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
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Published by the Parliamentary Library, 2005.
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