Bills Digest No.160 1997-98
Commonwealth Superannuation Board Bill 1997
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
Endnotes
Contact Officer and Copyright Details
Commonwealth Superannuation Board Bill 1997
Date Introduced: 3
December 1997
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.
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.
Subclause 8(3) provides 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(4)].
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(6)]. Such a
determination will be a disallowable instrument [subclause 8(8)].
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 1998.
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 1998.
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
18 March 1998
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1997
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