explanatory statement

Issued by the authority of the Minister for Finance and Administration

Superannuation Act 1990

Declaration under paragraph 6(1)(j)

The Superannuation Act 1990 (the Act) makes provision for and in relation to the Public Sector Superannuation Scheme (PSS) for Australian Government employees and for certain other persons.

Section 6 of the Act specifies the various persons who may be a member of the PSS (PSS member).  Paragraph 6(1)(j) provides that the Minister may declare a person to be a PSS member.

The Superannuation (PSS) Membership Inclusion Declaration 1995 (the Principal Declaration) identifies the persons who are declared PSS members under paragraph 6(1)(j).  In most cases the persons declared to be PSS members in respect of particular employment would not include persons who are, or are required to become, a member of an ‘alternative superannuation scheme’ in respect of that employment and persons who become a member of such an ‘alternative superannuation scheme’ at a later date.

The purpose of the Superannuation (PSS) Membership Inclusion Amendment Declaration 2005 (No. 1) (the Amending Declaration) is to amend the Principal Declaration to ensure that the choice of superannuation fund requirements do not change the intention of the Principal Declaration.

Section 3 and Schedule 1 of the Principal Declaration identify the persons who qualify as PSS members under the Principal Declaration and when they cease to have PSS membership.  A person does not qualify as a PSS member or will cease to be a PSS member if in certain circumstances they have membership of an ‘alternative superannuation scheme’ or of a ‘superannuation scheme’ in respect to their employment.

In most cases the provisions in the Principal Declaration that make use of the current definitions of ‘alternative superannuation scheme’ and ‘superannuation scheme’ relate to membership in any superannuation arrangement.  However, some provisions in the Principal Declaration limit the superannuation arrangements to a superannuation fund where there is a common employment‑related feature shared by the members.

From 1 July 2005, most employers making superannuation guarantee contributions on behalf of an employee will be required to provide employees with a choice of superannuation fund to which those contributions will be paid.  Employer contributions made to the PSS, the Commonwealth Superannuation Scheme or in accordance with the Superannuation (Productivity Benefit) Act 1988 are exempt from the choice of superannuation fund requirements.  Employers who have employees in alternative arrangements are likely to have to comply with the choice of superannuation fund requirements in respect of those employees.

However, certain persons excluded from PSS membership may unintentionally become PSS members when they exercise choice and move to a superannuation fund where there is no common employment‑related feature shared by the members or an RSA. From 1 July 2005, the Amending Declaration amends the definitions of ‘superannuation scheme’ and ‘alternative superannuation scheme’ in the Principal Declaration to ensure those persons remain excluded from PSS membership.

The Amending Declaration includes some technical amendments to clarify some provisions in the Principal Declaration.

The Amending Declaration has been prepared in consultation with the Office of Legislative Drafting and Publishing.  No further consultation is required as the instrument is machinery in nature and does not substantially alter existing arrangements.

The Amending Declaration is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Amending Declaration commences on 1 July 2005.

The details of the Amending Declaration are explained in the Attachment.

Attachment

Superannuation (PSS) Membership inclusion Amendment Declaration 2005 (no. 1)

Section 1

This section provides that the name of the Declaration is the Superannuation (PSS) Membership Inclusion Amendment Declaration 2005 (No. 1).

Section 2

This section provides for the Declaration to commence on 1 July 2005.

Section 3

This section provides that Schedule 1 of the Declaration amends the Superannuation (PSS) Membership Inclusion Declaration 1995 (the Principal Declaration).

Schedule 1 – Amendments

Item 1 replaces the definition of alternative superannuation scheme in subsection 2(1) of the Principal Declaration with a new definition.  The new definition will replace the current definition used in some of the provisions in Schedule 1 of the Principal Determination to exclude certain persons from being members of the Public Sector Superannuation Scheme (PSS).  It will also replace some references to superannuation scheme where it is used in provisions in Schedule 1 of the Principal Declaration to exclude certain persons from being PSS members.  This will provide a consistent definition for use in the exclusion provisions across the PSS membership declarations.

Paragraph (a) of the new definition of alternative superannuation scheme limits the application of the definition to a superannuation scheme that is receiving contributions in relation to a person’s employment or holding of an office.

Paragraph (b) of the definition of alternative superannuation scheme provides exceptions to the definition so that a person having contributions made to a superannuation scheme that would otherwise be an alternative superannuation scheme remains a PSS member.  These exceptions were previously included in various provisions in the Principal Declaration which are amended by items 14, 16, 19, 21, 23, 25, 28, 30, 32, 35, 37, 41 and 43 to 47. These exceptions are:

• contributions made to a superannuation scheme in relation to another employment or holding of another office;
• where membership of a superannuation scheme is only for the preservation or payment of productivity related benefits as defined in section 110A of the Superannuation Act 1976;
• participation in a superannuation scheme on behalf of a member solely for the employer satisfying their obligations under the Superannuation Guarantee (Administration) Act 1992;
• a superannuation scheme to which contributions are made in relation to a person only in relation to performance pay; or
• for a 'prescribed person (defined in the Principal Declaration), a superannuation scheme to which a person is taken to be a member for top-up purposes (salary sacrifice arrangements) under subsection 2(2).

Item 2 inserts a definition of member in relation to a Retirement Savings Account (RSA) into subsection 2(1) of the Principal Declaration.  The definition includes as a member of a superannuation scheme a person who holds an RSA.

Item 3 amends the definition of performance pay in subsection 2(1) of the Principal Declaration to include a payment made under an agreement under Part VIB of the Industrial Relations Act 1988 that was in force before 15 November 1996.

Item 4 makes a minor technical amendment to the definition of State superannuation scheme.

Item 5 substitutes a new definition of superannuation scheme in subsection 2(1) of the Principal Declaration to mean any scheme, fund or arrangement that pays superannuation or retirement benefits.  The new definition also clarifies that an RSA within the meaning of the Retirement Savings Account Act 1997 comes within the definition of superannuation scheme.

Item 6 amends the note at the end of subsection 2(1) of the Principal Declaration.  The note states that terms defined in the Superannuation Act 1990 (the Act) also apply in the Principal Declaration.  It provides as an example, the term Superannuation Scheme.  This amendment corrects the term used in the example to the Public Sector Superannuation Scheme.

Items 7, 33 and 39 change the references to clause in various provisions of the Principal Declaration to section.  Item 38 changes the reference to clause 3 in the Schedule heading of the Principal Declaration to section 3.  These changes are made to reflect current drafting style.

The schedule heading in the Principal Declaration was amended to ‘Schedule 1 Persons to whom section 6 of the 1990 Act applies’ by the Superannuation (PSS) Membership Inclusion Amendment Declaration 2002 (No. 1).  However, references to Schedule in the Principal Declaration were not amended to Schedule 1.  Items 8 to 12, 15, 17, 20, 22, 24, 26, 29, 31, 34 and 36 amend references to ‘the Schedule’ in the Principal Declaration to Schedule 1.

Items 13, 18, 27, 48 and 49 make minor technical amendments to provisions in the Principal Declaration.

Subsections 3(2) to (16) and Schedule 1 of the Principal Declaration identify those persons who qualify as PSS members and when they cease to qualify as PSS members.  A number of provisions exclude people from PSS membership under the Principal Declaration if they are members of an alternative superannuation scheme, as currently defined in the Principal Declaration, except if:

• the alternative superannuation scheme is the PSS or a scheme to which contributions are made in relation to the person only in relation to performance pay; or
• the person is a person who can choose whether to take part of their remuneration in a non-monetary form and the scheme membership is taken to be for top-up purposes.

These exclusions are now included in the amended definition of alternative superannuation scheme.  Items 14, 16, 19, 21, 23, 25, 28, 30, 32, 35, 37, 41 and 43 to 47 amend various subparagraphs in section 3 and Schedule 1 of the Principal Declaration to replace the existing provisions with a reference to membership of an alternative superannuation scheme.

Items 40 and 42 amend references to a ‘superannuation scheme provided for by the 1990 Act’ to ‘Public Sector Superannuation Scheme’.  This amendment provides a consistent approach between the Principal Declaration and the Superannuation (PSS) Membership Exclusion Declaration 1995.