Superannuation (Productivity Benefit) Declaration No. 9 1991 No. 127
EXPLANATORY STATEMENT STATUTORY RULES 1991 No. 127
SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988 ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE DECLARATION UNDER SECTION 4G
INTEREST IN RESPECT OF PERIOD OF DELAY
The Superannuation (Productivity Benefit) Act 1988 (the Act) provides the mechanism by which a 3 per cent superannuation benefit is made available to Australian Government employees without other superannuation coverage.
From 1 July 1990 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.
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.
Section 4G of the Act provides that the interest fixed under it for the purposes of sections 4E 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 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.
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 paid on a given day in respect of the period of delay. It is based on an interest rate of 0.13 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 1991-92 financial year is specified in the declaration.
The declaration commences on 1 July 1991.
Overview
The Superannuation (Productivity Benefit) Declaration No. 9 1991 No. 127, issued under the authority of the Minister for Finance, was enacted to provide an interest rate for superannuation contributions under the Superannuation (Productivity Benefit) Act 1988. This Act was designed to address the gap in superannuation coverage for Australian Government employees who did not have access to other superannuation schemes. The 1988 Act provides for a 3 per cent superannuation benefit for these employees, and the 1991 Declaration aims to ensure that interest is appropriately calculated for any delays in making required contributions. The policy objective of this legislative instrument is to maintain the integrity of the superannuation contributions by ensuring that interest is paid on delayed payments, thereby incentivising timely contributions and reflecting the time value of money.
Scope and Application
The Superannuation (Productivity Benefit) Declaration No. 9 1991 No. 127 applies to designated employers under the Superannuation (Productivity Benefit) Act 1988 who are responsible for Australian Government employees without other superannuation coverage. This includes both Commonwealth employers and certain state and territory employers as designated by the Minister for Finance. These employers are required to make periodic contributions based on the employees' salaries to either the superannuation fund nominated by the Minister or another approved fund, and also to pay a once-only amount corresponding to the entitlement accrued under the former Superannuation Benefit (Interim Arrangement) Act 1988. The Act further mandates that employers pay interest on any delayed payments and penalty interest for delays between the due date and the actual payment date. The interest is calculated according to a formula determined by the Minister, with an interest rate set at 0.13, which is 2 per cent per annum higher than the rate used for benefit calculation purposes under the Act. The declaration, which specifies the interest formula for the 1991-92 financial year, commences on 1 July 1991.
Key Provisions
The Superannuation (Productivity Benefit) Declaration No. 9 1991 No. 127 outlines key provisions for the Superannuation (Productivity Benefit) Act 1988. Section 4E and 4F require employers to make periodic contributions to a superannuation fund for employees without other superannuation coverage. Employers must pay an initial amount to cover the employee's entitlement accrued under the former Superannuation Benefit (Interim Arrangement) Act 1988, as well as an amount for contributions that should have been made from 1 July 1990 (Section 4E(b) and 4F(1)(b)). Additionally, employers are required to pay interest on these amounts if not paid on the due date (Section 4E and 4F). The interest rate is determined by the Minister for Finance and is calculated based on a formula specified in the declaration, using an interest rate of 0.13, which is 2% per annum higher than the rate used for benefit calculation purposes under the Act.
The obligations imposed on employers under the Act include the timely payment of superannuation contributions and any applicable interest. Employers must ensure that the contributions are made to a fund nominated by the Minister for Finance or another approved fund. The interest on contributions not paid on time must be calculated according to the formula specified in the declaration, which commences on 1 July 1991. Employers must also pay penalty interest for any delays in payment of contributions, as outlined in the Act.
Breaches of the Act, particularly the failure to pay superannuation contributions or interest on time, can lead to civil and criminal consequences. The Act stipulates penalties for non-compliance, although the specific penalties are not detailed in the explanatory statement. Employers who do not adhere to the requirements for timely payments and interest may face legal action, which could result in fines or other sanctions as prescribed by law. The severity of penalties may depend on the extent and nature of the non-compliance, with potential maximum penalties to be determined in accordance with the broader legal framework governing the Superannuation (Productivity Benefit) Act 1988.