EXPLANATORY STATEMENT

Issued by authority of the Minister for Finance and Deregulation

Superannuation Act 1990

Thirtieth Amending Deed to the Trust Deed to establish an occupational superannuation scheme for Australian Government employees and certain other persons pursuant to section 5 of the Superannuation Act 1990 (1990 Act).

The Minister for Finance, for and on behalf of the Commonwealth, established an occupational superannuation scheme to provide benefits for certain of the Commonwealth’s employees and for certain other people by Trust Deed dated 21 June 1990 under section 4 of the 1990 Act.  The occupational superannuation scheme is known as the Public Sector Superannuation Scheme (PSS).

Section 5 of the 1990 Act provides that the Minister for Finance and Deregulation may amend the Trust Deed by signed instrument, subject to obtaining the consent of the Australian Reward Investment Alliance (ARIA) to the amendment, where necessary.

Thirtieth Amending Deed

On    December 2007 the Minister for Finance and Deregulation amended the Trust Deed by signed instrument.  That instrument is called the Thirtieth Amending Deed in this statement.

The purpose of the Thirtieth Amending Deed is to amend the Trust Deed to take into account an early release amount when determining Family Law superannuation splitting arrangements.

Details of the Thirtieth Amending Deed are set out in the Attachment.

Board approval

Section 5 of the 1990 Act deals with amendments made to the Trust Deed.  That section allows the Minister to amend the Trust Deed provided, in respect of certain amendments, that ARIA has consented to those amendments.

ARIA has consented to the amendments included in the Thirtieth Amending Deed.

Legislative Instruments Act 2003

The Thirtieth Amending Deed is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA). Although section 44 of the LIA exempts superannuation instruments from disallowance, the Amending Deed is subject to disallowance in accordance with section 45 of the 1990 Act.

The Australian Government Actuary and the Attorney-General’s Department were consulted in relation to the Amending Orders.

Commencement

Clause 1 of the Thirtieth Amending Deed specifies the commencement dates for the amendments to the Trust Deed made by the Deed.  The amendments take effect immediately after the commencement of clause 6 of the Twenty-ninth Amending Deed.  Clause 6 of the Twenty-ninth Amending Deed commences on 1 January 2008.

ATTACHMENT

BACKGROUND TO AND DETAILS OF THE THIRTIETH AMENDING DEED

Background

Technical amendments to Family law superannuation splitting arrangements to take into account any early release amount

Part 16 of the Trust Deed deals with Family law superannuation splitting.  This Part provides for the creation of a separate interest (involving a reduction of the original interest) for a former spouse of a member, preserved benefit member, associate preserved benefit member or a pensioner when the Board receives a splitting agreement or splitting order.

2.             Together with the amendments to the Trust Deed by the Twenty-ninth Amending Deed, which enabled PSS members to obtain early release of their funded account balances on severe financial hardship or compassionate grounds, an early release deduction will now need to be taken into account when determining a member’s superannuation interest for family law purposes.

3.             This Deed therefore amends certain definitions and formulae in Part 16 to ensure that an early release deduction amount is considered in relation to Family law superannuation splitting.

4.             Analogous amendments have been made to the Superannuation Act 1976 in respect of the Commonwealth Superannuation Scheme (CSS) by the Superannuation Legislation Amendment Act 2007 and the Superannuation (Family Law – Superannuation Act 1976) Amendment Orders 2007 (No. 1).

Details of amendments

Commencement

5.             Clause 1 specifies the commencement date for the amendments to the Rules made by this Deed.

Clause 2 – Interpretation

6.             Clause 2 indicates that, unless a contrary intention appears, a word or phrase in the Amending Deed has the same meaning that it has in the Trust Deed.  It also provides a definition of ‘Twenty-ninth Amending Deed’.

Clause 3 – Technical amendments concerning early release of benefits

7.             Subclauses 3.1 to 3.3 amend the definitions in Rule 16.1.2 of “additional accumulation amount”, “member contributions amount” and “productivity contributions amount” for family law purposes to ensure that any early release deduction amount is taken into account.

8.             These definitions determine the amount of the various components of a PSS member’s benefit at the time of a marriage breakdown in order to facilitate the splitting of those components between the member and the member’s former spouse.  The amendments to these definitions ensure that the early release deduction amount is taken into account when determining the amount of each component.

9.             Subclauses 3.4 to 3.6 amend Rules 16.8.1, 16.8.2 and 16.8.3, which set out the methods to be used for determining “scheme value” in relation to a PSS member.  The amendments insert a definition of early release deduction amount where appropriate and ensure that the early release deduction amount is taken into account when determining scheme value.