as the contributions that would have been made had the employee joined a fund on 1 July 1990. Additionally, employers must pay extra amounts as interest for any delayed payments and penalty interest for any period of delay between the employee being enlisted into a fund and the payment being made.
The Superannuation (Productivity Benefit) Declaration No. 13 1992 No. 182 specifies the interest rate and formula used to calculate the penalty interest for the 1992-93 financial year. The interest rate is set at 0.1145, which is 2 per cent higher than the rate used to establish the first and second interest factors for benefit calculation purposes under the Act. The formula for calculating penalty interest is detailed in the Determination, which commenced on 1 July 1992. Non-compliance with these provisions could potentially lead to financial penalties for the employers, as the Act and the Determination do not explicitly detail criminal or civil penalties for breaches, but the obligation to pay accurate interest as calculated is strict.