EXPLANATORY STATEMENT
Issued by authority of the Minister for Finance and Administration
Superannuation Act 1990
Twenty-seventh 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 Administration may amend the Trust Deed by signed instrument, subject to obtaining the consent of the PSS Board (the Board) to the amendment where necessary.
Twenty-seventh Amending Deed
On 20 June 2006 the Minister for Finance and Administration amended the Trust Deed by signed instrument. That instrument is called the Twenty-seventh Amending Deed in this statement.
The main purpose of the Twenty-seventh Amending Deed is to amend the Trust Deed as a consequence of the Government’s Safety of Superannuation reforms as well as the introduction of a single superannuation Board from 1 July 2006.
Details of the Twenty-seventh 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 the Board has consented to those amendments.
The PSS Board has consented to the amendments included in the Twenty-seventh Amending Deed.
Legislative Instruments Act 2003
Section 17 of the Legislative Instruments Act 2003 (LIA) specifies that rule-makers should consult before making legislative instruments. The Twenty-seventh Amending Deed is a legislative instrument for the purposes of the LIA.
Consultation was undertaken with the PSS Board in relation to the overall policy issues concerning the Deed. Also, as mentioned above, the PSS Board has consented to the amendments included in the Twenty-seventh Amending Deed.
Commencement
Clause 1 of the Twenty-seventh Amending Deed specifies the commencement dates for the amendments to the Trust Deed made by the Deed. The amendments take effect from 1 July 2006 but two of the amendments only apply in relation to certain Board appointments made after that date, in order to protect the validity of the existing appointments.
ATTACHMENT
OVERVIEW OF THE TWENTY-SEVENTH AMENDING DEED
Safety of Superannuation reforms
The Deed includes amendments to the Trust Deed to ensure that substantive and acting appointments to the PSS Board do not contravene the new fitness and propriety standard under the Superannuation Industry (Supervision) Act 1993 (SIS) introduced as part of the Government’s Safety of Superannuation reforms. The amendments also ensure that a contravention of the standard would allow the Minister for Finance and Administration to terminate an appointment to the Board. The amendments also allow for reduced reliance on acting Trustees of the Board when substantive Trustees are absent from Australia and provide for Trustees to participate in, vote on and disclose conflicts of interest at Board meetings through proxies.
Single superannuation Board
The Deed includes amendments to the Trust Deed following the creation of a single superannuation Board by the Superannuation Legislation Amendment (Trustee Board and Other Measures) Act 2006. From 1 July 2006 the Boards for the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) and the Public Sector Superannuation Accumulation Plan (PSSAP) become a single Trustee Board, using a single investment Trust to manage the three separate Funds (the CSS, the PSS and the PSSAP). This creates a simplified, sustainable and more effective governance structure.
The CSS Board is abolished, with all the functions of the CSS Board being transferred to the PSS Board, which is renamed the Australian Reward Investment Alliance. The single Board has 7 members, giving it the same membership as the CSS Board and two more than the current PSS Board.
DETAILS OF THE TWENTY-SEVENTH AMENDING DEED
Commencement
Clause 1 specifies when the amendments in the Deed take effect. This clause provides that the amendments take effect from 1 July 2006 but two of the amendments (subclauses 3.9 and 3.10) only apply in relation to certain Board appointments made after that date, in order to protect the validity of the existing appointments.
Context
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.
Functions of the single superannuation Board
Subclause 3.1 and subclause 3.2 insert new subclauses 1.3A and 1.7 into the Trust Deed in order to define the terms “CSS functions” and “PSSAP functions”. These terms are needed in new subclause 8A.1 to apportion the remuneration of the Chairperson of the single Board between the CSS Fund, the PSS Fund and the PSSAP Fund.
SIS fitness and propriety standard
Subclause 3.2 also inserts a new subclause 1.8 into the Trust Deed which defines “SIS fitness and propriety standard” to mean the operating standard prescribed under Part 3 of SIS which sets out the requirements for the fitness and propriety of trustees of regulated superannuation funds and Registrable Superannuation Entity (RSE) licensees.
Name of single superannuation Board
Subclause 3.3 replaces the last paragraph of subclause 2.1 of the Trust Deed, which establishes the PSS, to add the name of the new single superannuation Board (Australian Reward Investment Alliance) into that subclause as the administering Trustee Board.
Additional consequential amendment to the Trust Deed - Consolidated Revenue Fund
Subclause 3.4 replaces paragraph (c) of subclause 3.4 of the Trust Deed to align the text with deemed changes to Acts and other instruments made by the Financial Management Legislation Amendment Act 1999. This is a minor change of a technical housekeeping nature that clarifies whether certain payments are being paid to the Consolidated Revenue Fund or the Commonwealth.
Trustees of the single Board
Subclause 3.5 replaces subclauses 4.1, 4.2 and 4.3 of the Trust Deed to reflect the increase in the size of the Board from 5 to 7 members. New subclause 4.1 does not include the existing requirement that 2 of the Trustees shall be persons with experience in, and knowledge of, the formulation of government policy and public administration. This is because the necessary requirements for a Trustee are now contained in the SIS fitness and propriety standards.
Contravention of SIS fitness and propriety standard
Subclause 3.6 inserts a new subclause 4.11 into the Trust Deed to provide that a person is not able to be appointed as a Trustee of the single Board if the appointment would result in a contravention of the SIS fitness and propriety standard.
Termination of appointment of Trustees of the single Board
Subclause 3.7 replaces subclause 5.3 of the Trust Deed to provide that the consent of the ACTU to the termination of the appointment of a Trustee who was nominated for appointment by the ACTU is limited to the circumstances set out under subclauses 5.1 and 5.2. This means that consent of the ACTU is not required where the appointment of a Trustee is terminated due to a contravention of a SIS fitness and propriety standard.
Subclause 3.8 inserts new subclauses 5.6 and 5.7 into the Trust Deed.
New subclause 5.6 provides that if the continuation in office of an appointed Trustee of the single Board would contravene a SIS fitness and propriety standard, the Minister may terminate the appointment of the Trustee.
New subclause 5.7 provides that subclauses 5.1 and 5.2, which list the circumstances in the event of which the Minister may terminate the appointment of a Trustee, do not limit the Minister’s power of termination in new subclause 5.6.
Trustees who are overseas
Subclause 3.9 replaces paragraph (b) of subclause 6.1 of the Trust Deed so that when the Chairperson of the PSS Board is overseas at the time of a meeting of the Board he or she is still able to participate in the meeting. This will reduce the need to appoint an acting Chairperson of the Board where such circumstances arise.
Subclause 3.10 replaces paragraph (b) of subclause 6.2 of the Trust Deed so that acting Trustees of the single Board who are overseas at the time of a meeting of the Board are still able to participate in the meeting. This will reduce the need to appoint acting Trustees where such circumstances arise.
Paragraph (b) of clause 1 makes it clear that the amendments made by subclauses 3.9 and 3.10 only apply in relation to an appointment made after 30 June 2006, in order to protect the validity of the existing appointments.
Appointment of Acting Trustees
Subclause 3.11 replaces subclause 6.3 of the Trust Deed to reflect the fact that new subclause 4.1 does not have a paragraph (a) or (b). These paragraphs were no longer required as the new subclause 4.1 does not include the existing requirement that 2 of the Trustees shall be persons with experience in, and knowledge of, the formulation of government policy and public administration (see subclause 3.5 above).
Eligibility for appointment as Acting Trustee
Subclause 3.12 inserts a new subclause 6.10 into the Trust Deed to provide that a person is not able to be appointed as an acting Trustee if the appointment would result in a contravention of the SIS fitness and propriety standard.
Disclosure of interests
Subclause 3.13 inserts new subclause 7.4A in the Trust Deed, which provides that disclosure of direct or indirect pecuniary interests, at a meeting of the single Board in a matter being considered by the Board, may be made by the Trustee personally or by proxy representative.
Subclause 3.14 replaces paragraph (b) of subclause 7.5 of the Trust Deed to extend the meaning of taking part in making a decision of the single Board to mean either in person or by proxy representative.
Subclause 3.15 replaces paragraph (b) of subclause 7.6 of the Trust Deed to extend the meaning of taking part in making a determination of the single Board to mean either in person or by proxy representative.
Meetings of the single Board
Subclause 3.16 replaces subclause 8.1 of the Trust Deed with a new subclause 8.1 which gives the single Board the power to hold such meetings as are necessary for the conduct of its affairs in relation to the CSS, the CSS Fund, the PSS, the PSS Fund, the PSSAP and the PSSAP Fund.
Subclause 3.17 replaces subclauses 8.4 and 8.5 of the Trust Deed with new subclauses 8.4 to 8.13.
New subclause 8.4 provides that a Trustee of the single Board may, if not able to be present at a meeting of the Board, appoint another Trustee as his or her proxy representative to attend and vote on his or her behalf at the meeting. New subclause 8.4 also provides that the appointment of the proxy representative is to be in writing and signed by the appointing Trustee.
New subclause 8.5 provides that the proxy representative is not entitled to vote on behalf of the Trustee on a proposed decision unless there is an instrument of proxy appointment which sets out the terms of the proposed decision and indicates whether the appointing Trustee is in favour of or against the proposed decision, and the proxy representative votes on the proposed decision in accordance with the indication in the instrument. A “Trustee” of the Board includes the Chairperson of the Board.
New subclause 8.6 provides that at a meeting of the Board 5 Trustees, or acting Trustees, shall constitute a quorum.
New subclause 8.7 extends the quorum requirements for a meeting of the Board. Under the new provisions a person attending as both a Trustee of the Board and as a proxy of another Trustee will be counted once for their attendance as a Trustee and once for each proxy held by the person.
New subclause 8.8 provides that at least two Trustees must be present in person (that is, not by proxy) at a meeting of the Board.
New subclause 8.9 extends the meaning of voting at a meeting of the Board to be voting whether in person or by proxy representative.
New subclause 8.10, which mirrors existing subclause 8.5, provides that the Board shall keep accurate records of all meetings held by the Board.
New subclause 8.11 provides for the record of a meeting of the Board to note that, where a Trustee votes by proxy representative at the meeting, the vote was by proxy.
New subclause 8.12 provides that the Board may permit its Trustees to participate in a meeting, or all meetings, by telephone, closed-circuit television, or any other means of communication.
New subclause 8.13 provides that a Trustee who participates in a meeting under a permission under new subclause 8.12 is taken to be present in person at the meeting.
Apportionment of Trustee’s remuneration
Subclause 3.18 inserts a new clause 8A into the Trust Deed to provide for the apportionment of Trustees’ remuneration between the CSS Fund, the PSS Fund, the PSSAP Fund and the Consolidated Revenue Fund.
New subclause 8A.1 mirrors the existing subclause 9.4 of the Trust Deed, but allows for the Chairperson’s remuneration and allowances to be apportioned between the CSS Fund, the PSS Fund and the PSSAP Fund.
New subclause 8A.2 mirrors the existing subclause 9.5 of the Trust Deed, but allows for the remuneration and allowances of Trustees other than the Chairperson to be apportioned between the CSS Fund, the PSS Fund, the PSSAP Fund and the Consolidated Revenue Fund.
Subclause 3.19 deletes subclauses 9.4 and 9.5 of the Trust Deed as the apportionment of Trustees’ remuneration is now handled in new clause 8A.
Delegation by the Board
Subclause 3.20 replaces paragraph (a) of subclause 12.1 of the Trust Deed to replace the term “member of the Board” with “Trustee” to reflect current terminology.
Subclause 3.21 inserts a new paragraph (aa) into subclause 12.1 of the Trust Deed to include a member of the staff of the single Board in the persons to whom the Board may delegate all or any of its powers under the Trust Deed except the Board’s power to reconsider its own decisions or decisions made by its delegates.
Subclause 3.22 replaces paragraph (a) of subclause 12.3 of the Trust Deed to include a member of the staff of the Board in the persons to whom a delegate may sub-delegate a power of the Board. Subclause 3.22 also replaces the term “member of the Board” with “Trustee” to reflect current terminology.
Subclause 3.23 replaces paragraph (c) of subclause 12.3 of the Trust Deed to include a member of the staff of the Board as a delegate who may sub-delegate a power of the Board.
While it is acknowledged that it is current practice for delegation provisions to apply seniority limitations on delegations, it is not appropriate to apply these seniority limits in respect of the Board’s delegation powers as most of the Board’s powers are highly administrative and may require the involvement of junior staff.