EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO.175
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
DECLARATION UNDER SECTION 4A
CLASSES OF EMPLOYEES TO BE NEITHER FUND EMPLOYEES NOR INTERIM ARRANGEMENT EMPLOYEES
The Superannuation (Productivity Benefit) Act 1988 provides the mechanism by which a 3 per cent superannuation benefit is made available to Australian Government employees without other superannuation coverage.
The designated employers of such employees are 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. The amount to be contributed is calculated using a Table set out in a Schedule to the Act. The Table is structured so that a proportionally greater benefit is provided to lower paid wage earners. The amount to be contributed is adjusted where the employee is not employed full-time.
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 an amount should have been paid to a fund and the date when it was paid.
The Act also provides a mechanism for the continued payment of a benefit directly by the employer where the employee does not become a member of a fund before becoming entitled to a benefit. The Act provides for a superannuation benefit to be provided to “remainder employees”. “Remainder employees” are “qualified employees” who are not:
• members either of the Commonwealth Superannuation Scheme or the new Commonwealth superannuation scheme; or
• ”class employees”.
A “class employee” is an employee who is a member of a class specified in a declaration issued under section 4A. There is no requirement that continuing contributions be made to a superannuation fund for such an employee, and that employee is also excluded from the benefit paid directly by the employer to employees who do not become members of superannuation funds. The declaration under section 4A may also specify other arrangements that are to apply to a declared class.
Before its repeal, Part XA of the Superannuation Act 1976 provided, and the Superannuation Benefits (Supervisory Mechanisms) Act 1988 provides, that the Minister for Finance may approve the provision of superannuation outside the main Commonwealth schemes for Australian Government employees in one of two ways. He may either:
• approve a scheme which provides superannuation for such employees; or
• issue superannuation guidelines to enable the employer to establish or amend a superannuation scheme without the need for detailed approval.
The superannuation guidelines issued by the Minister have provided the employers to whom they have been issued with the power to provide a 3 per cent superannuation benefit. That benefit need not be provided in the same way as the benefit under the Superannuation Benefit (Interim Arrangement) Act 1988 or the Superannuation (Productivity Benefit) Act 1988.
The declaration makes into “class employees” all employees of employers to whom superannuation guidelines have been issued and other employers for whom the Minister has approved a superannuation scheme which provides a 3 per cent benefit.
The declaration also makes into “class employees” a number of categories of employees who are provided with an employer-financed 3 per cent benefit through some other means.