Superannuation (Productivity Benefit) Penalty Interest Determination 1993 No. 186
EXPLANATORY STATEMENT STATUTORY RULES 1993 No. 186
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 are required to pay to either the superannuation fund nominated by the Minister for Finance, or another superannuation 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 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, 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 8 A 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 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 0.0955 which is equivalent to 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 1993-94 financial year is specified in the Determination.
The Determination commences on 1 July 1993.
Overview
The Superannuation (Productivity Benefit) Penalty Interest Determination 1993 was enacted to provide specific guidelines on the calculation of penalty interest for delays in superannuation payments under the Superannuation (Productivity Benefit) Act 1988. This Act was introduced to ensure that Australian Government employees without other employer-sponsored superannuation coverage receive productivity benefits. The determination was issued by the Minister for Finance under section 4G of the Act, establishing an interest rate of 0.0955, which is 2% higher than the rate used for benefit calculation purposes under the Act. This penalty interest applies to delays in payments, including interim benefits and continuing contributions, and the determination specifies the formula to be used for calculating such interest, effective from 1 July 1993.
Scope and Application
The Superannuation (Productivity Benefit) Penalty Interest Determination 1993 No. 186 applies to employers designated under the Superannuation (Productivity Benefit) Act 1988, which includes Australian Government employers responsible for employees without other employer-sponsored superannuation coverage. These employers are required to remit periodic contributions to a superannuation fund nominated by the Minister for Finance or another approved fund, and to account for any delay in making these payments by paying penalty interest. The interest is calculated in accordance with the terms set out in the Determination, which applies to any delay between the date when an amount should have been paid to a fund and the date when it was actually paid. The interest rate is determined by the Minister and is set at 2 per cent per annum above the rates used for benefit calculation under the Act. The Determination, which commenced on 1 July 1993, is a subordinate instrument that extends the application of the Act by setting the specific rate and formula for calculating penalty interest.
Key Provisions
The Superannuation (Productivity Benefit) Penalty Interest Determination 1993 No. 186 (the Determination) specifies how penalty interest is calculated under the Superannuation (Productivity Benefit) Act 1988 (the Act). According to section 4G of the Act, the Minister has the authority to set the interest rate for penalties related to late payments under sections 4E, 4EA, and 4F. Section 4E (b) mandates interest on interim benefits not paid on the date the employee joined a fund, while section 4EA covers interim benefits not paid on the date the employee joined a superannuation scheme under the Superannuation Act 1976 or 1990. Section 4F (1) (b) requires interest on instalments of continuing contributions not paid on the employee's payday or an agreed date.
The Act imposes specific obligations on designated employers, who must pay periodic contributions to a superannuation fund based on employee salaries. Employers are also required to make a one-off payment to the fund, including any accrued entitlements from the former Superannuation Benefit (Interim Arrangement) Act 1988 and contributions that would have been made post-1 July 1990. Moreover, employers must pay penalty interest for any delays in these payments, with the interest rate set by the Minister.
The Determination introduces a penalty interest rate of 0.0955, which is two percent higher than the rates used for benefit calculations under the Act. This rate applies to all amounts that should have been paid on a given day, for the period of delay. The Determination also provides a specific formula for calculating this penalty interest during the 1993-94 financial year.
The Act does not specify particular offences or penalties for breaches of the penalty interest provisions. However, non-compliance with the payment obligations and the interest rate set by the Determination may result in financial penalties for employers, including the payment of additional interest. The specific consequences of such non-compliance would depend on the terms of the contract between the employer and the employee, as well as any relevant industrial relations legislation.