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.
Overview
The Superannuation (Productivity Benefit) Act 1988, enacted by the Parliament of Australia, was introduced to provide a mechanism for a 3 per cent superannuation benefit for Australian Government employees who are not covered by other superannuation schemes. The Act addresses the gap in superannuation coverage for specific classes of employees by requiring designated employers to contribute periodically to a superannuation fund based on the employee's salary, with a greater benefit provided to lower-paid wage earners. This Act also outlines the payment of a once-only amount for accrued entitlements under the former Superannuation Benefit (Interim Arrangement) Act 1988, along with interest and penalty interest for delays in payment. Additionally, it facilitates the continued payment of benefits directly by employers to employees who do not become members of a superannuation fund before becoming entitled to a benefit. The policy objective is to ensure that a superannuation benefit is accessible to eligible employees, thereby enhancing their retirement security.
Scope and Application
The Superannuation (Productivity Benefit) Act 1988 applies to Australian Government employees who do not have coverage under another superannuation scheme. It mandates that employers of these employees, who are designated under the Act, contribute a 3 per cent superannuation benefit to a fund either nominated by the Minister for Finance or another approved fund. The contribution amount is determined based on the employee's salary, with a greater proportional benefit for lower-paid employees, and is adjusted for part-time employment. The Act also requires employers to make a once-only payment of accrued entitlements and interest on delayed contributions, with additional penalty interest for any delay in payment. The Act further provides for the direct payment of benefits by employers to employees who do not join a superannuation fund, known as "remainder employees." These are qualified employees who are neither members of the Commonwealth Superannuation Scheme nor "class employees," the latter being employees specified in a declaration under section 4A of the Act. The declaration identifies employees for whom no ongoing contributions are required and excludes them from direct employer benefits. The Act’s application can be extended or modified through superannuation guidelines issued by the Minister for Finance, which allow employers to establish or amend superannuation schemes without detailed approval. The declaration under section 4A designates specific employees as "class employees" and specifies other arrangements applicable to these classes, including those employees covered by approved superannuation schemes or guidelines.
Key Provisions
The Superannuation (Productivity Benefit) Act 1988 (sections 1-4) sets out the framework for a 3 per cent superannuation benefit for Australian Government employees without other superannuation coverage. Under section 1, designated employers are required to make periodic contributions to a superannuation fund based on the employee's salary, with a greater benefit provided to lower paid wage earners. Section 2 outlines the calculation of these contributions using a structured Table. Section 3 specifies that employers must also make a once-only payment for the employee's accrued entitlement under the former Superannuation Benefit (Interim Arrangement) Act 1988 and for contributions that would have been made had the employee joined a fund from 1 July 1990. Employers are also required to pay interest on these payments and any delayed contributions, as well as penalty interest for delays (section 4).
The obligations of employers under the Act are to ensure timely and accurate contributions to the designated superannuation fund (section 1). Employers must calculate contributions using the specified Table and make the once-only payment as stipulated (section 2). Additionally, they must pay interest on these payments and any delayed contributions, and penalty interest for any delay in making the required payments (section 4). Employers must also ensure that any superannuation guidelines issued by the Minister for Finance are adhered to, and that all contributions and payments are made in accordance with those guidelines (section 5).
For breaches of the Act, the penalties and consequences are outlined in section 6. Employers who fail to make the required contributions or payments may be subject to financial penalties. The Act does not specify the exact penalties but implies that non-compliance could lead to financial repercussions. Additionally, failure to comply with the interest and penalty interest requirements may also result in financial penalties. The Act does not detail the maximum penalties but suggests that non-compliance could lead to significant financial consequences for the employer.