Superannuation (Salary) Regulations (Amendment) 1992 No. 169
EXPLANATORY STATEMENT
STATUTORY RULES 1992 No. 169
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)
The Superannuation Act 1976 (the Act) makes provision for and in relation to an occupational superannuation scheme for Commonwealth employees and for certain other persons. Members of the scheme are referred to in the Act as eligible employees.
Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.
Subsection 5(2) of the Act provides that, subject to subsection 5(3), the annual rate of salary of a member of the scheme on a particular day is an amount equal to the amount per annum of the salary payable to him on that day.
Subsection 5(3) provides that the regulations may provide that the member's annual rate of salary for the purposes of the Act on a particular day shall be an amount equal to such amount per annum as is ascertained under the regulations.
Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).
The rate of contribution payable under the Act by an eligible employee is expressed in the Act as a percentage of his or her fortnightly rate of salary. The rate of pension payable is expressed as a percentage of his or her final annual rate of salary. The terms "fortnightly rate of salary" and "final annual rate of salary" are both defined in subsection 3(1) of the Act by reference to the eligible employee's annual rate of salary.
Flexible remuneration packages allow recipients to choose to receive some of their remuneration in a non-monetary form instead of as salary, thus providing the capacity to vary the level of cash salary received by them from time to time. For example, they may choose to have the use of a motor vehicle and re-imbursement of telephone expenses in lieu of an increased cash salary.
The components of a package and the minimum and maximum amounts that may be taken as cash salary vary from employer to employer. Employees can also vary the amount of cash salary received from time to time. Such manipulation of the level of cash salary received could result in the payment of low levels of superannuation contributions where an employee takes a low cash salary through most of his or her career, but a high final salary on which benefits will be based, if cash salary is maximised close to retirement.
Civil Aviation Authority
The Civil Aviation Authority (CAA) has introduced flexible remuneration packages for certain of its staff, some of whom are eligible employees. The structure of the CAA package is such that the minimum cash salary able to be received by individuals is between 68 and 72 per cent of the total value of the package.
It is proposed that the annual rate of salary for the purposes of the Act of a CAA employee who is in receipt of a flexible remuneration package should be 70 per cent of the value of his or her package.
Existing CAA eligible employees who move to a flexible remuneration arrangement will not be disadvantaged by the adoption of this rate as their annual rate of salary. If this rate is lower than their annual rate of salary immediately before the regulations apply to then, the Act allows them to retain the higher rate, updated for general salary rises.
Northern Territory of Australia
Many employees of the Northern Territory of Australia (the NT) and certain NT authorities are eligible employees. The NT has introduced contract employment for certain of its Executive employees. Persons employed under those contracts have a flexible remuneration package, the cash component of which can vary from 50 per cent of the total value of the package to around 95 per cent.
It is proposed that the annual rate of salary for the purposes of the Act for a NT employee who is in receipt of a flexible remuneration package be set at 70 per cent of the total value of his or her package.
Existing NT eligible employees who move to a flexible remuneration arrangement will not be disadvantaged by the adoption of this rate as their annual rate of salary. If this rate is lower than their annual rate of salary immediately before the regulations apply to them, the Act allows them to retain the higher rate, updated for general salary rises.
The Regulations amend the Principal Regulations to provide for the annual rate of salary for an eligible employee who is employed by the Civil Aviation Authority or the Northern Territory on flexible remuneration packages to be 70 per cent of the total value of his or her package.
The provisions of the Regulations are explained in the Attachment.
The Regulations operate from the date of gazettal.
ATTACHMENT
SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)
The details of the amending regulations are as follows -
Regulation 1
This regulation provides that the Superannuation (Salary) Regulations are amended as set out in the amending Regulations.
Regulation 2
This regulation provides for the insertion of Part 2E in the Principal Regulations (sections 8P and 8Q) to provide for an annual rate of salary for certain eligible employees who are employed under employment agreements.
Regulation 8P
This is an interpretation provision which contains definitions of the terms "relevant agreement", "relevant authority" and "relevant office":
"relevant agreement" describes those employment agreements which state in them the total monetary value of the remuneration of the employee and which provide for an employee who is party to the agreement to choose to receive part of his or her remuneration in a non-monetary form. These remuneration agreements are often referred to as total employment cost packages.
"relevant authority" is defined by reference to the authorities listed in Part 1 of Schedule 1 of the Principal Regulations.
"relevant office" is an office established by or under a law referred to in Part 2 of Schedule 1.
Regulation 8Q
Regulation 8Q provides for the annual rate of salary on a particular day of a person who, in accordance with a relevant agreement, is appointed or employed by a relevant authority or holds a relevant office.
In accordance with subregulation 8Q(2) and (3), that annual rate of salary is a percentage of the amount per annum of the total value of the remuneration provided for in the agreement. The percentage is specified in Part 1 or Part 2 of Schedule 1 as appropriate, having regard to the authority or body by which the person is employed or appointed or the law under which the person holds office.
Regulation 3
Regulation 3 provides for the insertion of Schedule 1 in the Principal Regulations. Schedule 1 lists the percentage rates of the annual value of the remuneration which is the annual rate of salary for eligible employees to whom Part 2E applies.
Regulation 4
This includes drafting amendments to revise the headings of existing Parts of the Principal Regulations to reflect modern drafting styles.