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Title

SUPERANNUATION LEGISLATION AMENDMENT (FAMILY LAW) BILL 2002

In Committee

Database

Senate Hansard

Date

01-04-2004

Source

Senate

Parl No.

40

Electorate

Victoria

Interjector

 

Page

22603

Party

LP

Presenter

 

Status

Final

Question No.

 

Questioner

 

Responder

 

Speaker

Troeth, Sen Judith

Stage

In Committee

Type

 

Context

Bills

System Id

chamber/hansards/2004-04-01/0131


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Thursday, 1 April 2004
Page: 22603


Senator TROETH (Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) (1:27 PM) —I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. The memorandum was circulated in the chamber on 1 April 2004. I seek leave to move government amendments (1) to (11) on sheet VW222 together.

Leave granted.


Senator TROETH —I move:

(1) Clause 1, page 1 (line 6), after “Family Law”, insert “and Other Matters”.

(2) Clause 2, page 2 (table item 1, column 1), omit “4”, substitute “5”.

(3) Clause 2, page 2 (at the end of the table), add:

3. Schedule 2

The day on which this Act receives the Royal Assent

(4) Clause 4, page 2 (line 12), omit “amendments”, substitute “family law interest-splitting amendments”.

(5) Page 2 (after line 23), after clause 4, insert:

5 Application of indexation amendments

The amendments made by Schedule 2 apply:

(a) for the purpose of working out an increase in the rate of a pension benefit that is payable immediately before:

(i) the prescribed half-year begin-ning on 1 January 2004; and

(ii) each subsequent prescribed half-year; and

(b) for any other purpose related to the purpose mentioned in paragraph (a).

(6) Schedule 1, heading, page 3 (line 2), omit “Amendments”, substitute “Family law superannuation splitting and other matters”.

(7) Schedule 1, item 3, page 6 (line 6), omit “Board”, substitute “Authority”.

(8) Schedule 1, item 3, page 7 (lines 2 to 22), omit section 49D, substitute:

49D Operative time during growth phase—reduction of later standard pension or lump sum amount

(1) If:

(a) at the operative time, standard pension is not payable in respect of the original interest; and

(b) after the operative time, standard pension becomes payable to the member spouse in respect of the original interest;

then the annual rate of that standard pension is reduced to the amount calculated under the Orders.

Note: If the member spouse dies before becoming entitled to standard pension, then subsection (1) will never-theless result in an indirect reduction of any widow's pension that becomes payable. This happens because the amount of the widow's pension is based on the amount of invalidity pay (a standard pension) that would have become payable to the member spouse at the time of death.

(2) A reduction under subsection (1) is to be disregarded in calculating the amount of any non-standard pension that later becomes payable.

Note: For example, the reduction will be disregarded in calculating the amount of pension under section 42 payable to a child of the member spouse after the member spouse's death.

(3) If:

(a) at the operative time, standard pension is not payable in respect of the original interest; and

(b) after the operative time, a lump sum amount becomes payable, in respect of the original interest, under section 32, 48, 48A, 56, 57 or 77;

then that lump sum amount is reduced to the amount calculated under the Orders.

(9) Schedule 1, page 14 (after line 26), after item 11, insert:

Parliamentary Contributory Superan-n-uation Act 1948

11A Subsection 4(1) (at the end of the definition of annuity)

Add “, including an associate annuity under section 22CD or 22CE”.

11B At the end of section 4E

Add:

(4) Reductions under Division 3 of Part VAA are to be disregarded in applying subsection (3).

11C After subsection 18(8A)

Insert:

(8AAA) Any reduction under section 22CH is to be disregarded in applying the definition of basic rate in subsection (8A) of this section.

11D After subsection 18(8AC)

Insert:

(8ACA) Any reduction under section 22CH is to be disregarded in applying the definition of basic rate in subsection (8AC) of this section.

11E After subsection 18B(15)

Insert:

(15A) Any reduction under section 22CH is to be disregarded in applying the definition of basic rate in subsection (15) of this section.

11F After Part V

Insert:

Part VAA—Family law super-annuation splitting

Division 1—Preliminary

22CA Definitions

In this Part, unless the contrary intention appears:

additional service factor at the operative time has the meaning given by section 22CC.

additional service factor at the payment time has the meaning given by section 22CC.

affected benefit means the affected benefit referred to in section 22CH.

applicable additional percentage means the percentage that is applied to the rate of salary, or allowance by way of salary, payable in respect of an office in order to calculate:

(a) the annual rate of an additional retiring allowance; or

(b) the annual rate of an annuity.

applicable basic percentage means the percentage that is applied to the rate of parliamentary allowance in order to calculate:

(a) the annual rate of a retiring allowance (other than additional retiring allowance); or

(b) the annual rate of an annuity.

associate annuity means an annuity under section 22CD or 22CE.

associate deferred annuity means an associate deferred annuity under section 22CE.

associate immediate annuity means an associate immediate annuity under section 22CD.

base amount means:

(a) for a splitting agreement—the base amount specified in, or calculated under, the agreement; or

(b) for a splitting order—the amount allocated under subsection 90MT(4) of the Family Law Act 1975.

basic service factor at the operative time has the meaning given by section 22CB.

basic service factor at the payment time has the meaning given by section 22CB.

family law value means the amount determined in accordance with regulations under the Family Law Act 1975 that apply for the purposes of paragraph 90MT(2)(a) of the Family Law Act 1975. In applying those regulations, the relevant date is taken to be the date on which the operative time occurs.

Note: This amount is determined by applying those regulations, whether or not an order has been made under subsection 90MT(1) of the Family Law Act 1975.

member spouse has the same meaning as in Part VIIIB of the Family Law Act 1975.

non-member spouse has the same meaning as in Part VIIIB of the Family Law Act 1975.

non-standard annuity means an annuity other than a standard allowance or annuity.

operative time, in relation to a splitting agreement or splitting order, means the time that is the operative time for the purposes of Part VIIIB of the Family Law Act 1975 in relation to a payment split under the agreement or order.

Orders means Orders under section 22CK.

original interest means a superannuation interest to which section 22CD applies.

payment split has the same meaning as in Part VIIIB of the Family Law Act 1975.

payment time, in relation to the affected benefit, means the time when the benefit becomes payable.

scheme value means the amount determined under the Orders.

Secretary means the Secretary of the Department.

section 16A amount means the total referred to in paragraph 16A(1)(c).

section 22Q amount means the employer component, or the sum of the employer components, referred to in paragraph 22Q(5)(c).

splitting agreement means:

(a) a superannuation agreement (within the meaning of Part VIIIB of the Family Law Act 1975); or

(b) a flag lifting agreement (within the meaning of Part VIIIB of the Family Law Act 1975) that provides for a payment split.

splitting order has the same meaning as in Part VIIIB of the Family Law Act 1975.

splitting percentage means:

(a) for a splitting agreement—the percentage specified in the agreement under subparagraph 90MJ(1)(c)(iii) of the Family Law Act 1975; or

(b) for a splitting order—the percentage specified in the order under subparagraph 90MT(1)(b)(i) of the Family Law Act 1975.

standard allowance or annuity means:

(a) a retiring allowance; or

(b) an annuity, other than an annuity under section 19AA.

superannuation interest has the same meaning as in Part VIIIB of the Family Law Act 1975.

transfer amount means:

(a) if a splitting percentage applies—the amount calculated by multiplying the splitting percentage by the greater of:

(i) the family law value; and

(ii) the scheme value; or

(b) if a base amount applies and the scheme value is not more than the family law value—the base amount; or

(c) if a base amount applies and the scheme value is more than the family law value—the amount calculated using the formula:

 

transfer factor means the number calculated by dividing the number of whole dollars in the transfer amount by the number of whole dollars in the scheme value.

22CB Basic service factor

(1) In calculating the annual rate of the affected benefit in accordance with section 22CH, the basic service factor at the payment time and the basic service factor at the operative time are worked out under this section.

Period of service at least 8 years

(2) If the period of service is at least 8 years, then:

(a) the basic service factor at the payment time is the number calculated, by reference to the member spouse's period of service before the payment time, by adding:

(i) for service that occurred within the first 8 years—0.0625 for each full year; and

(ii) for service that occurred within the next 10 years:

(A) 0.025 for each full year; and

(B) 0.025/365 for each left-over day; and

(b) the basic service factor at the operative time is the number calculated, by reference to the member spouse's period of service before the operative time, by adding:

(i) for service that occurred within the first 8 years:

(A) 0.0625 for each full year; and

(B) 0.0625/365 for each left-over day; and

(ii) for service that occurred within the next 10 years:

(A) 0.025 for each full year; and

(B) 0.025/365 for each left-over day.

Period of service less than 8 years—retiring allowance (not under subsection 18(2AA))

(3) If the period of service is less than 8 years and the affected benefit is a retiring allowance (other than an allowance under subsection 18(2AA)), then:

(a) the basic service factor at the payment time is 0.5; and

(b) the basic service factor at the operative time is the number calculated using the formula:

 

Period of service less than 8 years—retiring allowance under paragraph 18(2AA)(b) or (c) or annuity under paragraph 19(1)(a)

(4) If the period of service is less than 8 years and the affected benefit is a retiring allowance under paragraph 18(2AA)(b) or (c) or an annuity under paragraph 19(1)(a), then:

(a) the basic service factor at the payment time is 0.5; and

(b) the basic service factor at the operative time is the number calculated, by reference to the member spouse's period of service before the operative time, by adding:

(i) 0.0625 for each full year; and

(ii) 0.0625/365 for each left-over day.

Period of service less than 8 years—retiring allowance under paragraph 18(2AA)(d)

(5) If the period of service is less than 8 years and the affected benefit is a retiring allowance under paragraph 18(2AA)(d), then:

(a) the basic service factor at the payment time is 0.3; and

(b) the basic service factor at the operative time is the number calculated, by reference to the member spouse's period of service before the operative time, by adding:

(i) 0.0375 for each full year; and

(ii) 0.0375/365 for each left-over day.

22CC Additional service factor

(1) In calculating the annual rate of the affected benefit in accordance with section 22CH, the additional service factor at the payment time and the additional service factor at the operative time are worked out under this section.

Where subsection 18(10B) does not apply

(2) If subsection 18(10B) does not apply, then:

(a) for each office, the additional service factor at the payment time is the number calculated, by reference to the member spouse's period of service in the office before the payment time, by adding:

(i) 0.0625 for each full year; and

(ii) 0.0625/365 for each left-over day; and

(b) for each office, the additional service factor at the operative time is the number calculated, by reference to the member spouse's period of service in the office before the operative time, by adding:

(i) 0.0625 for each full year; and

(ii) 0.0625/365 for each left-over day.

Where paragraph 18(10B)(a) applies (one office)

(3) If paragraph 18(10B)(a) applies, then:

(a) the additional service factor at the payment time is 0.75; and

(b) the additional service factor at the operative time is:

(i) if the period of service in the office is at least 12 years—0.75; or

(ii) otherwise—the number cal-culated, by reference to the member spouse's period of service in the office before the operative time, by adding:

(A) 0.0625 for each full year; and

(B) 0.0625/365 for each left-over day.

Where paragraph 18(10B)(b) applies (highest-paid office)

(4) If paragraph 18(10B)(b) applies, then:

(a) the additional service factor at the payment time is 0.75; and

(b) if, at the operative time, the member spouse is not entitled to parliamentary allowance, then the additional service factor at the operative time for the highest-paid office to which paragraph 18(10B)(b) applies is 0.75; and

(c) if, at the operative time, the member spouse is entitled to parliamentary allowance, then the additional service factor at the operative time for the highest-paid office to which paragraph 18(10B)(b) applies is worked out as follows:

(i) calculate a factor under paragraph (2)(b) of this section for each office referred to in paragraph 18(10B)(b), other than an office for which the period of service began after the operative time;

(ii) for each such factor, calculate a weighted factor under subsection (6) of this section;

(iii) add together the weighted factors calculated under subparagraph (ii) of this paragraph.

(5) If the additional service factor at the operative time, worked out under paragraph (4)(c), would be more than 0.75, then it is taken to be 0.75.

(6) The weighted factor is calculated using the formula:

 

where:

salary for highest office means the number of whole dollars in the salary applicable at the payment time to the office referred to in paragraph 18(10B)(b) that had the highest rate of salary, or allowance by way of salary, at the payment time.

salary for the office means the number of whole dollars in the salary, or allowance by way of salary, applicable to the office at the payment time.

Division 2—Benefits for non-member spouse

22CD Associate annuity for non-member spouse

(1) This section applies to a superannuation interest under this Act (the original interest) if:

(a) the Secretary receives a splitting agreement or splitting order in respect of the original interest; and

(b) the original interest is not an entitlement to an annuity under section 19AA; and

(c) the member spouse and the non-member spouse are both alive at the operative time; and

(d) if a base amount applies—the base amount at the operative time is not more than the family law value or the scheme value.

Immediate annuity if operative time in payment phase

(2) If, at the operative time, standard allowance or annuity is payable in respect of the original interest, then the non-member spouse is entitled to an associate immediate annuity from the operative time, at the rate calculated under the Orders by reference to the transfer amount.

Deferred annuity if operative time in growth phase

(3) If, at the operative time, standard allowance or annuity is not payable in respect of the original interest, then the non-member spouse is entitled to an associate deferred annuity in accordance with section 22CE.

22CE Associate deferred annuity

(1) The associate deferred annuity is payable at an annual rate calculated under the Orders by reference to the transfer amount.

(2) The annuity is payable from the later of:

(a) the operative time; and

(b) the earliest of the following dates:

(i) if the Trust is satisfied that the non-member spouse has become permanently incapacitated—the date that the Trust considers to have been the date on which the person became permanently incapacitated;

(ii) a date notified to the Secretary under subsection (3);

(iii) the 65th anniversary of the non-member spouse's birth.

(3) The non-member spouse may give a written notice to the Secretary specifying a date that is not earlier than the 55th anniversary of the non-member spouse's birth. However, the notice has no effect if section 26B would prevent the annuity being paid to the non-member spouse from the specified date.

Note: Section 26B applies the preservation requirements of the Superannuation Industry (Supervision) Regulations.

(4) The annuity is not payable unless:

(a) a written application has been made requesting payment of the benefit; and

(b) the applicant has provided any information that is necessary to determine whether the benefit is payable.

(5) An application for payment on the ground of incapacity must be accompanied by the following:

(a) a certificate given by a medical practitioner nominated by the Trust;

(b) a certificate given by a medical practitioner nominated by, or on behalf of, the non-member spouse;

(c) such additional information or documents as the Trust requires.

(6) The certificates mentioned in paragraphs (5)(a) and (b) must include a statement to the effect that, in the opinion of the medical practitioner concerned, the non-member spouse is permanently incapacitated, as defined in this section.

(7) If the non-member spouse dies before the annuity becomes payable, an amount calculated under the Orders must be paid to the legal personal representative or, if no legal personal representative can be found, to any individual or individuals that the Trust determines.

(8) For the purposes of this section, a person is permanently incapacitated if, and only if, the person suffers from permanent incapacity within the meaning of the Superannuation Industry (Supervision) Regulations 1994.

22CF Commutation of small associate annuity

(1) If:

(a) the annual rate of associate immediate annuity that becomes payable to the non-member spouse is less than the amount determined under the Orders; or

(b) the annual rate of associate deferred annuity that becomes payable to the non-member spouse is less than the amount determined under the Orders;

then the non-member spouse may elect to commute the annuity.

(2) The election must be made in writing to the Secretary not later than 3 months after the annuity becomes payable.

(3) If the non-member spouse makes the election, then the non-member spouse is entitled instead to:

(a) if paragraph (1)(a) applies—a lump sum equal to the transfer amount; or

(b) if paragraph (1)(b) applies—a lump sum calculated under the Orders.

Division 3—Reduction of benefits for member spouse

22CG Operative time during growth phase—reduction of lump sum

(1) This section applies if:

(a) at the operative time, standard allowance or annuity is not payable in respect of the original interest; and

(b) the original interest is not an entitlement to an associate annuity.

(2) The contributions in respect of the original interest are reduced, with effect from the operative time, by the amount calculated using the formula:

 

where:

contributions at OT means the amount of the contributions, ascertained at the operative time.

Note: Under subsections 20A(2) and 22Q(3), certain amounts are deemed to be contributions (in addition to contributions under Part IV).

(3) Any section 16A amount in respect of the original interest is reduced, with effect from the operative time, by the amount calculated using the formula:

 

where:

section 16A amount at OT means the section 16A amount, ascertained at the operative time.

(4) Any section 22Q amount in respect of the original interest is reduced, with effect from the operative time, by the amount calculated using the formula:

 

where:

section 22Q amount at OT means the section 22Q amount, ascertained at the operative time.

22CH Operative time during growth phase—reduction of retiring allowance

(1) This section applies if:

(a) at the operative time, standard allowance or annuity is not payable in respect of the original interest; and

(b) after the operative time, a retiring allowance (the affected benefit) becomes payable to the member spouse in respect of the original interest.

Note: If the member spouse dies before becoming entitled to a retiring allowance, then subsection (1) will never-theless result in an indirect reduction of any annuity under paragraph 19(1)(a) to a surviving spouse. This happens because the amount of that annuity is based on the amount of retiring allowance that would have become pay-able to the member spouse if he or she had not died.

Reduction of basic percentage

(2) In calculating the annual rate of the affected benefit, the applicable basic percentage is replaced by the percentage calculated using the formula:

 

where:

BSF at OT means the basic service factor at the operative time.

BSF at PT means the basic service factor at the payment time.

Reduction of additional percentage

(3) In calculating the annual rate of the affected benefit, each applicable additional percentage is replaced by the percentage calculated using the formula:

 

where:

ASF at OT means the additional service factor at the operative time for the office concerned.

ASF at PT means the additional service factor at the payment time for the office concerned.

(4) Subsection (3) does not apply to an applicable additional percentage for an office if:

(a) the period of service in the office began after the operative time; and

(b) paragraph 18(10B)(b) does not apply.

Multiple interest splits for same original interest

(5) If, before the affected benefit becomes payable, the original interest has been split more than once (that is to say, section 22CD has applied more than once), then the calculations under subsections (2) and (3) are modified as set out in subsections (6) and (7).

Note: If the same superannuation interest is subject to 2 or more payment splits, then section 22CD applies separately in relation to each of those splits.

(6) In applying the formula in subsection (2), the component (BSF at OT x Transfer factor) is to be replaced by the number calculated using the following steps, based on the chronological order of the operative times (starting with the earliest):

(a) calculate a factor (the interim factor) for the first split using the formula:

 

(b) calculate a factor (the interim factor) for the next split (the current split), using the formula:

 

(c) calculate a factor for each remaining split (if any), using the formula in paragraph (b);

(d) add together the factors calculated under paragraphs (a) to (c).

Example: Assume 2 splits, with the first split having a basic service factor (BSF) of 0.4 and a transfer factor of 0.5 and the second split having a basic service factor of 0.6 and a transfer factor of 0.5. Applying the above steps, the replacement number for the formula is 0.4, that is:

 

(7) In applying the formula in subsection (3), the component (ASF at OT x Transfer factor) is to be replaced by the number calculated using the following steps, based on the chronological order of the operative times (starting with the earliest):

(a) calculate a factor (the interim factor) for the first split using the formula:

 

(b) calculate a factor (the interim factor) for the next split (the current split), using the formula:

 

(c) calculate a factor for each remaining split (if any), using the formula in paragraph (b);

(d) add together the factors calculated under paragraphs (a) to (c).

Reduction not to affect later non-standard annuity

(8) A reduction under this section is to be disregarded in calculating the amount of any non-standard annuity that later becomes payable.

Note: For example, the reduction will be disregarded in calculating the amount of annuity payable under section 19AA in respect of a child of the member spouse after the member spouse's death.

22CI Operative time during growth phase—reduction where original interest is entitlement to associate deferred annuity

(1) This section applies if:

(a) at the operative time, standard allowance or annuity is not payable in respect of the original interest; and

(b) the original interest is an entitlement to an associate deferred annuity.

(2) The annual rate of that associate annuity (when it becomes payable) is reduced to the amount calculated under the Orders.

Note: Although an associate immed-iate annuity becomes payable at the operative time, an associate deferred annuity will often not become payable until some time after the operative time.

22CJ Operative time during payment phase—reduction of standard allowance or annuity

(1) If, at the operative time, standard allowance or annuity is payable in respect of the original interest, then the annual rate of that allowance or annuity is reduced to the amount calculated under the Orders.

(2) A reduction under subsection (1) is to be disregarded in calculating the amount of any non-standard annuity that later becomes payable.

Note: For example, the reduction will be disregarded in calculating the amount of annuity payable under section 19AA in respect of a child of the member spouse after the member spouse's death.

Division 4—Miscellaneous

22CK Ministerial Orders

(1) The Minister may make Orders prescribing matters required or permitted by this Part to be prescribed.

(2) An Order is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.

(3) An Order is taken to be a statutory rule for the purposes of the Statutory Rules Publication Act 1903.

(10) Schedule 1, item 27, page 31 (line 5), after “Family Law”, insert “and Other Matters”.

(11) Page 33 (after line 9), at the end of the Bill, add:

Schedule 2—Indexation under the Defence Forces Retirement Benefits Act

Defence Forces Retirement Benefits Act 1948

1 Subsection 83(1)

Insert:

first quarter, in relation to a half-year, means:

(a) for a half-year beginning on 1 January in a year—the March quarter of the year; and

(b) for a half-year beginning on 1 July in a year—the September quarter of the year.

2 Subsection 83(1)

Insert:

half-year means a period of 6 months beginning on 1 January or 1 July in any year.

3 Subsection 83(1)

Insert:

prescribed half-year means the half-year commencing on 1 January 2002 or a subsequent half-year.

4 Subsection 83(1) (definition of prescribed year)

Repeal the definition.

5 Subsection 83(2)

Omit “March quarter”, substitute “first quarter in a half-year”.

6 Subsection 84(1)

Omit “March quarter” (wherever occurring), substitute “first quarter”.

7 Subsection 84(1)

Omit “year” (wherever occurring), substitute “half-year”.

8 Subsection 84(2)

Omit “year”, substitute “half-year”.

9 Subsection 84(3)

Omit “year” (wherever occurring), substitute “half-year”.

10 Subsection 84(3)

Omit “March quarter” (wherever occurring), substitute “first quarter”.

11 Subsection 84(4)

Omit “year” (wherever occurring), substitute “half-year”.

12 Subsection 84(4)

Omit “30 June” (wherever occurring), substitute “30 June or 31 December (as the case requires)”.

13 Section 84A

Omit “year” (wherever occurring), substitute “half-year”.

14 Subsection 84B(1)

Omit “year” (wherever occurring), substitute “half-year”.

15 Subsection 84B(2)

Omit “16 June in the preceding year”, substitute “16 June or 16 December (as the case requires) in the preceding half-year”.

16 Subsection 84B(3)

Omit “16 June in the preceding year”, substitute “16 June or 16 December (as the case requires) in the preceding half-year”.

17 Subsection 84B(3)

Omit “30 June in the preceding year bears to 12”, substitute “30 June or 31 December (as the case requires) in the preceding half-year bears to 6”.

18 Subsection 84C(2)

Omit “March quarter” (wherever occurring), substitute “first quarter”.

19 Subsection 84C(2)

Omit “year” (wherever occurring), substitute “half-year”.

20 Paragraph 84C(3)(a)

Repeal the paragraph, substitute:

(a) in relation to the prescribed half-year that commenced on 1 January 2002—the amount that was the existing amount in relation to that provision, as calculated under this section immediately before the commencement of Schedule 2 to the Superannuation Legislation Amend-ment (Family Law and Other Matters) Act 2003; and

21 Paragraph 84C(3)(b)

Omit “year”, substitute “half-year”.

22 Section 84D

Omit “30 June in a year”, substitute “30 June or 31 December (as the case requires) in a half-year”.

23 Subsection 84E(1)

Omit “year” (wherever occurring), substitute “half-year”.

Note: The heading to section 84E is altered by omitting “year” and substituting “half-year”.

24 Subsection 84E(2)

Repeal the subsection.

25 Subsection 84E(3)

Omit “year” (wherever occurring), substitute “half-year”.

26 Subsection 84F(2)

Omit “year” (wherever occurring), substitute “half-year”.

Note: The heading to section 84F is altered by omitting “year” and substituting “half-year”.

27 Subsection 84F(3)

Repeal the subsection.

28 Sections 84G and 84GA

Repeal the sections.