EXPLANATORY STATEMENT

ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE AND ADMINISTRATION

SUBJECT: TWENTIETH 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

Authority

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

2.      Section 5 of the Superannuation Act 1990 (1990 Act) provides that the Minister for Finance and Administration may amend the Trust Deed by signed instrument, subject to obtaining the PSS Board’s consent to the amendment where necessary.

3.      On 23 March 2004 the Minister for Finance and Administration amended the Trust Deed, and the Rules for the administration of the PSS set out in the Schedule to the Trust Deed, by signed instrument. That instrument is called the Twentieth Amending Deed in this statement. The PSS Board has consented to those amendments.

Date of Effect of the TWENTIETH Amending DEED and associated Rules

4.      Clause 1 specifies that the amendments to the Trust Deed and Rules made by the Twentieth Amending Deed come into effect on 1 July 2005.

Amendments to the TRUST DEED

Background

5.      On 17 October 2003, the Minister for Finance and Administration, Senator the Hon Nick Minchin, announced that the Australian Government would introduce changed superannuation arrangements for new employees who join the PSS from 1 July 2005 to provide fully funded accumulation benefits.

6.      The Twentieth Amending Deed amended the Trust Deed and Rules for the PSS to establish the PSS accumulation plan and to make some technical amendments to the Trust Deed.

7.      Subclause 2.1 replaces paragraph 3.2(i) to allow the Board to effect policies with insurers to provide the types of death and invalidity cover provided for in the Rules including basic, supplementary and additional death and invalidity cover and basic and supplementary income protection cover.

8.      Subclause 2.2 inserts at the end of paragraph 3.2(j) a new power for the Board to arrange for the purchase of retirement income products by certain former members and their beneficiaries as provided for in the Rules.

9.      Subclause 2.3 replaces paragraph 3.3(b) to correct a minor typographical error.

10.  Subclause 2.4 replaces paragraph 3.3(h) to update the Trust Deed to reflect a change to legislation whereby the Corporations Act 2001 now provides authority for access to information. This was previously included in the Superannuation Industry (Supervision) Act 1993 and regulations under that Act (the SIS Act).

11.  Subclause 2.5 replaces paragraph 9.2(a) to clarify that contributions made on behalf of members also form part of the PSS Fund.

12.  Subclause 2.6 adds after subclause 10.6 subclauses 10.7 and 10.8. Subclause 10.7 requires the Board to establish an investment strategy for the accumulation plan. Subclause 10.8 enables the Board to determine further investment strategies for members of the accumulation plan so those members may have the opportunity to choose particular investment strategies.

AMENDMENTS TO THE RULES

Overview

13.  The changes made to the Rules by the Twentieth Amending Deed renames the current Rules as the defined benefits plan and creates a new accumulation plan of the PSS to cover certain people who become new PSS members from 1 July 2005. The changes do not adversely affect the benefits or rights of current PSS members or those with a pre-existing interest in the PSS and establishes a new regime of benefits for new PSS members.

Section B – Defined Benefits Plan

14.  Clause 3 amends the Rules by converting the Rules as amended before the commencement of this clause to a new Section B of the Rules governing the defined benefits plan of the PSS. Before the heading to Part 1 a new heading, Section B – Defined Benefits Plan is inserted and in the heading to each Part the letter “B” is inserted after the word “Part”. Each rule number has been renumbered by adding the letter “B” as a prefix and each reference to a Part of the Rules or reference to a rule has also been updated to reflect the renumbering.

15.  Clause 4 further amends the Rules as renumbered by clause 3 and as amended before the commencement of this clause.

Division 1 – Understanding Section B of these Rules

16.  Subclauses 4.2 to 4.7 make amendments arising from the renumbering of the Parts and Rules in Section B of the Rules and the naming of the defined benefits plan.

Division 2 – Words and Phrases Used in Section B of these Rules

17.  Subclauses 4.8 to 4.11 make amendments arising from the renumbering of the Parts and Rules in Section B of the Rules.

18.  Subclause 4.12 further amends the Rules by amending the definitions of preserved benefit and transfer amount by replacing the words “PSS Scheme” with the words “PSS defined benefits plan” to ensure those definitions only apply to the defined benefits plan.

19.  Subclauses 4.13 and 4.14 amend the Rules to replace the definitions of casual member and regular member to ensure those definitions only apply to members of the defined benefits plan.

20.  Subclause 4.15 amends the Rules by inserting a definition of category A member to have the same meaning as in Section A of the Rules.

21.  Subclause 4.16 further amends the Rules by inserting a definition of PSS defined benefits plan to mean the plan governed by Section B of the Rules.

22.  Subclause 4.17 amends the Rules by inserting a definition of PSS member to mean a person who is a member of the PSS scheme due to the operation of Part 3 of the Superannuation Act 1990.

23.  Subclause 4.18 amends the Rules to reflect earlier changes to definitions and clarify that a person becomes a PSS member under Part 3 of the Superannuation Act 1990 and that the Minister has authority to declare whether a person is a PSS member or not.

24.  Subclause 4.19 inserts a new Rule B2.1.1A that specifies how a person can become a member of the PSS defined benefits plan after 1 July 2005. A person may only become a member of the defined benefits plan if on the day the person last became a PSS member they were already a member of the defined benefits plan, a preserved benefits member in the defined benefits plan or an invalidity pensioner; or on 30 June 2005 the person was a holder of a statutory office and became a PSS member after making an election to join the PSS in respect of that office; or the person was a temporary employee and made an election to join the PSS in respect of the employment engaged in on 30 June 2005; or the person was a temporary employee and made an election before 1 July 2005 to join the PSS scheme which did not take effect until after 1 July 2005; or the person was a CSS member who elected to become a PSS member. Subclause 4.19 also inserts a new Rule B2.1.1B specifying that any person who becomes a PSS member on or after 1 July 2005 who does not become a member of the defined benefits plan becomes a member of the accumulation plan.

25.  Clause 5 further amends the renumbered Rules to insert Section A to the Rules which is a new section covering the accumulation plan of the PSS. The details of the new section are outlined in Attachment A.

ATTACHMENT A

Section A – Accumulation Plan

Part A1 - Introduction

Division 1 - Understanding Section A of these Rules

1.    This Division outlines the structure of Section A of the Rules and explains that Section A of the Rules has been divided into 6 Parts, each dealing with a major aspect of the operation of the PSS accumulation plan (rule A1.1.1). This Division also outlines how each Part is further divided up into Divisions addressing unique groupings within the Part and each Division is made up of Rules that contain specific provisions (rule A1.1.2). The Division also outlines how to read the numbering of the Rules (rule A1.1.3).

Division 2 - Words and Phrases Used in Section A of these Rules

2.      This Division defines certain words and phrases that have a special meaning when used in Section A of the Rules (rule A1.2.1).

Part A2 – Membership and Contributions

Division 1 - Membership

3.      This Division deals with membership issues in the PSS accumulation plan including how a person becomes a category A member (rule 2.1.1), how concurrent membership will be dealt with in category A and preserved benefit members.

4.      A person is able to become a member of the accumulation plan, called a category A member, if they become a PSS member on or after 1 July 2005, are not a member of the PSS defined benefits plan and do not become a member of the defined benefits plan due to the operation of Section B of the Rules. Members of the PSS defined benefits plan are called Category B members in section A of the Rules (rule A2.1.2).

5.      A person may hold concurrent membership if the person is a category A member in respect of two or more concurrent employments (rule 2.1.3). Where this occurs only one accumulation account will be maintained for the person (rule 2.1.4). A person cannot be both a category A and category B member (rule 2.1.5).

6.      A former category A member who preserves their benefit in the PSS accumulation plan on ceasing to be a PSS member is referred to as a “category A preserved benefit member” and will keep the same personal accumulation account maintained for them whether they remain as a preserved benefit member or return as a category A member at a later time (rules 2.1.6 and 2.1.7).

Division 2 - Contributions by Employers

7.      This Division outlines when employers are required to make contributions, when they may make additional contributions, the method of payment of employer contributions and reporting requirements.

8.      Employers will be required to make basic employer contributions of 15.4% of a category A member’s superannuation salary to the PSS Board each pay day unless the PSS Fund is prevented by the Superannuation Industry (Supervision) Act 1993 and Regulations under that Act (the SIS Act) from accepting the contributions (rule A2.2.1). In some circumstances employers may also be required to make further basic contributions in order to ensure the amount of contributions made each quarter is at least equal to the Superannuation Guarantee amount of 9% of ordinary time earnings (rule A2.2.2).

9.      The term pay day is defined to mean each time a salary payment is made by a designated employer, and for category A members who have their superannuation salary calculated on the basis of “PSS salary”, also includes some days when they do not receive a salary payment from their designated employer due to being on certain types of unpaid leave.

10.  The superannuation salary of a category A member will be the amount that would have been the person’s fortnightly contribution salary had they become a category B member (PSS salary), unless they are covered by circumstances where their superannuation salary is ordinary time earnings (rule A2.2.3). The circumstances in which a person’s superannuation salary will be ordinary time earnings is where a certified agreement, Australian workplace agreement or remuneration determination applying to the person specifies that their superannuation salary will be their ordinary time earnings and for members not covered by a certified agreement, Australian workplace agreement or remuneration determination, where an agreement with their designated employer specifies that their superannuation salary will be their ordinary time earnings (rule A2.2.4). Ordinary time earnings has the same meaning as in the Superannuation Guarantee (Administration) Act 1992.

11.  A designated employer may also make additional employer contributions to the Board in respect of category A members unless the SIS Act prevents it (rule A2.2.5). This will allow employers to make contributions on behalf of a member through salary sacrifice arrangements and will also allow employers to provide superannuation contributions in circumstances where contributions would otherwise not be required. These circumstances differ depending upon whether basic employer contributions are based on ordinary time earnings or PSS salary.

12.  The Board may specify the way in which payments may be paid to them (rule A2.2.6). If the Board specifies a way of making payments, designated employers are required to make payments in that way (rule A2.2.7).

13.  The Board is required to pay all employer contributions received into the PSS Fund (rule A2.2.8).

14.  For category A members whose superannuation salary is ordinary time earnings, their employers are required to inform them in writing at least quarterly, of the amount of employer contributions made to the PSS (rule A2.2.9).

15.  For category A members who have contributions made based on PSS salary, employers are required to report to the category A member and to the PSS Board about the amount of employer contributions made each quarter, expressed in dollars and cents, and as a percentage of ordinary time earnings (rule A2.2.10). If the percentage of ordinary time earnings reported is less than 9%, the employer is required to pay the shortfall amount to the PSS Board as basic employer contributions (rule A2.2.11).

16.  Information required to be provided by employers to category A members can be provided in a pay advice document (rule A2.2.12).

Division 3 - Contributions by Members

17.  This Division outlines when and how employee contributions and eligible spouse contributions may be made and how these payments will be dealt with.

18.  Category A members can pay employee contributions to the Board at any time in any amount provided the SIS Act does not prevent the PSS Fund from accepting the contributions (rule A2.3.1). The method of payment must also comply with any Board determination on payment methods. A category A member is not required to make employee contributions (rule A2.3.2). A category A preserved benefit member may not make employee contributions (rule A2.3.3).

19.  Eligible spouse contributions may also be made for a Category A member at any time and in any amount provided the SIS Act does not prevent the PSS Fund from accepting the contributions (rule A2.3.4). The payment must also comply with any Board determination on payment methods.

20.  The Board can determine the way employee contributions and eligible spouse contributions are paid to the Board (rule A2.3.5) and must pay any employee contributions and eligible spouse contributions into the PSS Fund (rule A2.3.6).

Division 4 - Transfer Amounts

21.  This Division outlines what amounts may be transferred to the PSS Fund and how the payments can be paid into the PSS Fund.

22.  A category A member may transfer any or all of the following amounts to the Board as a transfer amount: an amount payable to, or in respect of the person by a superannuation entity as defined in the SIS Act, the amount of any eligible termination payment, an amount payable in respect of a person in accordance with the Superannuation Guarantee (Administration) Act 1992 and an amount payable in respect of the person under the Superannuation Government Co-contribution for Low Income Earners) Act 2003 (rule A2.4.1).

23.  The Board may determine the way in which transfer amounts must be paid to the Board (rule A2.4.2) and must pay transfer amounts into the PSS Fund (rule A2.4.3).

Part A3 – Benefits

Division 1 - Benefits

24.  This Division outlines who may apply to be paid benefits and how benefits may be paid. This Division also deals with preservation of benefits and the roll-over of benefits, and the payment of benefits to an eligible roll-over fund.

25.  A benefit application, in a form acceptable to the Board, can be made to the Board by a category A member who intends to leave the PSS within a month of making the benefit application, is applying for early release of benefits on compassionate grounds or due to severe financial hardship, has applied for invalidity retirement or is applying for income protection benefits. A benefit application can also be made by a former category A member, a category A preserved benefit member, the legal personal representative of a category A member or a category A preserved benefit member, or a person claiming to be entitled to the benefit of a deceased category A member or a deceased category A preserved benefit member (rule A3.1.1). Any application must include any supporting evidence of entitlement to the benefit as required by the Board (rule A3.1.2).

26.  If the Board receives a benefit application the Board must pay a former category A member or a category A preserved benefits member such part of their total benefit as is permitted by the SIS Act as soon as possible (rule A3.1.3). If the Board receives a benefit application from a category A member who intends to leave the PSS, the Board must pay the benefit as soon as possible after the person ceases to be a PSS member (rule A3.1.4).

27.  If no benefit application has been made the SIS Act may still require a benefit or part of a benefit to be paid to a category A member or a category A preserved benefit member. If this occurs the Board must pay such part of the benefit as the SIS Act requires. The Superannuation (PSS) Membership Exclusion Declaration 1995 provides for PSS membership to cease where any of a person’s benefit becomes compulsorily payable under the SIS Act (rule A3.1.5).

28.  If a benefit application is received by the Board from a category A member seeking early release of benefits on compassionate grounds or due to severe financial hardship, the Board may pay the person in accordance with the SIS Act such part of the person’s total benefit as the SIS Act permits (rule A3.1.6).

29.  If a benefit application is received or is taken to have been received by the Board from a category A member in respect of whom an application has been made to the Board for approval of their invalidity retirement, the Board must, if the person is subsequently retired on invalidity grounds, pay the person such part of their benefit as the SIS Act permits (rule A3.1.7).

30.  If a benefit application is received by the Board from a category A member who has applied for income protection benefits, and an amount is paid into the PSS Fund in response to a claim against an insurance policy providing income protection cover, the Board must pay the category A member income protection benefits (rule A3.1.8).

31.  If the Board receives a benefit application from the legal personal representative of a category A member or a category A preserved benefit member, the Board may pay the legal personal representative such part of the total benefit as the SIS Act permits, if the Board is satisfied that the category A member or category A preserved benefit member is under a legal disability and is entitled to the payment of a benefit under section A of the Rules (rule A3.1.9).

32.  When the Board receives an application for benefits from a person claiming to be entitled to the benefits of a deceased category A member or a deceased category A preserved benefit member, or the Board becomes aware that such a member has died, the Board must determine who shall be paid the death benefits in accordance with Division 2 of Part A3 and pay the total benefit to the person or persons entitled to the benefit in such shares as the Board decides (rule A3.1.10).

33.  If a former category A member or a category A preserved benefit member is paid part of their total benefit in accordance with this Division, the remainder of the benefit becomes a preserved benefit unless the person applies to roll-over the remainder of the benefit to another superannuation entity (rule A3.1.11).

34.  A roll-over application can be made to the Board by a category A member who intends to leave the PSS within a month of making the benefit application, a former category A member, a category A preserved benefit member or a category A member who has made member contributions or paid a transfer amount to the PSS (rule A3.1.12). A roll-over application must be made in a form acceptable to the Board and must include any supporting evidence of entitlement as required by the Board (rule A3.1.13).

35.  If the Board receives a roll-over application from a category A member who intends to leave the PSS, the Board must roll-over the benefit as soon as possible after the person ceases to be a PSS member (rule A3.1.14)

36.  When the Board receives a roll-over application from a former category A member or a category A preserved benefit member, the Board must roll-over the person’s total benefit (rule A3.1.15). If the Board receives a roll-over application from a category A member who has made member contributions or paid a transfer amount to the PSS, the Board must roll-over the amount requested provided it does not exceed the total of the person’s accumulated member contributions and the employer funded component of any transfer amount. The employee funded component of the transfer amount forms part of the person’s accumulated member contributions (rule A3.1.16). If no benefit application or roll-over application is received upon a person becoming a former category A member the total benefit becomes a preserved benefit unless the Board is able to pay the benefit to an eligible roll-over fund (rule A3.1.17).

37.  The Board may pay a benefit to an eligible roll-over fund if a benefit has become compulsorily payable, 90 days have passed since the benefit became payable and the person in relation to whom the benefit is payable has not informed the Board in writing of how he/she wishes the benefit to be paid. The Board may also pay an amount to an eligible roll-over fund if it is unable to locate a category A member or a category A preserved benefit member and the SIS Act permits the Board to pay the benefit to an eligible roll-over fund (rule A3.1.18).

Division 2 - Death Benefits

38.  This Division outlines who is entitled to be paid death benefits.

39.  If there is a binding member nomination in place that meets the requirements of the SIS Act the person or persons specified in the notice are entitled to be paid the death benefits as specified by the notice (rule A3.2.1).

40.  If a binding member nomination is not in place, has expired or is otherwise wholly or partially invalid, either or both of the following could be entitled to be paid death benefits: one or more dependants of the deceased category A member or deceased category A preserved benefit member, or the legal personal representative or representatives of the deceased category A member or deceased category A preserved benefit member (rule A3.2.2).

41.  If the Board is unable to find a legal personal representative or a dependant of the deceased category A member or deceased category A preserved benefit member after making reasonable enquiries, any individual may be entitled to be paid the death benefits (rule A3.2.3).

42.  If a binding member nomination is not in place or is wholly or partially invalid, the Board must determine which persons are entitled to be paid the death benefits and may apportion the benefits between the persons so entitled (rule A3.2.4).

Division 3 - Permanent Invalidity Benefits

43.  This Division outlines how an application for approval of invalidity retirement should be made, the invalidity retirement process and provides for permanent invalidity benefits to be paid to category A members in invalidity retirement is approved by the Board.

44.  A category A member claiming to have a permanent incapacity, or the employer of a category A member with a permanent incapacity, may apply to the Board for approval of the category A member’s invalidity retirement (rule A3.3.1). If this occurs, the category A member is also taken to have made a benefit application (rule A3.3.2).

45.  Once the Board receives an application to approve the invalidity retirement of a category A member, the Board may approve the member’s retirement if it is satisfied that the member has a permanent incapacity (rule A3.3.3). The Board may determine the process it will follow before approving the invalidity retirement of a category A member (rule A3.3.4).

46.  The Board must advise a category A member, and the designated employer, of a decision on invalidity retirement. The advice should include a statement of the reasons for the decision (rule A3.3.5). If the Board approves the invalidity retirement of a category A member, the amount of benefit payable is the former category A member’s total benefit (rule A3.3.6).

Division 4 - Income Protection Benefits

47.  This Division outlines how a member may become entitled to income protection benefits, and the process for payment of such benefits.

48.  A category A member may apply to the Board for income protection benefits if the category A member is unable to work due to a temporary incapacity, and the category A member holds income protection cover (rule A3.4.1).

49.  When the Board receives an application for income protection benefits, the Board will make a claim against the policy providing the income protection cover (rule A3.4.2).

50.  Any amount paid to the Board by a life insurance company covering a policy providing income protection cover, is to be paid directly to the PSS Fund and must be paid from the PSS Fund to the category A member as an income stream unless this would be prevented by the SIS Act (rule A3.4.3). Any such amount paid does not form part of the category A member’s personal accumulation account (rule A3.4.4). The Board is not required to pay income protection benefits in respect of a category A member who does not hold income protection cover or where a life insurance company refuses to pay an amount in response to a claim (rule A3.4.5).

Division 5 - Retirement Income Products

51.  This Division outlines that the Board must arrange retirement income products with a life insurance company for persons in receipt of benefits under section A of the Rules, and allows persons in receipt of such benefits to purchase these products arranged by the Board (rules A3.5.1 and A3.5.2).

Part A4 – Insurance

Division 1 - Basic Death and Invalidity Cover

52.  This Division outlines how the Board must arrange a basic death and invalidity policy or policies, the way this cover will be provided, how claims by the Board are managed and the premiums for basic death and invalidity cover (rule A4.1.1).

53.  All category A members will be provided with basic death and invalidity cover (rule A4.1.2).

54.  When a category A member dies, or if an application is made for approval of their invalidity retirement, the Board must make a claim against the policy providing the basic death and invalidity cover (rule A4.1.3).

55.  Any amount paid in response to a claim against a policy or policies must be paid into the PSS Fund and is credited to the person’s personal accumulation account. This amount forms a part of the former category A member’s accumulated funded employer contributions (rule A4.1.4).

56.  The Board will pay for basic death and invalidity cover premiums from the PSS Fund (rule A4.1.5). The amount of premium payable in respect of each category A member will be determined by the Board, and must be deducted from the category A member’s personal accumulation account (rule A4.1.6).

Division 2 - Supplementary Death and Invalidity Cover

57.  This Division outlines that the Board may arrange for supplementary death and invalidity cover policies with a life insurance company and that the policies will be on the terms and conditions agreed between the Board and the relevant life insurance company (rule A4.2.1).

58.  A category A member may apply to the Board for supplementary death and invalidity cover at any time (rule A4.2.2).

59.  The Board may allow the category A member to choose the policy providing the supplementary death and invalidity cover if the Board has taken out more than one policy (rule A4.2.3).

60.  A category A member who applies for supplementary death and invalidity cover must provide any information and undergo any medical examinations the relevant life insurance company requires for it to determine whether it is prepared to provide the supplementary death and invalidity cover (rule A4.2.4).

61.  If a category A member applies to the Board for supplementary death and invalidity cover, or applies to vary the existing cover, the Board must ask the life insurance company whether it is prepared to provide the cover for the category A member and if so the cost of the premium. The Board must provide the information transferred between it and the life insurance company to the category A member (rule A4.2.5).

62.  A category A member can vary the amount of supplementary death and invalidity cover at any time before the cover ceases to be applicable, provided the relevant life insurance company is prepared to vary the cover (rule A4.2.6). Variations take effect from the date specified in the policy or the date determined by the Board (rule A4.2.7).

63.  A category A member’s supplementary death and invalidity cover ceases on the earliest of the date he/she notifies the Board he/she no longer wishes to have supplementary death and invalidity cover, death or invalidity retirement occurs or the cover is ceased by the insurer (rule A4.2.8).

64.  When a category A member with supplementary death and invalidity cover dies or an application is made for the person’s invalidity retirement, the Board must make a claim against the policy providing the cover (rule A4.2.9). Any amount paid by a life insurance company to the Board must be paid into the PSS Fund and is credited to the person’s personal accumulation account (rule A4.2.10).

65.  The Board will pay group insurance premiums from the PSS Fund (rule A4.2.11). The premium for supplementary death and invalidity cover must be deducted from the category A member’s personal accumulation account (rule A4.2.12).

Division 3 – Basic Income Protection Cover

66.  This Division outlines that the Board must arrange a policy or policies to provide basic income protection cover for category A members. The basic income protection policy or policies will be on the terms and conditions agreed between the Board and the relevant life insurance company, subject to the SIS Act (rule A4.3.1).

67.  A category A member will be provided with basic income protection cover unless the member notifies the Board in writing that they do not wish to be provided with basic income protection cover, or the company refuses to provide cover to a category A member (rule A4.3.2).

68.  A category A member’s basic income protection cover ceases on the earliest of the date he/she notifies the Board he/she no longer wishes to have basic income protection cover, death or invalidity retirement occurs or the insurer ceases cover (rule A4.3.3).

69.  The Board will pay group insurance premiums from the PSS Fund (rule A4.3.4). The premium for income protection cover must be deducted from the category A member’s personal accumulation account (rule A4.3.5).

Division 4 – Supplementary Income Protection Cover

70.  Subject to the SIS Act, the Board may take out a policy or policies with a life insurance company to provide supplementary income protection cover for category A members. Supplementary income protection cover policy or policies will be on the terms and conditions agreed between the Board and the life insurance company (rule A4.4.1).

71.  A category A member can apply to the Board for supplementary income protection cover at any time (rule A4.4.2). The category A member may choose the policy providing the supplementary income protection cover if the Board has taken out more than one policy (rule A4.4.3).

72.  A category A member who applies for supplementary income protection cover must provide any information and undergo any medical examination the life insurance company requires to determine if the supplementary income protection cover will be provided to the category A member (rule A4.4.4).

73.  If a category A member applies for supplementary income protection cover, the Board must ask the life insurance company whether it is prepared to provide cover to the category A member and the cost of the premium. The Board must provide the information from the life insurance company to the category A member (rule A4.4.5).

74.  A category A member may vary the amount of supplementary income protection cover at any time before the cover ceases, provided the life insurance company is prepared to vary the cover (rule A4.4.6). Variations will take effect from the date specified in the policy or the date determined by the Board (rule A4.4.7).

75.  A category A member’s supplementary income protection cover ceases on the earliest of the date he/she notifies the Board he/she no longer wishes to have supplementary income protection cover, death or invalidity retirement occurs or insurance cover ceases (rule A4.4.8).

76.  All premiums for supplementary income protection cover are to be paid by the Board from the PSS Fund (rule A4.4.9). The premium for supplementary income protection cover must be deducted from a category A member’s personal accumulation account (rule A4.4.10).

Part A5 – Other Matters

Division 1 - Personal Accumulation Account

77.  This Division outlines that the Board must keep personal accumulation accounts for category A members and category A preserved benefit members and defines what amounts make up a person’s accumulated funded employer contributions and accumulated member contributions.

78.  The Board must keep a personal accumulation account for each category A member and category A preserved benefit member (rule A5.1.1). The Board may only keep one personal accumulation account for each person (rule A5.1.2). This personal accumulation account records the sum of a person’s accumulated funded employer contributions and their accumulated member contributions (rule A5.1.3).

79.  Accumulated funded employer contributions of a category A member or a category A preserved benefit member will be equal to the total of certain amounts credited to the person’s personal accumulation account, minus the total of other particular amounts debited to the person’s accumulation account (rule A5.1.4).

80.  Any or all of the following amounts may be credited to a category A member’s personal accumulation account and form part of their accumulated funded employer contributions: basic employer contributions; any additional employer contributions; the employer funded component of any transfer amount; any amount paid by a life insurance company to the Board in respect of the person in response to a claim against a life policy and the interest credited in respect of fund earnings on those amounts as decided by the Board (rule A5.1.5).

81.  The following amounts must be debited from the accumulated funded employer contributions in a person’s personal accumulation account: income tax as determined by the Board; any insurance premiums; the interest debited in respect of fund losses on the person’s accumulated funded employer contributions as decided by the Board; any early release of benefit not already paid from the person’s accumulated member contributions; any benefit paid to or in respect of the category A member or category A preserved benefit member from their accumulated funded employer contributions and any administration costs for member investment choice (rule A5.1.6).

82.  The accumulated member contributions of a category A member or a category A preserved benefit member is equal to the total of certain the amounts credited to the person’s personal accumulation account less the total of other particular amounts debited to the person’s personal accumulation account (rule A5.1.7).

83.  Any or all of the following amounts may be credited to a category A member’s personal accumulation account and form part of their accumulated member contributions: employee contributions paid by a category A member; eligible spouse contributions accepted by the Board and paid on behalf of a category A member; the employee funded component of transfer amounts and the interest credited in respect of fund earnings on those amounts as decided by the Board (rule A5.1.8).

84.  The following amounts are paid from a person’s accumulated member contributions in their personal accumulation account: any insurance premium payable as described in these Rules paid from the person’s accumulated employer contributions; the interest debited in respect of fund losses on the person’s accumulated member contributions as decided by the Board and any other benefit paid to or in respect of the category A member or category A preserved benefit member from their accumulated member contributions (rule A5.1.9).

Division 2 - Crediting Fund Earnings and Debiting of Fund Losses

85.  This Division outlines how the Board will deal with crediting of earnings and debiting of losses.

86.  The Board may determine the amounts to be credited or debited to a person’s personal accumulation account, that will reasonably reflect the after tax earnings derived from the investment of the amount in the account other than a surcharge deduction amount (rule A5.2.1). The Board must have regard to the charges incurred in the investment of amounts in all personal accumulation accounts and any member investment choice (rule A5.2.2).

87.  Where the Board identifies a surcharge deduction amount, the Board must credit a member’s personal accumulation account from Fund earnings with an amount decided by the Board that is equal to the increase in the person’s surcharge debt account due to the application of the long-term bond rate (rule A5.2.3).

Division 3 - Superannuation Surcharge

88.  This Division outlines the application of the Superannuation Contributions Tax. If an assessment is made of the surcharge on the surchargeable contributions of a category A member or a category A preserved benefit member, the Board must identify an amount equal to the balance of the person’s surcharge debt account in the person’s personal accumulation account as a surcharge deduction amount (rule A5.3.1).

Division 4 - Member Investment Choice

89.  This Division outlines that the Board may offer category A members and category A preserved benefit members the option to elect to have amounts held in their personal accumulation account, other than a surcharge deduction amount, invested in accordance with a particular investment strategy (rule A5.4.1). The Board may determine when and how a category A member and category A preserved benefit member may make or change an election about their choice of investment (rule A5.4.2). The Board will also determine administration fees to be paid from a person’s personal accumulation account (rule A5.4.3).

Division 5 - Solvency

90.  This Division outlines the definition of solvency for the PSS accumulation plan, how additions to personal accumulation plans will be made where technical insolvency occurs and procedures to be followed during technical insolvency.

91.  Solvency in the PSS accumulation plan refers to the net realisable value of the assets in the PSS Fund attributable to members covered by section A of the Rules being equal to or exceeding the sum of all personal accumulation accounts (rule A5.5.1). A reference to the PSS accumulation plan being technically insolvent is a reference to the net realisable value of the assets in the PSS Fund attributable to members covered by Section A of the Rules being less than the sum of all personal accumulation accounts (rule A5.5.2).

92.  Under these Rules if the PSS accumulation plan is solvent at the beginning of the financial year, the Board must not credit an amount in respect of fund earnings to a personal accumulation account that would result in the PSS accumulation plan being technically insolvent at the end of the financial year (rule A5.5.3).

93.  The Board may only credit an amount to a personal accumulation account in respect of fund earnings that would result in the PSS accumulation plan being technically insolvent at the end of the financial year if the amount is added in accordance with a solvency plan (rule A5.5.4).

94.  If the PSS accumulation plan is technically insolvent the Board must put in place a program designed by an actuary to ensure the PSS accumulation plan is in a solvent position no later that at the end of the fifth financial year following the financial year the Fund became technically insolvent (rule A5.5.5).

Part A6 – Review of Decisions

Division 1 - Reconsideration Advisory Committees

95.  This Division outlines that the Board will establish a Reconsideration Advisory Committee, with people holding such qualifications as the Board determines suitable, and may refer a decision of the Board to this committee (rule A6.1.1). Subject to Board directions a Reconsideration Advisory Committee will regulate its own affairs (rule A6.1.2).

96.  The Board will provide the Reconsideration Advisory Committee with all relevant evidence and information as required (rule A6.1.3). The decision of the Reconsideration Advisory Committee will be either to affirm, vary, substitute or set aside a Board decision under review (rule A6.1.4).

Division 2 - Reconsidering Delegate’s Decisions

97.  This Division outlines how a request for reconsideration can be made. A person affected by a decision, made by a delegate of the Board, may request the Board to reconsider the original decision (rule A6.2.1). The request for reconsideration must be made in writing, or any other form acceptable to the Board, and should set out the particulars of the decision to be reconsidered (rule A6.2.2).

98.  The Board must reconsider a decision of the delegate of the Board, and may refer this to the Reconsideration Advisory Committee to determine the matter, or itself review the decision after considering the recommendation of a Reconsideration Advisory Committee (rule A6.2.3).

99.  Any decision made by the Board or the Reconsideration Advisory Committee must be notified to the person requesting reconsideration of the original decision (rule A6.2.4).

Division 3 - Reconsidering Board Decisions

100.     This Division outlines how a request for reconsideration may be made to the Board (rule A6.3.1). A request for reconsideration of a decision must be made in writing setting out the particulars of the decision to be reconsidered, specify the grounds under which the request is being made, include new evidence, being evidence not previously known to the Board supporting the request, and be accompanied by the prescribed fee (rule A6.3.2).

101.     The Board must not proceed with a request for reconsideration of a decision if the request is not made in the prescribed manner. In such a case the Board may refund the fee paid (if any). The Board may also subsequently proceed with the request if new evidence is provided (rule A6.3.3).

102.     If the Board accepts a request to reconsider a decision, after considering the evidence provided and any other evidence the Board considers relevant, and the Board is satisfied there is no reasonable doubt, it should decide in favour of the person (rule A6.3.4).

103.     If the Board reconsiders a decision made by it, the Board must refer the request to the Reconsideration Advisory Committee if the Board has delegated the power to the Committee for review and decision, or the Board must review the decision after considering the recommendation of the Reconsideration Advisory Committee and make a recommendation in relation to the decision. The Board may use its discretion to refund the fee if it accepts a request to reconsider one of its decisions and, after delegating to a Reconsideration Advisory Committee or taking the recommendation of an Assessment Panel or it decides to use its discretion, the Board makes a recommendation in relation to the decision (rule A6.3.5).

104.     Any decision made by the Board or the Reconsideration Advisory Committee must be notified to the person requesting reconsideration of the original decision. The notification should include a statement of reasons for the decision (rule A6.3.6).

Division 4 - Board Initiated Reconsiderations

105.     This Division outlines that the Board may initiate a reconsideration of a decision (rule A6.4.1).