EXPLANATORY STATEMENT
ISSUED BY AUTHORITY OF THE MINISTER FOR FINANCE AND ADMINISTRATION
SUBJECT: TWENTY-SECOND AMENDING DEED TO THE DEED TO ESTABLISH AN OCCUPATIONAL SUPERANNUATION SCHEME FOR COMMONWEALTH 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 certain of the Commonwealth’s employees and for certain other people by a Deed dated 21 June 1990 under section 4 of the Superannuation Act 1990 (the 1990 Act). In this statement the Deed is called “the Trust Deed”. The occupational superannuation scheme is known as the Public Sector Superannuation Scheme (PSS).
2. Section 5 of the 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. The Minister has amended the Trust Deed and the Rules for the Administration of the Superannuation Scheme set out in the Schedule to the Trust Deed by the following signed instruments:
Trust Deed | Date |
| Trust Deed | Date |
First Amending Deed | 21 June 1990 |
| Twelfth Amending Deed | 25 Mar 1998 |
Second Amending Deed | 1 July 1991 |
| Thirteenth Amending Deed | 5 Dec 1999 |
Third Amending Deed | 30 June 1992 |
| Fourteenth Amending Deed | 20 Aug 2001 |
Fourth Amending Deed | 21 Dec 1992 |
| Fifteenth Amending Deed | 25 Sep 2001 |
Fifth Amending Deed | 16 June 1993 |
| Sixteenth Amending Deed | 26 Jun 2002 |
Sixth Amending Deed | 24 Jan 1994 |
| Seventeenth Amending Deed | 3 April 2003 |
Seventh Amending Deed | 7 May 1994 |
| Eighteenth Amending Deed | 27 June 2003 |
Eighth Amending Deed | 28 June 1994 |
| Nineteenth Amending Deed | 26 Nov 2003 |
Ninth Amending Deed | 22 June 1995 |
| Twentieth Amending Deed | 23 Mar 2004 |
Tenth Amending Deed | 29 Jan 1996 |
| Twenty-first Amending Deed | 9 May 2004 |
Eleventh Amending Deed | 10 Dec 1996 |
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4. On 5 July 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 Twenty-second Amending Deed in this statement.
5. 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 the PSS Board (the Board) has consented to those amendments. However, paragraph 5(1A)(b) prescribes a number of exemptions where the Board’s consent is not required to an amendment to the Trust Deed.
6. Sub-paragraph 5(1A)(b)(i) exempts an amendment that 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. Subsection 5(1B) provides that for the purposes of that sub-paragraph a payment under the Trust Deed or the Rules is taken to be a payment by an employer-sponsor.
7. The amendments included in the Twenty-second Amending Deed affect the amount of surcharge deductions that are made from the employer component of PSS benefits (see below). As employer benefits are payable under the PSS Rules and are paid by the Commonwealth, these amendments relate to a payment by an employer-sponsor because of subsection 5(1B). The amendments therefore did not require the consent of the Board.
BACKGROUND
8. The surcharge is an extra charge levied on the surchargeable superannuation contributions of higher income individuals. The Superannuation Budget Measures Act 2004 amended a range of superannuation legislation to reduce the maximum surcharge rates progressively to 12.5 per cent for 2004-05, and 10.0 per cent for 2005-06 and subsequent financial years, commencing from 1 July 2004.
9. The Twenty-second Amending Deed amended the PSS Rules to change the amount by which a PSS benefit can be reduced where the member has a surcharge debt, to reflect the reduction in the maximum surcharge rate.
PROVISIONS OF THe Twenty-second Amending Deed
10. Clause 1 specifies that the amendments of the Rules made by the Twenty-second Amending Deed come into effect on 1 July 2004, which reflects the commencement date for the first of the progressive reductions in the maximum surcharge rates. As the amendments made by the Twenty-second Amending Deed change the amount by which a PSS benefit can be reduced, to reflect a reduction in the maximum surcharge rate, the retrospectivity of the Deed does not disadvantage PSS members or impose liabilities on PSS members.
Amendments to the PSS Rules
11. Division 2 of Part 12 of the PSS Rules specifies the powers of the Board relating to benefits, including the power to determine the amounts by which benefits can be reduced in respect of a surcharge debt.
12. Rule 12.2.9 limits the Board’s powers in respect of such benefit reductions by imposing a cap on the amount of the reduction. The cap has regard to the maximum rate of surcharge applying from time to time. Paragraphs (c) and (d) of Rule 12.2.9 previously prevented the Board from reducing the benefits of a member who has a surcharge debt by more than 13.5% of the employer financed component of that part of the benefits payable to the member that accrued in the 2004-2005 financial year and by more than 12.5% of the employer financed component of that part of the benefits payable to the member that accrued after 30 June 2005.
13. Subclause 3.1 deleted paragraphs (c) and (d) of Rule 12.2.9 and substituted two new paragraphs to reflect the reduction in the maximum surcharge rates, as referred to in paragraph 8 above.