EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO 128
ISSUED BY THE 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 persons employed by the Commonwealth and for certain other persons. Persons who are eligible to contribute under the Act are referred to in the Act as eligible employees (contributors).
Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.
The rates of employer-financed pensions payable under the Act are expressed as a percentage of the former contributor’s final annual rate of salary. A contributor’s final annual rate of salary is, in the generality of cases, his or her annual rate of salary on his or her last day of service. Contributions payable under the Act are also expressed as a percentage of a contributor’s annual rate of salary.
Subsection 5(2) of the Act provides that, subject to subsection 5(3), a contributor’s annual rate of salary on a particular day is the amount per annum of the salary for the purposes of the Act payable to the contributor on that day. Subsection 5(3) enables regulations to be made prescribing an alternative amount to be a contributor’s annual rate of salary. Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).
Section 47 of the Act provides in effect that, where a contributor’s salary is reduced, his or her annual rate of salary for the purposes of the Act after the reduction is to be:
(a) if no election is made under subsection 47(2) - the fixed annual amount applicable immediately before the reduction; or
(b) if an election is made under subsection 47(2) - the annual amount of the lower rate of salary as updated from time to time.
Regulation 20 of the Principal Regulations, however, provides that in the case of an officer of the Australian Public Service (other than a fixed-term appointee):
(a) who is a Secretary of a Department and who is redeployed to a lower classification of Secretary or to a Senior Executive Service classification; or
(b) who is a Senior Executive Service Officer and who is redeployed to a lower Senior Executive Service classification or to a lower classification that is not a Senior Executive Service classification,
and who does not make an election under subsection 47(2), the annual rate of salary of the person for the purposes of the Act after the redeployment, or subsequent such redeployments, is the annual rate of salary as updated from time to time applicable to the classification held by the person immediately before the first redeployment.
It is intended that similar arrangements apply in relation to Secretaries of Departments who are appointed to the office of Administrator of Norfolk Island where the salary payable in respect of the appointment is less than that payable to the person immediately before the appointment. The Regulation amends regulation 20 of the Principal Regulations to provide that that regulation applies to such persons until their actual salary exceeds the salary applicable to the classification held by them immediately before the reduction.
The amending Regulation operates from the date of its gazettal.
Overview
The Superannuation Act 1976 was enacted to establish an occupational superannuation scheme for persons employed by the Commonwealth, including certain other eligible individuals, aiming to provide financial security for contributors upon retirement. The Act addresses the gap in retirement income for eligible employees by mandating employer contributions based on a percentage of the contributor’s salary. Enacted by the Parliament of Australia, the overarching policy objective of the Act is to ensure that eligible employees have a reliable income source during their retirement years, thereby promoting social security and economic stability.
The Superannuation (Salary) Regulations (Amendment) Statutory Rules 1990 No. 128, issued under the authority of the Minister for Finance, further refines the implementation of the Act by detailing the specific mechanisms for calculating annual rates of salary, particularly in cases of salary reductions or redeployments within the Australian Public Service. These regulations ensure that the annual rate of salary used in the calculation of superannuation contributions and benefits remains fair and reflective of the contributor’s employment status, thereby maintaining the integrity and purpose of the superannuation scheme.
Scope and Application
The Superannuation (Salary) Regulations (Amendment) under the Superannuation Act 1976 pertains to the occupational superannuation scheme for persons employed by the Commonwealth and certain other eligible individuals. The Act and its regulations are designed to ensure that contributions and pensions are calculated based on the annual rate of salary, with specific provisions for redeployed officers of the Australian Public Service and Secretaries of Departments who are appointed as Administrators of Norfolk Island. The amendment to regulation 20 extends the application of the regulation to ensure that the annual rate of salary continues to be updated from time to time for such officers until their actual salary exceeds the salary applicable to their previous classification. This amendment ensures consistency and fairness in the calculation of pensionable salaries for affected officers. The regulation applies across the Commonwealth, extending the existing provisions to cover specific categories of officers and administrators within the public service.
Key Provisions
The Superannuation (Salary) Regulations (Amendment) primarily focuses on modifying the treatment of annual rates of salary for certain officers within the Australian Public Service (APS) who experience a reduction in their salary due to redeployment. Under the Superannuation Act 1976, section 47 stipulates that if a contributor’s salary is reduced, their annual rate of salary for the purposes of the Act after the reduction is either the fixed annual amount applicable immediately before the reduction or, if an election is made, the annual amount of the lower rate of salary as updated from time to time. However, regulation 20 of the Principal Regulations introduces an exception for specific officers within the APS. This regulation states that for Secretaries of Departments and Senior Executive Service Officers who are redeployed to a lower classification and do not make an election under subsection 47(2), their annual rate of salary for the purposes of the Act after redeployment is the annual rate applicable to the classification held immediately before the first redeployment.
The amending Regulation seeks to extend the applicability of this exception to Secretaries of Departments who are appointed to the office of Administrator of Norfolk Island where their salary is less than that payable to them before the appointment. This means that for these specific officers, their annual rate of salary for the purposes of the Act will continue to be the annual rate applicable to the classification held immediately before the first redeployment until their actual salary exceeds the salary applicable to the classification held before the reduction. These provisions are designed to ensure that certain high-ranking officers within the APS and the office of Administrator of Norfolk Island maintain a specific annual rate of salary for the purposes of the Act, irrespective of any subsequent reductions in their actual salary.
The obligations imposed by the amending Regulation require that the specified officers must not make an election under subsection 47(2) of the Act if they are redeployed to a lower classification. If they do not comply with this requirement, their annual rate of salary for the purposes of the Act will be the annual rate applicable to the classification held immediately before the first redeployment. Additionally, the regulation applies to such officers until their actual salary exceeds the salary applicable to the classification held by them immediately before the reduction. This means that their annual rate of salary will continue to be updated in line with the classification held before the reduction until their salary surpasses that amount.
The Superannuation (Salary) Regulations (Amendment) does not introduce new offences or penalties but rather clarifies and extends existing provisions. Therefore, the civil or criminal consequences for breach would depend on the existing provisions of the Superannuation Act 1976. Generally, breaches of the Act may lead to penalties under the general administrative law provisions, including fines and other civil penalties. However, specific details regarding maximum penalties are not provided in the amending Regulation itself but would be governed by the broader legislative framework within which the Superannuation Act operates.