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Thursday, 25 March 1965

Senator HENTY (Tasmania) (Minister for Civil Aviation) . - by leave - Mr. Deputy President, a statement was made this morning by the Treasurer (Mr. Harold Holt) in another place with reference to the Commonwealth Superannuation Fund. The statement is as follows -

I am now able to give some information regarding the disposal of the surplus revealed at the last quinquennial investigation. Honorable senators are keenly interested in the well-being of the Commonwealth Superannuation Fund. At the request of the Treasurer, the Secretary to the Treasury conferred with organisations of Public Service employees immediately after the report of the eighth quinquennial investigation of the Fund was tabled in the Senate during the last sittings and again as recently as last week. This is the first occasion upon which such a large surplus has been disclosed in the Fund. As can be seen from the report, it has largely arisen from the increased earnings of the Fund in comparison with the assumed rate of earnings of 33/4 per cent when the rates of contribution were calculated. Put shortly, rates of contribution to the Fund have been higher than they would need to be if they had been based on an expectation of earnings at the levels which were actually reached during recent years and the levels which can be reasonably expected for at least quite a few years ahead.

The Superannuation Board was not unanimous in its view about the best and most acceptable method of utilising the surplus and this was an important reason for consulting with the Public Service organisations. I am informed that they have expressed agreement with the decisions which the Government has now reached and which 1 will outline to the Senate. These decisions will not only result in distribution of the surplus already accrued, but will also accept the position that the higher earning rate recently achieved is likely to continue. The Government clearly could not wish that contributions should continue to be paid at rates higher than those that are judged to be necessary to ensure that the Fund is able at all times to provide the benefits prescribed. Accordingly -

(a)   New rates of contribution to take effect from 1st July 1962 are now being calculated. These will be based on an assumed earning rate of 51/2 per cent, for the ten year period to 30th June 1972 and 41/2 per cent, thereafter, with appropriate provision for contingencies. These earning assumptions will be subject to review at the next actuarial investigation at 30th June 1967, in the light of circumstances then existing.

(b)   The difference between the newly calculated contributions and the contributions already paid after 30th June 1962 will be rebated or refunded if contributions have not already been refunded.

(c)   In the light of the new assumptions about earning rates and the introduction of new contribution rates, the Commonwealth Actuary will re-assess the state of the Fund at 30th June 1962. The portion of the revised surplus then disclosed that is attributable to contributors, together with earnings from 1st July 1962 in relation both to their portion of the surplus and to overpayments of contribution, will be rebated or refunded if contributions have not already been refunded.

(d)   A cash distribution will be made to pensioners of the share of the revised surplus at 30th June 1962 attributable to them and subsequent earnings thereon.

(e)   Contributors to the Provident Account will be credited with interest from 1st July 1957 at the average rate earned by the Fund in each financial year.

(f)   A cash payment will be made to the retired contributors to the Provident Account of the additional interest earned on their contributions.

Legislation to give effect to the Government's decision will be brought down as quickly as possible but, as I have indicated, the actuarial calculations are complex and the other administrative arrangements will necessarily take some time to complete. It will not, therefore, be possible to incorporate the new rates of contribution in the legislation but, to avoid any subsequent delay, authority will be sought for the making of regulations to prescribe appropriate rates of contribution and rebates or refunds as soon as the final actuarial calculations are available. Any amounts that would have been payable to pensioners or contributors who are now deceased will be paid to their legal personal representatives.

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