EXPLANATORY STATEMENT
Issued by authority of the Minister for Finance and Administration
Superannuation Act 1990
Twenty-sixth 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-sixth Amending Deed
On 22 August 2005 the Minister for Finance and Administration amended 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-sixth Amending Deed in this statement.
The purpose of the Twenty-sixth Amending Deed is to amend the Rules to change the amount by which a PSS benefit can be reduced where the member has a surcharge debt, to reflect the abolition of the surcharge in the 2005-06 and later financial years.
The surcharge is an extra charge levied on the surchargeable superannuation contributions of higher income individuals. The Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 amended a range of superannuation legislation to abolish the surcharge in the 2005‑06 and later financial years.
Details of the Twenty-sixth Amending Deed are set out in the Attachment.
Board approval not required
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. However, paragraph 5(1A)(b) of the 1990 Act prescribes a number of circumstances where the Board’s consent is not required to an amendment to the Trust Deed.
Sub-paragraph 5(1A)(b)(i) of the 1990 Act provides that the consent of the Board is not required in respect of 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) of the 1990 Act 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.
The amendments included in the Twenty-sixth Amending Deed affect the amount of surcharge deductions that are made from the employer component of PSS benefits. 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) of the 1990 Act. The amendments therefore did not require the consent of the Board.
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-sixth Amending Deed is a legislative instrument for the purposes of the LIA.
No consultation was undertaken as the amendments included in the Deed are beneficial to PSS members and give effect, in terms announced in the Budget, to a decision to repeal, impose or adjust a tax, fee or charge.
Commencement
The amendments to the Rules made by the Twenty-sixth Amending Deed come into effect on the day on which the Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 receives the Royal Assent. The amendments included in the Deed are beneficial to PSS members.
ATTACHMENT
DETAILS OF THE TWENTY-SIXTH AMENDING DEED
Commencement
Clause 1 specifies that the amendments to the Rules made by the Twenty-sixth Amending Deed come into effect on the day on which the Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 receives the Royal Assent.
Clause 2 puts this Deed in context with the Trust Deed and allows words or phrases in the Deed to have the same meaning as in the Trust Deed where appropriate.
Amendments to the Rules
Division 2 of Part B12 of the 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.
Rule B12.2.9 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. Paragraph (d) of Rule B12.2.9 previously prevented the Board from reducing the benefits of a member who has a surcharge debt by more than 10% of the employer-financed component of any part of the benefits payable to the person that accrued after 30 June 2005.
Given that the surcharge has been abolished from 1 July 2005, paragraph (d) was no longer necessary. Subclause 3.1 therefore deletes paragraphs B12.2.9(c) and B12.2.9(d) and substitutes a new paragraph (c).