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
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2495.
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