Governance of Australian Government Superannuation Schemes Bill 2010, the
ComSuper Bill 2010 and the Superannuation Legislation (Consequential Amendments
and Transitional Provisions) Bill 2010
THE INQUIRY
1.1
On 24 February 2010, the Senate, on the recommendation of the Selection
of Bills Committee (Report No 2 of 2010) referred the Governance of Australian
Government Superannuation Schemes Bill 2010, the ComSuper Bill 2010 and the
Superannuation Legislation (Consequential Amendments and Transitional
Provisions) Bill 2010 for inquiry and report by 15 March 2010. The reasons for
the referral were:
To determine whether it is necessary to retain a separate
board to administer the military superannuation schemes and whether these
schemes differ markedly from other Commonwealth Government administered
schemes.
1.2
The Committee received 197 public submissions and three confidential
submissions, as well as 188 form letters, relating to the Bills and these are
listed at Appendix 1. The Committee considered the Bills at a public hearing in
Canberra on 11 March 2010. Details of the public hearing are referred to in
Appendix 2. The submissions and Hansard transcript of evidence may be accessed
through the Committee's website at https://www.aph.gov.au/senate/committee/fapa_ctte/index.htm.
THE BILLS
1.3
In October 2008, the Government announced plans to merge the boards of
Australian Reward Investment Alliance (ARIA), the Military Superannuation and
Benefits Scheme (MSBS) and the Defence Force Retirement and Death Benefits
Scheme (DFRDB) to form a single trustee board from 1 July 2010. The Hon Lindsay
Tanner MP, Minister for Finance and Deregulation, in announcing further reforms
to the administration of Australian Government superannuation schemes, stated:
Consolidation will bring more than 650,000 members and
pensioners under a single trustee board, establish a greater pool of assets for
investment purposes and apply best practice management approaches across all
schemes.
The introduction of these changes reflects the ongoing work
within the Government to review and where necessary, reform its own business
operations, internal governance and structures just like anybody else.
The Rudd Government will continue to work on reforming the
Australian Government superannuation schemes to ensure that they are best
placed to deliver more sustainable and cost-effective superannuation services
in the best interests of their members and ultimately, better value to the
taxpayer.[1]
Governance of Australian Government Superannuation Schemes Bill 2010
1.4
This Bill establishes a single trustee body from 1 July 2010 to be responsible
for most Commonwealth Government superannuation schemes. The new entity will be
known as the Commonwealth Superannuation Corporation (CSC).
1.5
The CSC will be responsible for the following schemes:
- the scheme established under the Superannuation Act 1922 (the
1922 scheme);
- the Commonwealth Superannuation Scheme (CSS);
- the Public Sector Superannuation Scheme (PSS);
- the Public Sector Superannuation Accumulation Scheme (PSSAP);
- the Military Superannuation and Benefits Scheme (MSBS);
-
the Defence Force Retirement and Death Benefits Scheme (DFRDB);
-
the Defence Forces Retirement Benefits Scheme (DFRB);
- the scheme provided for under the Papua New Guinea (Staffing
Assistance) Act 1973 (PNG Scheme).
1.6
In order to implement the merger and to set out the governance framework
of the single entity, the Bill:
- continues the existence of the board established by the Superannuation
Act 1990, currently called ARIA, and establishes it as the Commonwealth
Superannuation Corporation (CSC);
- prescribes that CSC is a Commonwealth authority for the purposes
of the Commonwealth Authorities and Companies Act 1997 (CAC Act) and
provides for some modifications of the application of the CAC Act in relation
to managing and investing scheme funds;
- sets out the powers and the functions of CSC;
- establishes a governing body of CSC consisting of the chair and
ten directors, all appointed on a part-time basis;
- sets out the procedures for meetings of the board, including
requirements for a quorum;
- allows CSC to employ staff and engage consultants on terms and
conditions determined by the governing board;
- sets out financial and reporting requirements in relation to the
superannuation schemes for which CSC is responsible; and
- deals with a number of miscellaneous issues relating to the
operation of CSC including the source of funds for remuneration of the chair
and directors and the delegation arrangements for CSC.
1.7
It is stated in the Bill's explanatory memorandum that the outcome of
the proposed consolidation of trustee arrangements will:
...provide an opportunity for benefits to all scheme members
and the Commonwealth through lower costs and potentially, higher investment
returns. It will also provide a more sustainable and cost-effective platform
for delivering Commonwealth superannuation in the future.
Under the broader superannuation framework, the single
trustee has a responsibility to act in the best interests of all members.
Accordingly, civilian and military interests are represented on its governing
body.[2]
ComSuper Bill 2010
1.8
The purpose of the Bill is to establish a statutory agency, to be known
as ComSuper, for the purposes of the Public Service Act 1999. ComSuper
will consist of the Chief Executive Officer (CEO) and staff.
1.9
The Bill sets out the CEO's functions as providing administrative
services to CSC in the performance of its functions in relation to a
superannuation scheme administered by CSC. The CEO will be subject to any
reasonable direction from CSC regarding administrative services and will be
required to comply, where possible, with any policies, guidelines and standards
regarding administrative services determined by CSC. In the Explanatory
Memorandum it is stated:
This provides a capacity for CSC to influence the quality of
administration services and priorities underpinning those services. This
recognises that CSC is responsible for the general administration of each
Superannuation Act, and therefore each superannuation scheme, for which its has
legislative responsibility. Consequently, it is envisaged that the CEO will work
in partnership with CSC to ensure administrative services are delivered
efficiently and effectively.[3]
1.10
The CEO is to be appointed by the Minister for Finance and Deregulation
with remuneration determined by the Remuneration Tribunal.
The Superannuation Legislation (Consequential Amendments and Transitional
Provisions) Bill 2010
1.11
The purpose of the Bill is to make consequential amendments to a range
of Commonwealth Acts to take account of the changes to governance arrangements
for the Commonwealth superannuation schemes.
1.12
The Bill proposes to:
- make the management of the 1922 scheme and the Papua New Guinea
scheme the responsibility of the CSC;
- put in place transitional arrangements to facilitate the transfer
of assets and liabilities of the MSB Board and the DFRDB Authority to the CSC;
- enable CSC to transfer the assets of the MSBF to the existing
ARIA Investments Trust without creating a situation whereby Capital Gains Tax
would be payable provided the transfer occurs before 1 July 2011; and
- amend the Superannuation Act 2005 to facilitate public
sector employees being able to consolidate their superannuation savings under
the management of one trustee.
ISSUES
1.13
The Committee received many submissions from individuals and
organisations representing defence force personnel. Some of the submissions
raised matters outside the Committee's inquiry into the Bills, in particular,
matters relating to indexation of pensions. The Committee's report is limited
to the issues specifically raised in relation to the Bills. These issues
centred on:
- differences between military and civilian service and the need
for these differences to be recognised;
- composition of the CSC Board;
-
lack of perceived benefits for defence force members; and
-
lack of consultation.
Special needs of military schemes
1.14
Many submitters argued that because of the unique nature of military
service their conditions should not be subsumed by civilian conditions and thus
they did not support the proposed merger of the military and civilian trustees.[4]
Mr A Mumford submitted:
ADF service, as the Government has stated in the past, is the
highest calling our country can ask of its citizens. Surely then, it is the
Government's responsibility to recognise the uniqueness of military service and
ensure that all ADF personnel, past, present and future are fairly recompensed in
retirement for the unique role they play in the security of our nation. In
particular, their retirement remuneration should not be tampered with on
political or bureaucratic whim.[5]
1.15
The Defence Force Welfare Association (DFWA) stated ADF personnel are
members while civilians are employees with different rules applying to each.[6]
It was argued that the unique nature of military service has been recognised in
the past by Government. However, as stated by Colonel David Jamison (Retd),
National President of DFWA, it is thought:
...that the provisions of this intended legislation are such
that they will diminish and compromise this important philosophical foundation
to the detriment of present and future members of the ADF and also that of
those whom these members leave behind when they pass on.[7]
1.16
Similarly, the Vietnam Logistic Support Veterans' Association Queensland
commented that the circumstances of former members of the ADF are quite different
from those of former public servants and 'they have a right to have their
superannuation benefits made without reference to the regimes of others'.[8]
The Australian Veterans and Defence Services Council commented that there was a
perception that the proposed changes result from 'a reluctance to recognise the
uniqueness of military service that sets the Defence Force service apart from
all civilian employment whether it be in the Public Service or in the private
sector'. The merger was seen to submerge ADF interests 'in a culture that would
have difficulty in accepting the circumstances of military life in the
structure of conditions of service'. The Council concluded:
Until there is a clear change in attitude the protection of
Defence Force interests needs structures that permit the military view to
receive its due recognition. This perception is strongly held in the military
and veteran communities. For their confidence that provisions for their
wellbeing will be safeguarded they need to perceive that the organisational
structures are in place for this purpose.[9]
1.17
The Defence Force Retirement and Death Benefits Scheme (DFRDB) Authority
responded to the issue of a separate board for the military schemes. The
Authority noted that while anecdotal evidence indicated that having a majority
of ADF members on the DFRDB Authority gave some confidence to scheme members
that the unique nature of their employment was taken into account, in practice
it is the schemes rules that provide for the uniqueness of military service.[10]
The Authority concluded:
In the context of the above, the DFRDB Authority accepts the
assurances of the Australian Government that the interests of DFRB and DFRDB
members will be appropriately represented by the CSC. Therefore it is the view
of the DFRDB Authority that it is not necessary to retain a separate board to
administer the military superannuation schemes.[11]
1.18
The Authority also noted that it is expected that the ministers in the
Defence portfolio will be consulted regarding the appointment of the five
employee/employer nominated directors. In addition, all CSC directors will have
an obligation to act in the interests of all members, and the existing
Australian government provider of Australian administration services to the
military schemes, ComSuper, will be retained and will continue to apply scheme
rules to initial benefit decisions.[12]
1.19
Mr Tony Hyams, Chairman of ARIA and the MSB Boards, commented that it is
sometimes difficult to discern exactly the nature of the concerns in relation
to the distinctive qualities of the military funds and that 'most of the
concern is about perception, frankly'.[13]
In addition, Mr Hyams commented that:
I gain great comfort from the fact that the government has
stated that its policy is not to change any of the benefits or entitlements of
any of the members of either or any of the funds under the new board, and the
draft legislation bears that out. So I am comfortable to the extent that the
rights and entitlements of the members do not change.[14]
1.20
The joint Department of Finance and Deregulation (Finance) and Department
of Defence (Defence) submission noted that 'while there are particular features
of the military schemes that recognise the special nature of military service,
there are many similar design concepts between the schemes'. The similarities
in design include that retirement benefits of the CSS and DFRDB are based on
the percentage of the member's final salary, with the percentage depending on
length of service. A major difference between the military and civilian schemes
is the recognition of the risks of military service in the rate of accrual of
benefits and the design of death and disability benefits.[15]
1.21
The Departments went on to note that:
Notwithstanding the differences in benefit design, the MSB
Board and ARIA perform broadly similar functions. One of their primary
functions is to manage the investment of member funds. They also manage, and
oversee ComSuper's administration of, the superannuation schemes for which they
are responsible according to the legislated scheme rules and manage governance
and regulatory requirements.[16]
1.22
Dr Stein Helgeby, Deputy Secretary, Department of Finance and
Deregulation, outlined to the Committee the recognition of the special nature
of military service contained within the Bills. This principally goes to the
military representation on the trustee governing board as well as the ability
for the board to establish dedicated committees to review military death and
disability benefits and invalidity classifications. The Defence Force Case
Assessment Committee will undertake the functions currently performed by the
DFRDB Authority to reconsider decisions by ComSuper in relation to invalidity
benefits. The Defence Force Case Assessment Committee will have representation
from each of the Army, Navy and Air Force as is currently the case for the
DFRDB Authority. The joint submission from Finance and Defence also added:
This recognises that the special nature of military service
warrants special treatment and also acknowledges the role that the DFRDB
Authority currently has in overseeing the operation of the DFRDB and DFRB, and
particularly its primary role of reviewing decisions of its delegates, ComSuper
staff, in relation to invalidity benefits.[17]
1.23
Dr Helgeby, Finance, commented that 'the inclusion of these features in
the bills recognises the fact that unique service does indeed require unique solutions'.[18]
Mr Steve Grzeskowiak, Department of Defence, added:
We are confident that the primary area, in my view a very
important area, where the special nature of military service does need to be
recognised is in that assessment process for people who have disagreement with
the decision that has been made primarily on invalidity pensions. By having the
Army, Navy and Air Force representation in that case assessment committee—and
that is in addition to the two military members on the board—we are confident
that we will be able to get that military voice, that military opinion, into
that process.[19]
1.24
The Finance and Defence concluded:
Overall, the Bills seek to recognise the special nature of
military service (noting that this principle is relevant to all aspects of
military conditions of service) without taking away from a superannuation
trustee's essential function of managing the superannuation schemes for which
it is responsible on behalf of all scheme members and safeguarding members’
benefits until they retire.[20]
1.25
In evidence, Colonel David Jamison (Retd), DFWA, commented that while
not fully satisfying all its concerns, the establishment of the Committee would
be a partial step to resolving them.[21]
Composition of the CSC Board
1.26
Under the proposed legislation, the CSC Board will consist of a chair
and ten members. Three members may be nominated by the President of the
Australian Council of Trade Unions (ACTU) and two members may be nominated by
the Chief of the Defence Force. Before nominating any member, the President of
the ACTU must consult relevant organisations representing retired members. All
directors must meet the fitness and propriety standards specified in the Superannuation
Industry (Supervision) Act 1993 (SIS Act).
1.27
The Board may also establish a Defence Force Case Assessment Committee
(DFCAC) to review decisions referred by CSC. The DFCAC, if established, will
include three members nominated by the Chiefs of the three Services (similar to
the current membership of the DFRDB Authority).
1.28
Many submitters did not support the composition of the proposed board.[22]
Of particular concern was the restriction of members representing ADF interests
to two, while the ACTU would be able to nominate three board members.[23]
This was viewed as a diminution of the voice of the ADF and could lead to the
overruling of the two members nominated by the Chief of the Defence Force. Rear
Admiral Doolan (Retd) stated, for example, that:
...if you are increasing the number of board members and you
are decreasing the percentage of military representatives on the board, then
the military voice must be more muted. It follows, in any board, if you have 11
members on the board and only two military, then their influence on that board
is much, much smaller than if you have a smaller board where they are either in
the majority or at least are even with the numbers of the rest of the board. It
is a straight mathematical equation. If a board splits and the majority rules,
then the military voice is muted.[24]
1.29
Mr Peter Thornton commented that the composition of the board was flawed
as there are no representatives from retiree organisations and that it was
dominated by political appointees. He suggested that the legislation be amended
to include representatives from Superannuated Commonwealth Officers'
Association (SCOA) and the DFWA/RSL on the board.[25]
1.30
Other submitters indicated support for the composition of the board and argued
that military interests would be preserved. The DFRDB Authority considered that
the membership arrangements for the new CSC, and those for the new DFCAC,
adequately reflect the needs of military representation in these matters. The
Authority also noted that the Department of Defence will continue to be closely
involved in setting administration service standards and ComSuper will continue
to be the provider of those services (albeit with some changes to its agency
status).[26]
1.31
SCOA considered that the proposed legislation provided the opportunity
to have appropriate board representation of all members of Australian Government
superannuation schemes. SCOA noted that military members will be well
represented and as the Chief of the Defence Force will nominate two of the five
member representatives and the present Chairperson of the Military Superannuation
Benefits Board of Trustees, Mr Tony Hyams, is to be appointed as the Chair of
the new trustee board The ACTU must also consult with organisations
representing retired members.[27]
1.32
The Community and Public Sector Union (CPSU) commented that the
composition of the board will provide a balance between the military and civilian
representatives. The CPSU saw this as important as the trustees 'will be
representing different constituents in some complex and very different
superannuation schemes'. The CPSU also noted that the proposed structure is
consistent with current arrangements of ARIA and military super. Further, that for
the equal representation to be genuine, it is important that influence cannot
be exerted by either employers or employees in regard to appointments from the
'other side' onto the board. It was noted that this is an important principle underpinning
the operation of Industry Funds.[28]
1.33
Mr Alan Greenslade, Department of Finance and Deregulation, commented on
the composition of the board and noted that it is consistent with the SIS
legislation that employee representatives are nominated by a union
representative. This is mirrored for defence through the two nominees of the
Chief of the Defence Force.[29]
1.34
Mr Greenslade went on to emphasise that:
Trustees, including all the directors on the board, have an
overarching duty to act in the best interests of all scheme members, whether
they are civilian or military. That is an obligation. I am aware of broad
industry experience, and that is that exactly what individual trustees do: they
act on behalf of all their members. I noted there was a submission by the
Australian Institute of Superannuation Trustees—I cannot remember the number of
the submission—where they actually made the point that they had done some
research and that research confirmed that that is exactly the behaviour of
individual trustees: they act on behalf of all members.[30]
Benefits arising from the proposed amalgamation
1.35
Many submissions voiced doubts that benefits for defence force
superannuants would arise from the proposed merger of the trustees under a
single trustee. The RSL submission, for example, argued that the prospective
improvements resulting from the merger 'are not substantiated', that benefits
to military superannuants are 'ephemeral' and that bigger financial
institutions are not always better at delivering savings or benefits as
evidence by the global financial crisis. Rather, the merger appeared to provide
greater savings to the Commonwealth through outsourcing administrative
services.[31]
The RSL argued:
...it appears that the legislated right of military
superannuants to their own boards of governance for their military
superannuation schemes is to be traded away for an unquantified and uncertain
efficiency in ''trustee operation and improved service delivery to members''.[32]
1.36
Rear Admiral Ken Doolan (Retd), National President of the RSL, in
evidence, provided further comment:
I reiterate that the Returned and Services League is not
opposed to a sensible benefit for our members if it can be demonstrated that
that is the likely outcome or, should I say, that we can be persuaded that that
will be the outcome. We have been left completely in the dark on this
particular issue. We were not consulted, our members were not consulted and
they are the people who are actually drawing these benefits every fortnight.
They wish to know, with some degree of certainty, that this merger will in fact
be beneficial.[33]
1.37
Rear Admiral Doolan went on to state that because of a lack of
information from Government, the RSL 'cannot make an informed decision at this
stage. In the lack of the ability to make an informed decision we are opposed
to the merger.'[34]
1.38
The DFWA also commented that it saw no tangible or intangible benefits
to military superannuation contributors or beneficiaries.[35]
In relation to the advantages of scale arising from the proposed merger,
Colonel David Jamison (Retd), commented that 'small funds available to the
military scheme are still significant and they still can grow if the right
investment decisions are made'.[36]
In addition, Colonel Jamison commented that while there may be some reduction
in costs through amalgamation, the major concern was that the distinction
between the ADF and others was important and in any case, 'because of the
nature of these funds, the administration and the way that the costs are spread
over mainly the government with some smaller costs flowing to the members, that
is not an issue that is a defining one'.[37]
1.39
Mr Bator, DFRDB Authority, commented on the benefits that he saw as
arising from the proposed merger:
I think the main benefit I see is that there will be a
governance improvement insofar as there are currently four bodies responsible
for administering the Australian government superannuation schemes: the DFRDB
Authority for the DFRB and the DFRDB schemes; the Military Superannuation and
Benefits Board for the MSB scheme; ARIA for the CSS, PSS and PSSAP schemes; and
the Commissioner for Superannuation, which is another role I hold for the 1922
Act and the PNG schemes. As I noted in my submission to you, that will
obviously improve governance arrangements so that is one thing. I think, two,
as I mentioned, one clear benefit would be the removal of any potential
conflict that currently exists where the Commissioner of Superannuation—myself—is
the chair of the authority. Whilst I am certainly not aware of any conflict
that has arisen, that perception will be removed and the perception would be
around me defending the administration over the member benefit.
As I mentioned, given what I understand, the new Defence
Force Case Assessment Committee will largely operate in terms of DFRDB cases as
the authority does, and that gives me some assurance. So I am talking about
governance improvements, removal of conflict and interest and the fact that in
my understanding and the understanding of the authority there will be very
similar arrangements in terms of case consideration for DFRDB authority members.[38]
1.40
SCOA welcomed the proposal for a single trustee as it considered that
the expanded board will enhance decision making in relation to the military
schemes, as well as the civilian schemes. In addition, the single trustee will
provide greater investment opportunity.[39]
1.41
The CPSU also supported the proposed changes and maintained that the smaller
military superannuation funds could potentially gain economies of scale via
proportionally reduced fees and charges by merging with the larger civilian
superannuation schemes. Any savings would benefit military personnel and by
providing better returns could potentially reduce the Government's ongoing
unfunded liability in these schemes.[40]
1.42
The joint submission from Finance and Defence clearly stated that the
proposed legislation would not change the member benefits, death or disability
arrangements or entitlements, such as indexation of pension. These are
legislated arrangements and cannot be changed by the scheme trustee.[41]
Finance and Defence went on to outline the benefits arising from the proposed
changes.
1.43
The Departments noted that there is trend towards rationalisation of
superannuation funds in Australia, particularly by the consolidation of funds.
There have been significant examples of consolidation of funds over the last
decade. This is in line with what is considered to be industry best practice
and the view of some fund advisers that funds need to be of sufficient size and
to have more than $5 billion in funds under management to survive. Large
consolidated funds will be able to compete in the future, particularly in an
environment of lower investment returns.[42]
1.44
The Departments saw the proposed changes as bringing the management of
all of the Commonwealth's superannuation schemes more into line with modern
industry practice and to secure a sustainable platform for delivering
Commonwealth superannuation into the future. Benefits will be gained through
improved governance and administration and access to the benefits of scale
advantage.[43]
1.45
Other benefits noted by the Departments included:
- a better spread of age profiles amongst members of all schemes
which would allow the trustee the capacity for a better spread of assets across
age bands, enabling better fund longevity and reduction of investment risk to
older members;
- scale advantage enjoyed by larger superannuation funds is
substantial and research has indicated that scale offers the potential for
reduced operation and investment costs and higher investment returns;
- Finance's actuarial service provider, Mercer, has considered the
potential improved net investment return as a result of merging the military
and civilian fund assets. Based on 2008 figures, it estimated that the
potential improvement in net investment returns would have been $10 million in
2008, would be $15 million in 2018 and $19 million in 2028;[44]
and
- improved service delivery by ComSuper by better defining
ComSuper's role and providing a clearer relationship with a single trustee, thus
removing pressures associated with ComSuper responding to multiple boards. With
one board, there will be an ability to drive improvements in administration.[45]
1.46
The Departments concluded that military members will benefit most from
the reforms. As there is a significant degree of similarity between the MSBS
and the civilian schemes for their operational arrangements and investment
structures, the present structure results in duplicated effort. Members of the
MSBS, a significantly smaller fund, have the potential to gain substantial
benefits from the merger as research has shown that small funds appear to
benefit the most from a merger as scale reward is better.[46]
Dr Helgeby went on to note that Finance's actuarial service provider, Mercer, had
estimated that $7 million of $10 million improvement in net investment return in
2008, or 70 per cent of the benefit, would relate to the MSBS and to military
members. Further that:
This level of benefit to MSBS members can only be achieved by
bringing the funds together under management of a single trustee, something
that a separate military board could not achieve on its own. Indeed, if the
MSBS trustee remained separate it would be disadvantaged in the future as it
would become relatively smaller compared with other funds. In other words,
maintaining the existing arrangements would carry a price for military members.[47]
1.47
Mr Greenslade went on to comment:
There is a really strong trend within the industry to
consolidate, to do the things these bills are seeking to do to protect members’
interests, to protect their returns. It is not just to give them better
opportunities in the future; there is a downside risk as well. The risk is,
particularly for MSBS members, that in future they will become relatively
smaller in size compared with an industry which is consolidated. This would
reduce their ability to obtain good investment value and good fees. As we say
in our submission, one of the industry advisors is of the view that the trend
is so strong that funds need to be at least $5 billion to avoid that downside
risk. In a sense there is a danger to standing still. It is perhaps a false
assumption that one can stand still and the world will stay unchanged. There
can be a down escalator if you try and stand still.[48]
1.48
Mr Greenslade concluded:
In terms of the benefits from the consolidation of the funds
and the trustees, the benefits essentially flow through to members. Improved
returns and reduced expenses on investment management flow through to members.[49]
Consultation
1.49
The Committee was told that there had been no consultation about the
proposed changes.[50]
Rear Admiral Doolan indicated that the Government had provided the RSL with some
details of the proposals and commented that 'it was insufficient for the
national executive of the Returned Services League to make a judgment about
these matters. If all of the matters had been disclosed to us and we had been
able to make a detailed examination of it, we may have come to a different
conclusion.'[51]
1.50
The Finance and Defence submission noted that the development of the
legislation had been undertaken in partnership between the Finance and Defence
Ministers and their respective Departments as well as in consultation with the
MSB Board, the DFRDB Authority and ARIA. Mr Bator, DFRDB Authority, noted that
one of its authority members had attended the discussions about the merger and
had kept the Authority informed.[52]
1.51
The Departments also stated that a range of views 'expressed over time',
by a number of other stakeholders were also taken into account and:
This includes the priority of maintaining and protecting the
features of military superannuation that reflect the special nature of military
service.[53]
1.52
In addition, Dr Helgeby commented that the bodies consulted provided a
range of information to their members, for example, ARIA and the MSBS informed
members through their annual reports.[54]
CONCLUSION AND RECOMMENDATION
1.53
The Committee considers that it is important to note that the proposed
reforms do not change member benefits, death and disability benefits or any
other entitlements such as indexation of pensions. The individual military
schemes will remain under their own legislative basis and with their own identity.
ComSuper will remain responsible for administering the schemes.
1.54
The intent of the legislation is to introduce reforms which will improve
governance and administration of both military and civilian superannuation
funds. These funds provide benefits to thousands of former ADF personnel and
public sector employees and their dependants. It is therefore imperative that
industry best practice is the basic standard for trustee operation, structure
and governance, that there are continued improvements to reduce costs and that the
potential to improve investment returns is available for the benefit of all
members. The reforms proposed by this legislation will ensure that Commonwealth
superannuation arrangements are strong and sustainable into the future.
Recommendation 1
1.55
The committee recommends that the bills be passed.
Senator Helen
Polley
Chair
March 2010
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