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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Commonwealth Superannuation Board Bill
1998
Date Introduced: 12 November 1998
House: House of Representatives
Portfolio: Finance and Administration
Commencement: Except as otherwise noted in
the Main Provisions section, on Royal Assent
To create a new
Commonwealth Superannuation Board that will replace the current
boards responsible for the Commonwealth Superannuation Scheme
(CSS), the scheme that replaced CSS, the Public Sector
Superannuation (PSS) Board, and other, minor, Commonwealth
superannuation schemes..
Current Commonwealth employees in both the
general public service and in a number of Commonwealth authorities
may be covered by either the Commonwealth Superannuation Scheme
(CSS) or the Public Sector Superannuation Scheme (PSS). For new
employees, entrance to the CSS was terminated on the introduction
of the PSS in 1 July 1990, however as at 30 June 1997 there were 68
549 members of the CSS.(1) PSS has a larger membership which
reflects not only the closure of the CSS but also the transfer of
members from the CSS to the PSS. As at 30 June 1997, there were 114
123 members of the PSS.(2)
Both CSS and PSS are defined benefit schemes so
that the benefits a member will receive, other than interest on
their own contributions, is not dependent on the earnings of the
fund but is defined in the legislation and trust deeds that created
the funds. The CSS and PSS are also unfunded schemes, which means
that the final, defined benefit from notional employer
contributions is payable from the Consolidated Revenue Fund rather
than from the earnings on employer contributions.
CSS and PSS are administered by the CSS Board
and the PSS Board respectively which have responsibility for
ensuring that the relevant legislative and trust deed requirements
are complied with. However, both the CSS and PSS Boards have
delegated the bulk of their administrative powers and
responsibilities to Commonwealth Superannuation Administration
(ComSuper). ComSuper performs tasks such as keeping records of
members, receiving contributions and the payment of benefits.
However, major roles such as investment decisions remain with the
CSS and PSS Boards.
Currently, the membership of the CSS and PSS
Boards are substantially the same. The CSS Board has 7 members
while the PSS Board has 5 members. The 5 members of the PSS Board
are also members of the CSS Board. As at 30 June 1997, the
allocation of investments for CSS and PSS were identical, with both
having 40% of its portfolio in international shares, 33% in
Australian shares, 10% in Australian fixed interest, 15% in
Australian property and 2% in cash. Similarly, as can be expected
due to the same portfolio allocation, the performance of the CSS
and PSS was identical in 1996-97 with a rate of return of 18% after
tax and fees.(3)
When announcing the details of the choice of
superannuation funds for Commonwealth employees, which will also
involve the closure of PSS, the Minister's Media Release, dated 20
November 1997, stated: 'The CSS and PSS Boards will be amalgamated
into a single Board.'
While no detailed explanation for the
amalgamation has been given, the similarities between the
membership of the CSS and PSS Boards and their identical overall
portfolio allocations should mean that the amalgamation will have
little, if any, practical affect on members of CSS and PSS. This is
also reinforced by the nature of the schemes as defined benefit
funds where investment performance is of less relevance to final
member benefits than non-defined benefits schemes.
This Bill is essentially the same as one of the
same name introduced in December 1997 but which failed to pass both
House of Parliament before it was perouged for the 1998 General
election. The major difference is in the commencement date, which
has been postponed due to the delay in the passage of the 1997
Bill.
The Commonwealth Superannuation Board (the
Board) will be formally established by clause 5
and is to be a corporation (clause 6).
The functions and powers of the board are
contained in Part 3 of the Bill. Clause
7 provides that the powers and functions of the Board will
include:
-
- the general administration of the superannuation legislation
that established the various Commonwealth superannuation
schemes;
-
- such functions and powers in relation to non-statutory
superannuation instruments, such as trust deeds, relating to
Commonwealth employees or others in the service of the
Commonwealth, as are conferred by the Minister; and
-
- that in a case where the operation of a statutory or
non-statutory superannuation instrument is such that, in the
Board's opinion, its operation would produce a result that is not
in the spirit of the statute or instrument, the Board may vary the
components relating to a benefit or determine that a benefit is
payable where it would otherwise not be.
Clause 8 will give the Minister
and the Board power, subject to the Superannuation Industry
(Supervision) Act 1993 (SIS), power to alter the operation of
the provisions currently regulating superannuation for Commonwealth
employees or others in the service of the Commonwealth who
contribute to the various schemes. Subclause 8(1)
authorises the Minister to make determinations that will vary the
operation of the relevant legislation and non-statutory instruments
that relate to Commonwealth employees and other covered by
Commonwealth superannuation schemes. The Minister will also be
given power to issue statements to the Board regarding the
operation of the relevant legislation or non-statutory rules.
Subclauses 8(3) and 8(4)
provide that if the Minister makes such a statement the Board may
make an instrument giving effect to the Ministers statement.
Specifically, the Board will be able to make a determination that
will implement the Ministers statement, ensuring that the laws
relating to superannuation are complied with or will simplify the
operation of the various statutory or non-statutory rules relating
to superannuation for Commonwealth employees or others eligible for
Commonwealth superannuation. However, the above provisions relating
to the power of the Board to make determinations will not apply to
members of the CSS or PSS whose entitlements are determined under
the appropriate legislation [subclause 8(6)]. In
exercising its powers the Board is to have regard to the purpose
and intent of the legislation or instrument, the interests of the
people involved and the interests of the Commonwealth
[subclause 8(8)]. Such a determination will be a
disallowable instrument [subclause 8(10)].
Clause 9 provides that unless
the legislation creating the Commonwealth superannuation schemes
provides otherwise, the Board is to comply with SIS.
Commencement: Part 3 will
commence on 1 July 1999.
Part 4 contains administrative
provisions. Clause 10 provides that the Board is
to have 7 members, 3 appointed by the Minister and 3 elected by
members of the relevant superannuation schemes and those with
preserved benefits in the schemes. The seventh member is to be the
Chairperson and is to be appointed by the Minister after
consultation with the 6 members referred to above. The Minister is
to determine the method for the election of the 3 elected members.
An appointed person may be appointed for a maximum of 3 years,
while elected members are elected for 3 years.
Other provisions of Part 4
contain standard administrative provisions, relating to matters
such as acting Chairperson and members (elected members must be
replaced by an election); remuneration (to be determined by the
Remuneration Tribunal); meetings; disclosure of interests; and
delegations by the Board.
Clauses 23 and 24 provide that
the cost of management relating to a particular fund are to be met
by that fund and that the Board may make a determination of the
estimated costs to the various funds during a year and that the
Minister may direct the various funds to contribute to the proposed
Board.
Commencement: Clauses 23 and 24
commence on 1 July 1999.
Other provisions of the Bill deal with routine
matters, such as exemption from taxation for the amalgamation
process; accounting; audits; and the presentation of an annual
report.
-
- CSS Board, Annual Report 1996-97, 32.
- PSS Board, Annual Report 1996-97, 32.
- Ibid., 23-25.
Chris Field
2 December 1998
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1998
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