Bills Digest no. 111 2009–10
Superannuation
Legislation (Consequential Amendments and Transitional Provisions) Bill 2010
This Digest replaces an earlier version dated 22 February
2010 and makes some minor technical corrections.
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
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Superannuation
Legislation (Consequential Amendments and Transitional Provisions) Bill 2010
Date introduced: 4 February 2010
House: House of Representatives
Portfolio: Finance and Deregulation
Commencement: Schedules 1 and 2 immediately after
the commencement of section 2 of the Governance of Australian Government
Superannuation Schemes Act 2010 which is proposed to commence on 1 July
2010. The remaining provisions commence on Royal Assent.
Links: The relevant
links to the Bill,
Explanatory Memorandum and second reading speech can be accessed via BillsNet,
which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
This Bill is part of a three Bill package
intended to modernise Australian Government superannuation. The Bill makes
consequential changes arising from the other two Bills:
- the Comsuper Bill 2010, and
- the Governance of Australian Government Superannuation Schemes
Bill 2010.
All three Bills will be considered by Parliament together.
Background to the legislative package is contained in the
Bills Digests for the Comsuper Bill 2010 and the Governance of Australian
Government Superannuation Schemes Bill 2010.[1]
The amendments contained in this Bill arise from
announcements made jointly by the Minister for Finance and Deregulation and the
Minister for Superannuation and Corporate Law on both 31 October 2008[2] and the Minister for Finance and Deregulation separately on 26 November 2009.[3]
At the time of writing, the Bill has not been referred to a
committee for inquiry and report.
Little interest has been shown in the proposed changes.
The Explanatory Memorandum states that the amendments
contained in this Bill will have no financial impact.[4]
Part 1 of Schedule 1 contains amendments to a
number of statutes to provide for the transfer of various functions to the Commonwealth
Superannuation Corporation (CSC).
In particular Clauses 36–57 amend the Defence
force Retirement and Death Benefits Act 1973 to generally transfer the
functions of the Defence Force Retirement and Death Benefits Authority (the
responsible trustee for the Defence Force Retirement and Death Benefits (DFRDB)
scheme) to the CSC. This includes the review functions.
Clause 58 provides for a Defence Force Case
Assessment Committee to be established (the Committee). The Committee will
consist of a person nominated by each of the Chief of the Air Force, the Chief
of the Army and the Chief of the Navy and any other person as determined by the
CSC: proposed section 101. The CSC may delegate some or all of its
powers in relation to a decision to the Committee: proposed section 102.
Where the Committee is empowered to make recommendations to the CSC, the CSC
must take those recommendations into account when making its final decision.
That decision must be in writing and include full reasons for the decision: proposed
section 106.
There is a right of review of a decision by the CSC to the
Administrative Appeals Tribunal: proposed section 107.
Clauses 59–80 amend the Defence Force Retirement
Benefits Act 1948 to generally transfer the functions of the DFRDB
Authority, in respect of the Defence Force Retirement Benefits Scheme, to the
CSC.
Clauses 104–114 amend the Military Superannuation
and Benefits Act 1991. In particular Clause 110 repeals the current
Parts six and seven of that Act and inserts a new Part 6 This new part
specifies that the functions and powers of the CSC are those set out in the
Trust Deed for the Military Superannuation and Benefits Scheme. Effectively
this means that the CSC becomes the Trustee of this scheme.
Clauses 125–147 amend the Papua New Guinea
(Staffing Assistance) Act 1973 so that the functions of the Commonwealth
Commissioner for Superannuation under this particular Act will now be exercised
by the CSC. In particular, clause 131 inserts a new Division 1 which
provides for review of decisions by the CSC. Clause 138 inserts proposed
Divisions 2, 3 and 4. Proposed Division 2 provides for the
establishment of Reconsideration Advisory Committees which are empowered to
review decisions of the CSC or make certain recommendations to the CSC: proposed
section 55B. Proposed Division 3 provides for the review of CSC
decisions by the Administrative Appeals Tribunal.
Clauses 160–173 transfer the functions now exercised
by the Commonwealth Commissioner for Superannuation under the Superannuation
Act 1922 to the new CSC. In particular clause 169 inserts proposed
Divisions 1, 2 and 3 which provide for review of decisions by the
CSC, the establishment of Reconsideration Advisory Committees and the right of
review by the Administrative Appeals Tribunal respectively.
Clauses 174, 176–178, 182 and 183 amend the Superannuation
Act 1976 in such a way that the office of the Commissioner for
Superannuation is abolished. In particular, clause 183 repeals the
current Part II of this Act which authorised the establishment of that office.
Clauses 175, 179, 184–196 and 198–205 transfer the functions of the Australian Reward Investment Alliance (ARIA), who
are the responsible trustee for the Commonwealth Superannuation Scheme under
the Superannuation Act 1976, to the CSC.
Clauses 207–214 and 216–221 generally
transfer the functions exercised by ARIA, in relation to the Public Sector
Superannuation Scheme and the Public Sector Superannuation Accumulation Plan
(PSSAP), to the CSC.
In particular, clause 216 repeals parts six and seven
of this Act and substitutes a new Part 6. This new part specifies that
the functions and powers of the CSC in relation to the Public Sector
Superannuation Scheme, and the associated investment fund are those set out in
the Public Sector Superannuation Scheme Trust Deed. Effectively, this makes the
CSC the trustee of this scheme.
Clauses 222, 223, 225 and 228 to 231 amend the Superannuation Act 2005 to provide a mechanism (a
Ministerial Declaration) that would allow current members of the Commonwealth
Superannuation Scheme (CSS) or the Public Sector Superannuation Scheme (PSS) to
also become members of the (PSSAP).
Why would current members of the first two schemes
conceivably want to do this? The PSS and CSS are defined benefit schemes, where
some, or all, of the benefits are determined in relation to the members years
of service and salary at retirement. The maximum possible member contributions
to either scheme are limited to ten per cent of salary. All contributions are
on an ‘after tax’ basis.
It may be the case that CSS or PSS members wish to make
additional superannuation contributions on a ‘before tax’ basis—that is, via
salary sacrifice arrangements. Currently CSS and PSS members may do so by
making before tax contributions into any superannuation scheme of their choice,
other than the PSSAP. These amendments allow this type of contribution to be
made to the PSSAP.
Other superannuation funds into which such contributions
could be made have fees and charges. While the PSSAP has such charges, they are
generally far lower than its private sector counterparts.
Clauses 224, 226 and 232–239 amend the Superannuation
Act 2005 so that the functions effectively exercised by ARIA in relation to
the PSSAP are transferred to the CSC.
In particular, clause 233 repeals section 20 of this
particular Act and substitutes a new section 20. This new section
specifies that the functions and power of the CSC in relation to the PSSAP and
the PSSAP fund are those set out in the PSSAP Trust Deed. Effectively, the CSC
becomes the trustee of the PSSAP.
Part 1 of Schedule 2 contains relevant
definitions
Clauses 2–5, in Part 2 of Schedule 2 contain
provisions for the vesting of the assets and liabilities of the Military
Superannuation and Benefits Board (the responsible entity for the Military
Superannuation and Benefits Scheme) in the CSC without any conveyance, transfer
or assignment. These assets include the assets under management in the
MSBS investment fund. As at 30 June 2009 these assets were valued at $2.81
billion.[5]
Leslie Nielson
26 February 2010
Bills Digest Service
Parliamentary Library
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