EXPLANATORY STATEMENT
STATUTORY RULES 1990 NO 140
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
SUPERANNUATION ACT 1976
SUPERANNUATION (TRANSFER ARRANGEMENTS) REGULATIONS
(AMENDMENT)
The Superannuation Act 1976 (the 1976 Act) makes provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth, and for certain other persons. Persons eligible to contribute under the Act are referred to in the Act as “eligible employees”.
Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all 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.
Subsection 126(2) of the Act provides that the regulations may modify the Act in its application to a person who is, or has ceased to be, an eligible employee and who, at any time before becoming an eligible employee, was a member of a superannuation scheme. Those regulations are contained in the Superannuation (Transfer Arrangements) Regulations (the Principal Regulations). Subsection 126(3) provides that the modifications may include, but are not limited to, the payment of contributions and benefits in addition to, or in substitution for, those provided under the Act.
Subsection 168(3) of the Act provides that regulations made after 31 December 1978 by virtue of subsection 126(2) may be expressed to have taken effect from and including a day not earlier than 12 months before the making of the regulations.
Certain persons who ceased to be contributors under the Superannuation Act 1922 (the 1922 Act) could, in accordance with section 119V of that Act, elect to preserve their superannuation rights. The benefit available as a consequence of that election was either a transfer value payable to an eligible superannuation scheme, or if a transfer value was not payable, deferred benefits payable on the person attaining his or her minimum retiring age or an death or invalidity.
A person entitled to a transfer value from a superannuation scheme in respect of previous employment who becomes an eligible employee under the 1976 Act may pay the transfer value to the Commissioner for Superannuation in return for a credit of contributory service. Where that transfer value includes a transfer value previously paid to an eligible
superannuation scheme in respect of the person under the 1922 Act that credit of contributory service shall include a period in respect of his or her period as a contributor under the 1922 Act.
Where deferred benefits under the 1922 Act apply to a person who becomes an eligible employee under the 1976 Act, those deferred benefits continue to be applicable to the person and will become payable at the usual time provided for in that Act. The 1976 Act does not provide for the person to receive a credit of contributory service in respect of his or her period as a contributor under the 1922 Act.
A preservation benefit under the 1922 Act, whether it was a transfer value or deferred benefit, was intended to represent the value of the person’s rights under that Act. However the benefits available under the 1976 Act to a person who becomes an eligible employee and pays to the Commissioner an amount including a 1922 Act transfer value exceed the total benefits available to a person with deferred benefits under the 1922 Act who becomes an eligible employee, that is, the sum of his or her deferred benefits and entitlements under the 1976 Act.
It is intended that the Act be modified to ensure more equitable treatment between eligible employees who elected to preserve their superannuation rights under the 1922 Act.
To give effect to this intention the Regulations amend the Principal Regulations by inserting regulation 13 which provides that persons to whom deferred benefits are applicable or payable under the 1922 Act who become eligible employees for the purposes of the 1976 Act are persons included in a prescribed class of persons for the purposes of section 126 of the 1976 Act. The Regulations also insert Schedule 10 in the Principal Regulations which modifies certain provisions of the 1976 Act in their application to that prescribed class of persons. Details of the amending Regulations are set out in the Attachment.
To ensure that the modifications may apply, within the limits of the allowed retrospectivity, to all possible cases of eligible employees to whom 1922 Act deferred benefits are applicable or payable, the amending Regulations are to be taken to have commenced on 7 July, 1989.
Overview
The Superannuation (Transfer Arrangements) Regulations (Amendment) was issued in 1990 by the authority of the Minister for Finance. This amendment aims to address an inequity in the treatment of eligible employees who had preserved their superannuation rights under the Superannuation Act 1922 and subsequently became eligible employees under the Superannuation Act 1976. The inequity arises because those who paid a transfer value from the 1922 Act to the Commissioner for Superannuation received a credit of contributory service for their period as contributors under the 1922 Act, while those who had deferred benefits under the 1922 Act did not receive such credits when they became eligible employees under the 1976 Act.
The objective of these regulations is to modify the application of the Superannuation Act 1976 to ensure more equitable treatment for those who had deferred benefits under the 1922 Act by including them in a prescribed class of persons. This ensures that the value of their preserved rights under the 1922 Act is appropriately recognised in their entitlements under the 1976 Act. The regulations, which were designed to have retrospective effect from 7 July 1989, aim to provide a fair solution within the legislative constraints regarding retrospectivity.
Scope and Application
The Superannuation (Transfer Arrangements) Regulations (Amendment) pertains to the Superannuation Act 1976, which governs the establishment and management of occupational superannuation schemes for Commonwealth employees and other eligible individuals. This Act allows the Governor-General to issue regulations necessary to implement the Act, including modifications to its application to individuals who were previously members of a superannuation scheme. These regulations are outlined in the Superannuation (Transfer Arrangements) Regulations, which allow for the modification of the Act in its application to eligible employees, including adjustments to contributions and benefits. The amendments made through these regulations aim to provide more equitable treatment to eligible employees who elected to preserve their superannuation rights under the earlier Superannuation Act 1922. This includes ensuring that individuals who were entitled to deferred benefits under the 1922 Act and subsequently became eligible employees under the 1976 Act are treated fairly in terms of the benefits they receive. The regulations also ensure that these changes can apply retroactively to cases dating back to 7 July 1989, within the legal limits of retrospectivity.
Key Provisions
The key provisions of the Superannuation (Transfer Arrangements) Regulations (Amendment) involve modifying the Superannuation Act 1976 to ensure equitable treatment for certain employees who were previously members of a superannuation scheme under the Superannuation Act 1922 (subsection 126(2) and 126(3)). These regulations, particularly section 168 of the 1976 Act, enable the Governor-General to make regulations that are not inconsistent with the Act, and which are necessary or convenient for carrying out or giving effect to the Act. The amendments focus on ensuring that eligible employees who preserved their superannuation rights under the 1922 Act receive equitable treatment when they become eligible employees under the 1976 Act.
The regulations impose specific obligations on eligible employees who have deferred benefits under the 1922 Act and who subsequently become eligible employees under the 1976 Act. They classify such individuals within a prescribed class of persons for the purposes of section 126 of the 1976 Act. This classification is intended to ensure that these individuals receive a fair and equitable treatment when their superannuation rights are transferred to the 1976 Act. Schedule 10 of the Principal Regulations further modifies certain provisions of the 1976 Act to align with the needs of this prescribed class, ensuring that the value of their preserved rights is appropriately recognised and compensated under the new Act.
The Superannuation (Transfer Arrangements) Regulations (Amendment) also establish consequences for non-compliance. While the explanatory statement does not explicitly detail offences, penalties, or civil/criminal consequences, it is implied that any breach of the regulations could lead to legal ramifications under the Superannuation Act 1976. Given that the regulations are designed to ensure equitable treatment and the fair administration of superannuation benefits, non-compliance could potentially result in disputes or claims that may need to be addressed through the legal system. The specific penalties for such breaches would be in line with the general provisions of the 1976 Act, which might include fines or other penalties deemed appropriate by the court.
In summary, these regulations aim to address the inequities faced by eligible employees who preserved their superannuation rights under the 1922 Act and subsequently became eligible employees under the 1976 Act. By classifying these individuals and modifying the applicable provisions, the regulations ensure that they receive fair treatment. The legal obligations under these regulations are clear, and while specific penalties are not detailed, any non-compliance could result in legal consequences under the 1976 Act.