Superannuation (PSS) Membership Exclusion Declaration (Amendment) 1997 No.
71
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 71
Issued by the authority of the Minister for Finance
Superannuation Act 1990
Declaration under paragraph 6(2)(c)
The Superannuation Act 1990 (the 1990 Act) makes provision for and in relation to an occupational superannuation scheme, known as the Public Sector Superannuation (PSS) Scheme, for Commonwealth employees and certain other persons.
Section 6 of the 1990 Act specifies the persons who may be members of the PSS. In accordance with paragraph 6(2)(c) of the 1990 Act, a person declared by the Minister for Finance to be a person to whom section 6 does not apply is not a member of the scheme.
The declaration cited as Superannuation (PSS) Membership Exclusion Declaration (the Principal Declaration) provides that section 6 of the Act does not apply to persons described in the Schedule to the Declaration. Such person may not therefore be members of the PSS. Some items in the Schedule have the effect of excluding from the PSS certain persons who are members of another superannuation scheme to which the person's employer makes contributions.
Membership arrangements applying to the PSS generally exclude a person from membership if the person is a member of another superannuation scheme to which the employer has agreed to make employer contributions.
Some PSS members, referred to in the Principal Declaration as members of superannuation schemes for "top-up purposes", are employed on flexible remuneration arrangements which enable them to receive part of their remuneration as non-cash benefits. Under such arrangements some members may sacrifice a portion of their cash salary in favour of employer superannuation contributions to another superannuation scheme in addition to their continuing PSS membership. Continuing PSS membership is described in the Principal Declaration in terms of the employer making payments under the 1990 Act in respect of the employee.
Usually employers make contributions on behalf of their PSS members at a prescribed rate simultaneously with contributions paid by the members. However, some employers pay their liability on an emerging cost basis i.e. when the employee's benefit become payable. Under these arrangements it is questionable whether technically the employer makes payments under the 1990 Act in respect of the employee. Therefore the legality of the top-up arrangements for employees of emerging cost agencies is in question. This was overlooked in the original provisions.
The Declaration restores the original intention of the provisions by amending the definition of top-up arrangement in the Principal Declaration to put the matter beyond doubt. The substituted definition ensures that where the employer liability is discharged on an emerging cost basis those employees who are members of another superannuation scheme for top-up purposes are not excluded from the PSS. The amendments contained in the amending Declarations are explained in the attachment.
Section 45 of the Act provides that such a declaration is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 and a Statutory Rule for the purposes of the Statutory Rules Publication Act 1903.
The Declaration commenced on gazettal.
ATTACHMENT
SUPERANNUATION (PSS) MEMBERSHIP EXCLUSION DECLARATION (AMENDMENT)
The details of the Declaration are as follows:
Clause 1
This provides that the Principal Declaration is amended as set out in the amending Declaration.
Clause 2
This clause substitutes a new definition of "top-up arrangement" in clause 3 of the Principal Declaration (the interpretation provision).
Subclause 3.1 of the Principal Declaration defines a "top-up arrangement". Paragraph 3(1)(a) provides that a topup arrangement is an arrangement between the person and the person's employer whereby:
* superannuation contributions are paid in respect of the person to a superannuation scheme other than the PSS; and
* the contributions are part of, not additional to, the person's overall remuneration package.
Additionally, paragraph 3(1)(b) provides that the contributions are additional to payments made under the 1990 Act in relation to that same employment or office.
The wording of this latter provision may exclude certain persons from PS S membership if they are employed by bodies that discharge their PSS liabilities on an emerging cost basis. This effect was overlooked.
Subclause 2.1 substitutes a new definition of "top-up arrangement" which requires that the employee continues to be, or becomes, a member of the PS S in respect of the employment to which the arrangement relates and the employer must be the designated employer in respect of both the PSS membership and the top-up arrangement.
This restores the original intention that PSS members may be members of another superannuation scheme for topup purposes and remain members of the PSS irrespective of the arrangements made for the employer to reimburse the Commonwealth for the cost of that PSS membership.
Overview
The Superannuation (PSS) Membership Exclusion Declaration (Amendment) 1997 No. 71 was enacted to address an oversight in the original Superannuation Act 1990 concerning the exclusion of certain members from the Public Sector Superannuation (PSS) Scheme. The Superannuation Act 1990 provides for an occupational superannuation scheme for Commonwealth employees and others, and Section 6 specifies who may be members of the PSS. The original Superannuation (PSS) Membership Exclusion Declaration, established under paragraph 6(2)(c) of the 1990 Act, declared that specific persons were not members of the scheme, including those who were members of other superannuation schemes where the employer made contributions. The amendment sought to clarify the definition of "top-up arrangement" to ensure that employees on flexible remuneration arrangements, who were members of another superannuation scheme for top-up purposes, remained members of the PSS, regardless of the employer's payment arrangements. The Minister for Finance issued this amendment to restore the original intention of the Act, ensuring that the legality of these arrangements was not in question, particularly for employers who discharged their liabilities on an emerging cost basis.
Scope and Application
The Superannuation (PSS) Membership Exclusion Declaration (Amendment) 1997 No. 71, issued under the authority of the Minister for Finance, amends the existing Superannuation (PSS) Membership Exclusion Declaration to clarify and refine the eligibility criteria for membership in the Public Sector Superannuation (PSS) Scheme. The original Act, the Superannuation Act 1990, governs the PSS scheme for Commonwealth employees and certain other persons, with Section 6 specifying the criteria for membership. The amendment ensures that certain individuals who are members of another superannuation scheme for 'top-up' purposes, where their employer contributes to a scheme other than the PSS as part of their remuneration, are not excluded from the PSS membership. This amendment specifically addresses the legal uncertainties regarding the 'emerging cost' basis of employer contributions, ensuring that employees under such arrangements remain eligible for PSS membership. The changes apply to the Commonwealth jurisdiction and affect individuals who would otherwise be excluded due to their participation in alternative superannuation schemes. The amendments aim to restore the original intent of the PSS provisions, ensuring clarity and consistency in the application of the scheme.
Key Provisions
The key provisions of the Superannuation (PSS) Membership Exclusion Declaration (Amendment) 1997 No. 71 focus on amending the definition of "top-up arrangement" within the Superannuation Act 1990. Clause 1 of the amending Declaration specifies that the Principal Declaration is revised as outlined in the amendment. Clause 2 introduces a new definition of "top-up arrangement" under the interpretation provision of the Principal Declaration. This new definition aims to ensure that employees remain members of the Public Sector Superannuation (PSS) scheme even if they are also members of another superannuation scheme. Specifically, it mandates that employees must continue to be, or become, members of the PSS and that the employer must be the designated employer for both the PSS membership and the top-up arrangement. This amendment addresses the issue where employees on flexible remuneration arrangements, such as those employed by bodies that discharge their PSS liabilities on an emerging cost basis, could be inadvertently excluded from PSS membership.
The amended Act imposes specific obligations on employers and employees who engage in top-up arrangements. Employers are required to ensure that any contributions made to a superannuation scheme other than the PSS are part of the overall remuneration package of the employee and are not additional to the payments made under the 1990 Act. This includes ensuring that employees remain members of the PSS, even when participating in a top-up arrangement. Employees, on the other hand, must be aware of their continued membership in the PSS while also being part of another superannuation scheme. The amendment aims to clarify the legal status of employees who are part of top-up arrangements and who may be employed by bodies that discharge their PSS liabilities on an emerging cost basis.
Failure to comply with the provisions of the Superannuation Act 1990 and the amended Declaration could result in legal consequences. While the Act does not specify particular offences or penalties for breaches of the membership exclusion provisions, general provisions of the Acts Interpretation Act 1901 and the Statutory Rules Publication Act 1903 apply. Under these Acts, the declaration is a disallowable instrument, meaning that it can be disallowed by resolution of either House of the Parliament. Additionally, the Statutory Rules Publication Act 1903 ensures that such rules are published in the Commonwealth of Australia Gazette, making them accessible to the public. Non-compliance with the Act's provisions may also lead to civil or administrative actions to enforce the correct application of the superannuation scheme rules, although specific penalties for such breaches are not detailed in the Act itself.