EXPLANATORY STATEMENT
Issued by authority of the Minister for Superannuation and Corporate Law acting for and on behalf of the Minister for Finance and Deregulation
Superannuation Act 1990
Thirty-first 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).
An occupational superannuation scheme to provide benefits for certain of the Commonwealth’s employees and for certain other people was established by Trust Deed dated 21 June 1990, under section 4 of the 1990 Act. The occupational superannuation scheme is called the Public Sector Superannuation Scheme (PSS).
Section 5 of the 1990 Act provides that the Minister 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. ARIA is the trustee for the PSS.
Thirty-first Amending Deed
On 29 July 2008 the Minister for Superannuation and Corporate Law, acting for and on behalf of the Minister, amended the Rules for the PSS set out in the Schedule to the Trust Deed by signed instrument. That instrument is called the Thirty-first Amending Deed in this statement.
The purpose of the Thirty-first Amending Deed is to amend the Rules to make enhancements to the PSS to ensure the scheme complies with the requirements of the Superannuation Guarantee (Administration) Act 1992 from 1 July 2008. Background information on the changes and the details of the Thirty-first Amending Deed are set out in the Attachment.
Approval by ARIA
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, ARIA has consented to those amendments. ARIA’s consent is not required where the amendment relates to a payment by an employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993 (the SIS Act) that will, after the making of the amendment, be required or permitted to be made under the 1990 Act.
None of the amendments included in the Thirty-first Amending Deed require the consent of ARIA, as the amendments relate to a payment by an employer-sponsor.
Legislative Instruments Act 2003
The 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 possible disallowance in accordance with section 45 of the 1990 Act.
Section 17 of the LIA specifies that rule-makers should consult before making legislative instruments. The Executive Unit of ARIA and ComSuper (which administers the PSS) were consulted on the administrative application of the changes in the Amending Deed. An actuary was consulted on actuarial issues related to the changes.
Commencement
The amendments in the Deed come into effect on the day after they were registered on the Federal Register of Legislative Instruments.
ATTACHMENT
BACKGROUND TO AND DETAILS OF THE THIRTY-FIRST AMENDING DEED
Background
Superannuation Guarantee Additional Amount
Since 1 July 2008, all employers have been required to use Ordinary Time Earnings (OTE) as the basis for calculating whether the superannuation contributions they make into superannuation schemes on behalf of employees comply with the minimum contribution rate (9%) under the Superannuation Guarantee (Administration) Act 1992 (SG Act). This requirement applies to the Public Sector Superannuation Scheme (PSS).
- Before 1 July 2008, employer obligations in the PSS were calculated using the superannuation salary in the PSS, which is generally lower than OTE. This is because OTE includes components of earnings not recognised as superannuation salary, such as performance bonuses.
2. Before 1 July 2008, benefits payable from the PSS complied with the SG Act requirements. In very limited cases this has been achieved through the payment of a top-up benefit from the scheme, in addition to the scheme’s standard benefits.
3. In most cases after 1 July 2008, the PSS will continue to pay benefits to members that are equal to or greater than the minimum required under the SG Act. However, some new provisions have been inserted, and some minor changes made to the existing provisions relating to top-up benefits, to ensure this occurs in all cases, going forward. The Thirty-first Amending Deed makes these changes.
4. To ensure that the PSS complies with the requirements under the SG Act, the Deed includes a provision which backdates to 1 July 2008 the entitlement to a top-up benefit based on OTE (this backdating covers both the new top-up provisions and the existing top-up provisions that have been changed).
Details of the Amending Deed
Commencement
5. Clause 1 provides that the amendments in the Deed commence on the day after the Deed is registered on the Federal Register of Legislative Instruments.
Context
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.
Application of Deed
7. Clause 3 provides for the entitlement to a top-up benefit, based on OTE, to be backdated to 1 July 2008 (this backdating covers both the new top-up provisions and the existing top-up provisions that have been changed). This ensures that the PSS complies with the requirements under the SG Act from that date.
Amendments to the Rules
Clause 4 - Amendments relating to provision of a superannuation guarantee additional amount
8. Subclause 4.1 inserts a new definition for superannuation guarantee additional amount in Rule 1.2.1. The amount is a top up to ensure compliance with the superannuation guarantee (SG) and is determined by the Board (ARIA) having regard to the charge percentage specified in the Superannuation Guarantee (Administration) Act 1992 and to the advice of an actuary.
9. Subclauses 4.2 to 4.48 amend a number of Rules to provide for payment of a superannuation guarantee additional amount. Details of these amendments are included in the following table.
Clause | Rule | Effect of Clause | Reason for Change |
Division 1 of Part 6 – | |||
4.2 | 6.1.1 | Replaces (a)(i) | Increases benefit by any SG additional amount |
4.3 | 6.1.3 | Replaces (a) | Increases benefit by any SG additional amount |
Division 2 of Part 6 – | |||
4.4 | 6.2.1 | Replaces (a), inserts (aa) | Provides that where a person takes their benefit as a cash lump sum or as a combination of cash lump sum and rollover, that the total lump sum benefit paid is increased by any SG additional amount |
4.5 | 6.2.1A | New Rule | |
Division 3 of Part 6 – | |||
4.6 | 6.3.2 | Replaces (a)(i) | Increases benefit by any SG additional amount |
4.7 | 6.3.2 | Replaces (c) | Increases benefit by any SG additional amount |
4.8 | 6.3.3 | Replaces (a), inserts (aa) | Provides that where a person takes their benefit as a cash lump sum or as a combination of cash lump sum and rollover, that the total lump sum benefit paid is increased by any SG additional amount. |
4.9 | 6.3.3 | Replaces (c) | Increases benefit by any SG additional amount |
4.10 | 6.3.3A | New Rule | See comments in relation to clause 3.9 |
Division 5 of Part 6 – | |||
4.11 | 6.5.1 | Replaces (b) | Increases benefit by any SG additional amount |
4.12 | 6.5.2 | Replaces (a) | Increases benefit by any SG additional amount |
4.13 | 6.5.3 | Replaces Rule | Increases benefit by any SG additional amount |
Division 6 of Part 6 – | |||
4.14 | 6.6.3 | Replaces (i) | Increases benefit by any SG additional amount |
4.15 | 6.6.5 | Replaces (a)(ii) | Increases benefit by any SG additional amount |
4.16 | 6.6.5 | Replaces (b), inserts (bb) | Provides that where a person takes their benefit as a cash lump sum or as a combination of cash lump sum and rollover, that the total lump sum benefit paid is increased by any SG additional amount |
4.17 | 6.6.5 | Replaces (d) | Increases benefit by any SG additional amount |
Division 8 of Part 6 – | |||
4.18 | 6.8.6 | Amends Rule | Increases benefit by any SG additional amount |
4.19 | 6.8.7 | Replaces Rule | Increases benefit by any SG additional amount |
Division 1 of Part 7 – | |||
4.20 | 7.1.2A 7.1.2B | New Rules | New Rule 7.1.2A increases the lump sum benefit payable to a spouse by any SG additional amount, where the spouse’s reversionary pension has not been apportioned and the spouse elects to convert the pension to a lump sum benefit New Rule 7.1.2B increases the lump sum benefits payable by any SG additional amount, where a reversionary pension is apportioned between a number of spouses and all spouses elect to convert their pension to a lump sum benefit |
4.21 | 7.1.5 | Replaces Rule | Increases benefit by any SG additional amount |
Division 2 of Part 7 – | |||
4.22 | 7.2.1 | Replaces Rule | Increases benefit by any SG additional amount |
4.23 | 7.2.3 | Replaces Rule | Increases benefit by any SG additional amount |
4.24 | 7.2.4 | Replaces Rule | Increases benefit by any SG additional amount |
Division 3 of Part 7 – | |||
4.25 | 7.3.3 | Replaces (c) | Increases benefit by any SG additional amount |
4.26 | 7.3.4 | Amends Rule | Increases benefit by any SG additional amount |
4.27 | 7.3.5 | Replaces (c) | Increases benefit by any SG additional amount |
Division 4 of Part 7 – | |||
4.28 | 7.4.1 | Replaces Rule | Increases benefit by any SG additional amount |
4.29 | 7.4.3 | Replaces Rule | Provides that where a deceased member’s preserved benefit has been apportioned between a number of spouses and all spouses have chosen to take their benefit as a lump sum, the amount of each spouse’s respective lump sum is increased by a proportion of any SG additional amount applicable in respect of the deceased preserved benefit member |
4.30 | 7.4.3A | New Rule | |
4.31 | 7.4.5 | Replaces Rule | Consequential amendment as a result of changes made to Rule 7.4.3 by clause 3.30 |
4.32 | 7.4.6 | Replaces Rule | Increases benefit by any SG additional amount |
4.33 | 7.4.7 | Replaces Rule | Increases benefit by any SG additional amount |
Division 1 of Part 8 – | |||
4.34 | 8.1.1 | Replaces (f) | Consequential amendment as a result of amendments made to Rule 6.8.7 by clause 3.20 |
Division 2 of Part 8 – | |||
4.35 | 8.2.1 | Replaces (B) | Increases benefit by any SG additional amount |
4.36 | 8.2.2 | Replaces (b) | Increases benefit by any SG additional amount |
4.37 | 8.2.4 | Replaces Rule | Increases benefit by any SG additional amount |
Division 3 of Part 8 – | |||
4.38 | 8.3.5A 8.3.5B | New Rules | New Rule 8.3.5A provides that the amount of lump sum or lump sums paid under Rule 8.3.5 can be equal to the member’s preserved benefit plus any SG additional amount New Rule 8.3.5B provides that where the total amounts paid under Rule 8.3.5 are greater than the preserved benefit but less than an amount equal to the preserved benefit plus any SG additional amount, that the balance is to be treated as a preserved benefit under the SIS Act and dealt with accordingly. |
4.39 | 8.3.6A 8.3.6B | New Rules | New Rule 8.3.6A provides that the amount of lump sum or lump sums paid under Rule 8.3.6 can be equal to the member’s preserved benefit plus any SG additional amount. New Rule 8.3.6B provides that where the total amounts paid under Rule 8.3.6 are greater than the preserved benefit but less than an amount equal to the preserved benefit plus any SG additional amount, that the balance is to treated as a preserved benefit under the SIS Act and dealt with accordingly. |
Division 4 of Part 8 – | |||
4.40 | 8.4.3 | Replaces (c) | Increases benefit by any SG additional amount |
4.41 | 8.4.3 | Replaces (d)(ii) | Increases benefit by any SG additional amount |
4.42 | 8.4.4 | Replaces (a), inserts (aa) | Provides that where a person takes their benefit as a cash lump sum or as a combination of cash lump sum and rollover, that the total lump sum benefit paid is increased by any SG additional amount |
4.43 | 8.4.4 | Replaces (d) | Increases benefit by any SG additional amount |
4.44 | 8.4.4A | Replaces Rule | Consequential amendment as a result of amendments made by clause 3.43 to Rule 8.4.4 |
Division 5 of Part 9 – | |||
4.45 | 9.5.5 | Replaces Rule | Increases benefit by any SG additional amount |
Division 3 of Part 11 – | |||
4.46 | 11.3.26 | Replaces (a)(iii) | Increases benefit by any SG additional amount |
4.47 | 11.3.26 | Replaces (b) | Increases benefit by any SG additional amount |
4.48 | 11.3.27 | Replaces (c) | Increases benefit by any SG additional amount |