Bills Digest No. 163 2004–05
Superannuation (Consequential Amendments) Bill 2005
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Superannuation (Consequential
Amendments) Bill 2005
Date Introduced: 12 May 2005
House: House
of Representatives
Portfolio: Finance and Administration
Commencement: Royal
Assent or the same time as various parts of the Superannuation Bill 2005
receive Royal Assent, or 1 July 2005, or other dates as specified
in Clause 2.
Note: this Bill Digest should
be read in conjunction with the Bill Digest on the Superannuation Bill
2005 (the 2005 Bill) currently before the House of Representatives.
The Superannuation (Consequential Amendments) Bill
2005 (the Consequentials Bill) makes consequential amendments to implement
the measures contained in the Superannuation Bill 2005 (the 2005 Bill).
In particular this Bill will amend:
•
Superannuation Act 1990 (the 1990 Act)
•
Superannuation Guarantee (Administration) Act 1992 (SG Act)
•
Superannuation (Productivity Benefit) Act 1998 (Productivity Act)
•
Superannuation Benefits (Supervisory Mechanisms) Act 1990
•
Governor-General Act 1974
•
Judges’ Pensions Act 1968
•
Income Tax Assessment Act 1936
•
Income Tax Assessment Act 1997, and
•
Trust Deed under the Superannuation Act 1990.
See ‘Background’ in the Bills Digest for the Superannuation Bill 2005.
See ‘Basis of policy commitment’ in Bills Digest for the Superannuation
Bill 2005.
No particular position has been expressed on the changes contained in
this Bill. However, in relation to the establishment of the Public Sector
Superannuation Accumulation Plan (PSSAP) the Community and Public Sector
Union has welcomed the creation of a’ ‘modern’ superannuation scheme for
public servants.(1)
The relevant Second Reading Speech notes that these changes are necessary
for the smooth introduction of the Choice of Funds regime for Commonwealth
employees on 1 July 2005.(2) Further, these amendments contain
technical changes necessary for the establishment of the PSSAP as a separate
accumulation scheme on the same date.
Part 1 of Schedule 1 and Schedule 8 of the Consequentials
Bill amend the Superannuation Act 1990 and the PSS Trust Deed respectively
to clarify that the provisions referring to the functions and powers of
the PSS Board in the 1990 Act and the PSS Trust Deed are limited to its
responsibilities in respect of the PSS established under the 1990 Act.
The functions of the PSS Board in relation to the PSSAP are set out in
the 2005 Bill and the PSSAP Trust Deed.
Item 15 in Schedule 1 of the Consequentials Bill effectively
closes membership of the PSS to new Commonwealth employees from 1 July
2005.
However, this item also allows for former Commonwealth employees, who
have preserved their superannuation benefits in the PSS, to resume active
membership of this scheme should they re-enter Commonwealth employment
at a later date. Certain temporary Commonwealth employees as at 1 July
2005, if they have decided to join the PSS during the time they were so
employed, also have the right to remain PSS members after 1 July 2005.
Schedule 2 of the Consequentials Act inserts sub-sections 6(1)
and 32C(4) into the Superannuation Guarantee (Administration)
Act 1992 (SG Act). This ensures that contributions to the PSSAP, made
by employers on behalf of employees, are contributions made in compliance
with the Superannuation Choice of Fund regime.
The practical effect of this amendment is that Government employers who
make contributions to the PSSAP on or after 1 July 2005, but before 1
July 2006, will not be required to offer those employees a choice of superannuation
fund. However, nothing prevents them from doing so at any point after
1 July 2005.
These sub-sections will cease to have effect from 1 July 2006. From 1
July 2006 all Australian Government employers will be required to comply
with the choice requirements in the SG Act and hence will have to offer
their post 1 July 2005 employees a choice of superannuation fund on or
before 1 July 2006. (3)
Item 3 of Schedule 3 of the Consequentials Bill amends
the Superannuation (Productivity Benefit) Act 1988.
The productivity benefit is an amount paid to Commonwealth employees
not covered by the main Commonwealth superannuation schemes (such as the
PSS or CSS). It is equal to the amount they would have been paid under
the SG Act (i.e. 9% of ordinary time earnings). Generally, government
employees who receive the full productivity benefit are members of the
Australian Government Employees Superannuation Trust (AGEST). The Productivity
Benefit will continue to be paid to Commonwealth employees who were ‘qualified
employees’ for the purposes of the Productivity Act on 30 June 2005.
Item 3 of Schedule 3 of the Consquentials Bill inserts new
sections 3AA and 3AB into the Productivity Act. New section
3AB prevents the payment of superannuation benefits available under the
Productivity Act to a person who first enters Commonwealth employment
on or after 1 July 2006.
New section 3AB ensures that a member of the PSSAP, who elects
to have their superannuation contributions sent to another superannuation
fund before 1 July 2006, will not be eligible to receive the productivity
benefit.
At first sight these provision appear to restrict the amount of benefits
a member can be paid. However, those members of AGEST who are able to
join the PSSAP will see an increase in their superannuation contributions
from 9 to 15.4 per cent of wages.
Further, those who elect to have their contributions sent to a fund other
than the PSSAP after 1 July 2005 (if their employer is able to offer them
the Choice of Fund) will still receive 15.4 per cent of wages as contributions.
The effect of new section 3AB of the Productivity Act is to allow
a government employer to offer their post 1 July 2005 employees a choice
of superannuation fund, without having to pay the productivity benefit
to the new fund. This change prevents double payment of both the 15.4
per cent superannuation contribution and the productivity benefit to the
new fund.
Schedule 5 of the Consequentials Bill ensures that the personal
representative of a current or former Governor-General who dies on or
after 1 July 2006, where no pension is otherwise payable, is paid the
minimum level of superannuation in respect of that office. The minimum
level is the amount that they would have been entitled to if the Productivity
Act had continued operation in respect of those employed as Governor General
after 1 July 2006. These changes are necessary due to the closure of the
Productivity Benefit Scheme from 1 July 2006 (see schedule 3).
Likewise, Schedule 6 of the Consequentials Bill ensures that the
minimum level of superannuation benefits are paid to the personal representative
of a Judge or former Judge, if they die on or after 1 July 2006, where
no pension is otherwise payable. Again, these changes are necessary due
to the closure of the Productivity Benefit Scheme from 1 July 2006. The
minimum level is the amount that they would have been entitled to if the
scheme had continued in operation in respect of those becoming Judges
on or after 1 July 2006.
Endnotes
-
Marcus Priest, Government stems super scheme drain, Australian
Financial Review, 25 March 2004. p. 4.
-
Dr Sharman Stone MP, Parliamentary Secretary to the Minister for
Finance and Administration, Second Reading Speech, Superannuation
(Consequential Amendments) Bill 2005, House of Representatives, Debates,
12 May 2005, p. 3.
-
Dr Sharman Stone MP, Parliamentary Secretary to the Minister for
Finance and Administration, Second Reading Speech, Superannuation
Bill 2005, House of Representatives, Debates, 12 May 2005 ,
p. 2.
Leslie Nielson
24 May 2005
Bills Digest Service
Information and Research Services
This paper has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Information and Research Service,
nor do they constitute professional legal opinion.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of the
public.
ISSN 1328-8091
© Commonwealth of Australia 2005
Except to the extent of the uses permitted under the Copyright Act
1968, no part of this publication may be reproduced or transmitted
in any form or by any means, including information storage and retrieval
systems, without the prior written consent of the Parliamentary Library,
other than by members of the Australian Parliament in the course of their
official duties.
Published by the Parliamentary Library, 2005.
|
