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Superannuation Legislation (Commonwealth Employment) Repeal and Amendment Bill 1998

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1996-1997

 

the parliament of the commonwealth of australia

 

house of representatives

 

superannuation legislation (commonwealth employment) repeal and amendment bill 1997

 

explanatory memorandum

 

 

 

 

(Circulated by the authority of the Minister for Finance and Administration

 the Hon John J Fahey, MP)

 

 

11360 Cat. No. 97 1761 7 ISBN 0644 364467

superannuation legislation (commonwealth employment) repeal and amendment bill 1997

 

general outline

This Bill includes amendments to twelve Acts.  The Acts to be amended are the Superannuation Act 1922 , the Superannuation Act 1976 , the Superannuation Act 1990 , the Superannuation Amendment Act 1976 , the Superannuation (Productivity Benefit) Act 1988, the Superannuation Benefits (Supervisory Mechanisms) Act 1990 , the Papua New Guinea (Staffing Assistance) Act 1973 , the Parliamentary Contributory Superannuation Act 1948 , the Superannuation Legislation Amendment Act (No. 1) 1995 , the Administrative Appeals Tribunal Act 1975 , the Law Officers Act 1964 and the Workplace Relations Act 1996 .

Although the Bill includes a range of amendments in relation to superannuation arrangements for Commonwealth employees, its main purpose is to ensure that Commonwealth civilian employees can participate in the new choice of fund arrangements announced by the Treasurer in the 1997 Budget.   Also, as a consequence of the changes to facilitate choice of fund for these employees, the Bill will rationalise the administrative arrangements for the Commonwealth’s closed civilian superannuation schemes and simplify the rules of those schemes and the processes for maintaining those rules.

To ensure that Commonwealth employees are not tied to compulsory membership of a Commonwealth superannuation scheme, and can therefore take advantage of the choice of fund to be offered by employers, the Bill will amend the Superannuation Act 1990 (the 1990 Act) to close the Public Sector Superannuation Scheme (the PSS) to new members from 1 July 1998.  Inactive PSS or Commonwealth Superannuation Scheme (CSS) members who have ceased active membership of their scheme before 1 July 1998 (ie, they have resigned and have preserved benefits or have invalidity pensions) will be able to return to active membership of the CSS or PSS, as appropriate, on becoming employed by an employer participating in their scheme.

To allow choice to apply to CSS and PSS members from 1 July 2000, the Bill will amend the Superannuation Act 1976 (the 1976 Act) and the 1990 Act to allow CSS and PSS members to choose to leave those schemes for another scheme offered by, or arranged with, their employer.

The Bill describes the entitlements of a CSS member who chooses to leave the CSS to join another scheme.  These entitlements will be based on existing deferred resignation benefits but adjusted by actuarial factors to ensure no increase in unfunded liabilities or windfall gains.

The Bill, together with the Commonwealth Superannuation Board Bill 1997, provides for the replacement of the CSS and PSS Boards by a new Board, the Commonwealth Superannuation Board, and for the abolition of the statutory position of Commissioner for Superannuation. These Bills and the Superannuation Legislation (Commonwealth Employment - Saving and Transitional Provisions) Bill 1997 propose that the new Board will assume the powers, functions and duties of the replaced CSS and PSS Boards and of the Commissioner for Superannuation as well as certain other functions. 

Other Amendments to the Superannuation Act 1976

The Bill proposes to amend the 1976 Act to improve access to superannuation spouse benefits in certain circumstances where the retirement pensioner commenced a marital relationship after age 60 years.  Generally, a spouse’s pension is not payable if the pensioner dies within 5 years of the post-retirement relationship commencing.  The Bill proposes to reduce the 5 years requirement to 3 years.  In addition, the Bill provides for payment of a pro-rata rate of spouse’s pension where the relationship existed for less than 3 years immediately before the pensioner’s death. Where the relationship has existed for less than 3 years, the Bill provides that spouse’s pension is to be proportional to the length of the relationship and 3 years.

In addition, the Bill provides that where a spouse pension is reduced because the relationship was less than 3 years and the pension is less than an amount per annum determined by the CSS Board, the spouse may elect that the pension be commuted to a lump sum.

The Bill amends the 1976 Act to provide an option for age and early age retirees to reduce their pension entitlements and increase reversionary benefits payable to their spouse or to any children of the retiree.  The proposed amendments provide age or early age retirees with an option to reduce their pension entitlement to 93 percent of their original entitlement.  The resulting reversionary benefits will increase from 67 percent of the retiree’s pension to 85 percent of the pension being paid at the time of the retiree’s death.  Corresponding increases would apply in relation to pensions paid in respect of any children.

The Bill amends the 1976 Act to allow for certain payments payable from other superannuation funds or superannuation schemes to be paid into the CSS Fund.  This will enable CSS members who have superannuation amounts held in other funds to be able to transfer those amounts into the CSS Fund.  The transfer of such amounts will not increase Commonwealth liabilities for the CSS.

The Bill restores, with effect from 5 December 1997, the original intention in relation to late elections to preserve benefits.  The Bill proposes also that, where such a late election is accepted, in addition to repaying any benefit received on ceasing to be a member, the member or former member must also repay interest that would have accrued on the benefit had it not been received but had remained in the CSS Fund.  This would restore the situation that would have existed if the election for preservation had been made within the time allowed.

The Bill also includes certain other minor amendments of a technical nature to the Superannuation Act 1976 , the Superannuation Act 1990 and the Superannuation Legislation Amendment Act (No. 1) 1995.

Repeal of various Acts

The Bill will repeal the Superannuation Act 1922 , the Superannuation Act 1976 , the Superannuation Act 1990, the Superannuation (Productivity Benefit) Act 1988 and the superannuation and retirement incomes provisions of the Papua New Guinea (Staffing Assistance) Act 1973 .  However, in most circumstances, the repealed legislation will continue to operate through the application of the Superannuation Legislation (Commonwealth Employment - Savings and Transitional Provisions) Act 1997 .    The repealed legislation will be administered and maintained by the Commonwealth Superannuation Board, which is to be established by the Commonwealth Superannuation Board Bill 1997.

Superannuation Benefits (Supervisory Mechanisms) Act 1990

The Bill will amend this Act to provide that a determination made under the Act in relation to agencies meeting certain requirements in setting up superannuation arrangements for their employees will be a disallowable instrument.

Parliamentary Contributory Superannuation Act 1948

The Bill amends the Parliamentary Contributory Superannuation Act to improve access to spouse benefits where a retiring member entitled to pension commenced a post-retirement marital relationship after age 60, in line with the arrangements proposed under the 1976 Act.  The Bill also rectifies anomalies and technical deficiencies in relation to orphan benefits, the maximum reversionary benefit payable where there is more than one beneficiary and the arrangements relating to transfer values.

In addition, the Bill will cease the application of the inwards transfer value arrangements to persons who become Members of Parliament after the date of Royal Assent of the Bill.

Administrative Appeals Tribunal Act 1975, the Law Officers Act 1964 and the Workplace Relations Act 1996.

Provisions in these Acts in relation to people who leave the CSS or the PSS to join the Judges’ Pension Scheme will be amended by the Bill to assist those schemes to comply with the national regulatory system for superannuation schemes.

Financial Implications

There are three elements in the Bill that have financial implications.  These relate to post retirement reversionary benefits, the full funding of future benefit accruals for new employees and those CSS and PSS members who exercise choice and CSS late elections for preservation.

The changes to post retirement reversionary benefit arrangements are estimated to increase outlays by $2.2 million per year.  The increased outlays arise from the expected increase in the number of reversionary benefits that will be paid under the changed arrangements.

The Bill will result in the funding of future superannuation accruals for new employees and for existing CSS and PSS members who elect to join another complying superannuation fund or Retirement Savings Account.  The estimated additional outlays over the next three years are $12 million in 1998-99, $40 million in 1999-00 and $290 million in 2000-01.  However, these increased cash flows do not represent any additional expense; they are in effect a bring forward of future cash flows in lieu of an increase in unfunded liabilities.

The amendments to restore the intention of the Superannuation Act 1976 in relation to late elections for preservation are expected to avoid a potential increase on outlays of around $10 million per year.

 

 

Regulation Impact Statement

New Superannuation Arrangements for Commonwealth Employees

Outline

On 23 September 1997, the Minister for Finance and Administration announced new superannuation arrangements for Commonwealth civilian employees.  Under the new arrangements:

a)   from 1 July 1998, new employees will be able to have their employer superannuation paid into a complying superannuation fund, other than the Public Sector Superannuation Scheme (PSS), or Retirement Savings Account (RSA) of their choice;

b)   from 1 July 2000, Commonwealth Superannuation Scheme (CSS) and PSS members will be able to choose to cease their membership and have their future employer superannuation paid into another complying superannuation fund or RSA of their choice; and

c)   employer contributions for new employees and employees who choose to leave the PSS/CSS will be fully funded and able to be negotiated with the employer subject to a safety net (minimum) of the Superannuation Guarantee (SG) rate.

Summary of the Implementation Arrangements

Implementation arrangements have been developed which, among other things, will put in place the structural arrangements necessary for implementing the Government’s decision. 

For example, the ‘fund choice’ arrangements for Commonwealth employees will be implemented consistently with the 1997-98 Budget ‘choice of fund’ policy.   Each Department and agency will select the required number of funds or RSAs, including a default fund, or will be free to agree on superannuation arrangements through workplace agreements, provided there is ‘individual’ choice for employees who wish to leave the CSS or PSS.

As well, from 1 July 1998 the current trustee and administrative arrangements for the Commonwealth’s schemes will be rationalised and responsibilities clarified.  As part of these changes Commonwealth Superannuation Administration (ComSuper) will operate on a commercial basis and be responsible (under contract) for the provision of administrative services to a new consolidated Board.

Issue Identification

To what extent should the Commonwealth regulate arrangements for Commonwealth civilian employees in order to comply with the wider Budget decision?

As the fund choice arrangements for Commonwealth civilian employees are to be implemented consistently with the 1997-98 Budget choice of fund policy, the main issue arising from the new arrangements is whether or not implementation of the new arrangements should be regulated and, if regulated, to what extent.

Should existing superannuation arrangements and new superannuation arrangements be centralised within Government or decentralised?

The outcome of this issue will assist in making decisions about other issues including:

-     whether Departments and agencies should be able to individually select the required number of funds/RSAs and whether each employer can agree on superannuation arrangements through workplace agreements.

-     whether the Commonwealth should allow other superannuation funds and administrators to participate in superannuation arrangements for Commonwealth employees.

Objective

The Government’s main objectives in developing the new arrangements are:

- to provide Commonwealth employees with greater choice, flexibility and control over their superannuation savings consistent with the wider choice of superannuation policy announced by the Treasurer in the 1997-98 Budget; and

- to put in place rationalised administrative structural arrangements for the Commonwealth’s superannuation schemes. 

Options (regulatory and non-regulatory)

 

Clarification of options

Full legislation or partial legislation

Under full legislation (options 1 and 3) new superannuation arrangements for Commonwealth employees would be fully provided for by the Superannuation (Productivity Benefit) Act 1988 (the PB Act) which would continue to operate and provide for the minimum superannuation guarantee framework for Commonwealth employees.  This legislation would be amended to comply with the Government’s choice of fund policy.

If a less rather than more legislation approach is adopted (options 2 and 4) this would mean that the PB Act would be repealed and individual Commonwealth employers would then be responsible for complying with the overall superannuation guarantee framework, including in respect of choice of fund.   However, prescribed requirements under the Superannuation (Supervisory Mechanisms) Act 1990 would need to be issued to allow Commonwealth Departments and certain Commonwealth agencies to provide appropriate superannuation arrangements.

Centralised or decentralised approach to superannuation arrangements

Under a centralised approach (options 1 and 2), the Commonwealth as a whole would retain involvement in superannuation arrangements for Commonwealth employees.  AGEST would continue as the default superannuation scheme for all Commonwealth employees and the Commissioner for Superannuation would continue to have the legislative monopoly over the administration of certain superannuation schemes.

However, a decentralised approach (options 3 and 4) would mean that Commonwealth employers could select the required number of funds/RSAs and could agree on superannuation arrangements through workplace agreements.  This proposed option would also mean that AGEST would lose its legislative default monopoly and that the responsibilities and accountabilities of the parties involved in the administration of the Commonwealth’s civilian schemes would be clarified.  Under this option, the Commissioner would no longer have a monopoly on administrative services for the CSS/PSS and ComSuper’s funding would be devolved to employing agencies which would pay the Board for administrative services.  The Board would then use these funds to contract with ComSuper and/or other service providers to provide administrative services.

Assessment of Impacts (costs and benefits) of each option

Impact group identification

The new arrangements will impact on Commonwealth employers, the ACT Government and employees of those Governments by allowing greater choice and flexibility in superannuation arrangements (as at 30 June 1996 Commonwealth employees who were active contributing members were 76,000 (CSS), 115,000 (PSS) and 24,000 (AGEST)).  Less Commonwealth specific regulation of superannuation arrangements and greater reliance on legislation applying to the wider community (options 2 and 4) will ensure Government employers and employees are treated equitably and may reduce the level of complexity and therefore compliance costs that currently exist for these groups.

The new arrangements will also allow other superannuation funds/RSAs to provide superannuation for new Commonwealth employees and employees who choose to leave the CSS, PSS or AGEST.  Allowing Commonwealth employers to choose the default superannuation scheme (options 2 and 4) instead of legislating that AGEST be the default scheme (options 1 and 3) will also impact on fund managers which will be able to compete openly with AGEST for the provision of default superannuation arrangements.

The changes in relation to the provision of administrative services impact directly on the Board responsible for the administration of the CSS and PSS and on the Commissioner for Superannuation and the Commissioner’s staff in ComSuper.  Options 3 and 4 allow the Board to contract for the administration services it requires.  In turn, this means that ComSuper will become more accountable and, at the Board’s instigation, will benefit other fund administrators by allowing them to openly compete with ComSuper in the future for the provision of all or part of the administrative services.

Assessment of costs

Whatever options are adopted, the new arrangements will not result in a cost to business (ie, the superannuation fund providers or administrators).  However, under a decentralised approach (options 3 and 4), the new arrangements will result in some minimal administrative costs to Commonwealth employers in selecting and offering the required number of superannuation funds and RSAs to employees and ongoing costs in monitoring the funds selected.  This cost will be equivalent to the costs incurred by employers in the wider community and, in respect of Budget funded agencies, the Commonwealth proposes will be absorbed in current funding received by those agencies.  Under a decentralised arrangement, the collective administrative cost to all Commonwealth employers may be less than the cost that would apply if the Commonwealth undertook a more centralised approach.  However, the costs that would apply under any of these options are unable to be quantified.

Under any of the options and like AGEST members, new employees and CSS and PSS members who choose another superannuation fund or Retirement Savings Account (RSA) may incur small administration costs.  However, these costs, if any, may be absorbed by the employer.  In any event, these costs will be no different to those that apply to the wider community.

Assessment of benefits

The new arrangements will result in substantial benefits to superannuation funds and administrators.  However, a more centralised approach to administering existing superannuation schemes and the selection of the required number of funds/RSAs (options 1 and 2) would limit the opportunity for funds managers to participate in the new arrangements.  Similarly, under a decentralised approach (options 3 and 4), fund administrators and other relevant service providers will also benefit from a decision to allow the Board to choose the provider of administrative services.

The new arrangements will benefit Commonwealth employees by treating them equitably with their counterparts in the private sector and, consistent with the choice of fund policy, allow greater choice and flexibility in their superannuation arrangements to allow them to meet their individual circumstances.  These benefits are enhanced under a more decentralised approach (options 3 and 4).

Reduced legislative arrangements for the provision of Commonwealth superannuation (options 2 and 4) will ensure that Commonwealth employers and employees have arrangements that are consistent with those applying to the wider community.

Restrictions on competition

A more decentralised approach (options 3 and 4) will enhance this competition by opening up superannuation arrangements for Commonwealth employees to an almost unlimited range of service providers.  A more centralised approach (options 1 and 2) may restrict competition as some smaller superannuation providers may not be able to compete for the provision of superannuation services for the whole of Government but may be able to do so in respect of individual Commonwealth employers.

Under the decentralised approach, the Government would not impose any limits or restraints on the competitiveness of superannuation providers subject to them meeting community wide regulatory requirements.

Consultation

The changes to superannuation arrangements for Commonwealth civilian employees have arisen as a direct result of the choice of fund arrangements that will apply to the general workforce as announced by the Treasurer in the 1997-98 Budget. Further, the implementation of these changes are to be broadly consistent with the Budget policy as it applies to the wider community.

The new arrangements were prepared following consultation with the Departments of the Treasury, Prime Minister and Cabinet and Workplace Relations and Small Business, together with the Public Service and Merit Protection Commission, the Australian Taxation Office, and ComSuper.  In addition, CSS and PSS members were widely informed of the new arrangements following the announcement by the Minister for Finance and Administration on 23 September 1997.

Conclusion and recommended option

Options 2 and 4 that provide for minimum additional regulation avoid the need for the reproduction of choice of fund arrangements and places Commonwealth employers and employees on the same footing as the rest of the community.  Neither option considered should have any impact on the wider community.  Therefore either of these options would be acceptable from this perspective.

It is also considered that the new arrangements adopt a more decentralised approach to Commonwealth superannuation arrangements (options 3 and 4).  This approach is consistent with the Government’s overall policy of devolution of responsibility to employing agencies in line with the new Public Service Bill and the Workplace Relations arrangements, will have a more significant beneficial impact on the private sector and removes potential restrictions on competition.  Therefore these options will not disadvantage smaller superannuation providers.  These options meet the Commonwealth’s obligations under the Competition Principles Agreement to remove impediments to competition where feasible and in the public interest.  While there is some minimal cost to Commonwealth employers in administering the new arrangements under a decentralised approach the overall benefits significantly outweigh these costs which, consistent with the wider community, are expected to be absorbed by employers.

On balance, option 4 provides the appropriate preferred framework both for decentralisation of superannuation arrangements and a less regulatory framework.

Implementation and review

The new superannuation arrangements will require amendments to the Superannuation Act 1976, the Superannuation Act 1990, the Superannuation (Productivity Benefit) Act 1988 and the Superannuation Benefits (Supervisory Mechanisms) Act 1990.  Consequential amendments will also need to be made to other legislation including the Judges’ Pensions Act 1968 and the Governor-General Act 1974.

The regulatory framework and monitoring arrangements will be those implemented as part of the wider choice arrangements applying to the general community.



terms used in the notes on clauses

"1922 Act"  means the Superannuation Act 1922 ;

"1976 Act"  means the Superannuation Act 1976 ;

"1990 Act"  means the Superannuation Act 1990 ;

"APS" means the Australian Public Service;

"AWOTE"  means average weekly ordinary time earnings;

"Board Bill" means the Commonwealth Superannuation Board Bill 1997;

"Commissioner"  means the Commissioner for Superannuation;

"ComSuper" means the organisation called Commonwealth Superannuation Administration;

"CRF"  means the Consolidated Revenue Fund;

"CS Board"  or “Commonwealth Superannuation Board” means the Commonwealth Superannuation Board as provided for in the Commonwealth Superannuation Board Bill 1997

"CSS"  means the Commonwealth Superannuation Scheme;

"CSS member"  is used to describe a person who makes personal contributions to  the CSS (the 1976 Act uses the term "eligible employee" for such a person);

"Disallowable instrument" means an instrument described as a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901

“ISC” means the Insurance and Superannuation Commissioner

“PCSS” means the Parliamentary Contributory Superannuation Scheme;

"PNG Act"  means the Papua New Guinea (Staffing Assistance) Act 1973 ;

"Parliamentary Contributory Act"  means the Parliamentary Contributory Superannuation Act 1948 ;

"PB Act"  means the Superannuation (Productivity Benefit) Act 1988 ;

"PSS"  means the Public Sector Superannuation Scheme;

"PSS Rules"  means the rules for the administration of the PSS;

"Saving and Transitional Bill"  means the Superannuation Legislation (Commonwealth Employment - Saving and Transitional Provisions) Bill 1997

"SG Act" means the Superannuation Guarantee (Administration) Act 1992 ;

"SIS" means the Superannuation Industry (Supervision) Act 1993 including the regulations under that Act;

"SIS Act"  means the Superannuation Industry (Supervision) Act 1993 ;

"Statutory Rule" means an instrument described as a Statutory Rule for the purposes of the Statutory Rules Publication Act 1903

"Supervisory Mechanisms Act"  means the Superannuation Benefits (Supervisory Mechanisms) Act 1990.

notes on clauses

Clause 1 - Short title

Clause 1 provides for the short title of the Act to be the Superannuation Legislation (Commonwealth Employment) Repeal and Amendment Act 1997.

Clause 2 - Commencement

2.     Clause 2 provides for the commencement of the Act on Royal Assent with the following exceptions:

(a)  the amendments required to bring about the changes to superannuation arrangements for Commonwealth civilian employees are to take effect from 1 July 1998.  These include amendments to:

(i)  close the PSS to new members from that date;

(ii)  provide for existing CSS and PSS members to chose to leave the scheme after 1 July 2000;

(iii) change the arrangements for the administration of the CSS, the PSS and the PB Act;

(iv) simplify some of the CSS and PSS provisions to allow the closed schemes to be administered in a more cost-effective way;

(v) repeal the 1922 Act;

(b)  amendments to the benefits available to CSS members who leave their employment because of the sale of an asset or the transfer of a function take effect from 27 June 1997, the date of announcement of the new arrangements;

(c)  an amendment to clarify a provision of the 1976 Act inserted into the Act on 1 July 1995 relating to sale or transfer is taken to have commenced on that day along with various amendments intended to ensure that the CSS complies with SIS;

(d)  amendments to clarify the extent of a regulation-making power is taken to have commenced on 18 December 1992 the day on which the regulation-making power came into effect;

(e)  an amendment to restore the original intention of the 1976 Act in relation to late elections for preservation of rights under that Act is taken to have commenced on 5 December 1997;

(f)   the repeals of the 1976 Act, the 1990 Act and the PB Act have effect on 1 July 1998 immediately after the amendments described in paragraph (a); and

(g)  certain minor and technical amendments are taken to have commenced on the day on which a previous amending Act received the Royal Assent.

Clause 3 - Schedules

3.     Clause 3 provides that the Acts specified in the Schedules are to be amended or repealed according to the applicable items set out in each of the Schedules.

schedule 1 - amendment of the superannuation act 1976

Part 1 - Amendments relating to the scope and administration of the Act and the rights of contributors to transfer to other superannuation schemes

4.     The CSS has been closed to new entrants since 1 July 1990 when it was replaced as the principal scheme for Commonwealth civilian employees by the Public Sector Superannuation Scheme (the PSS).  As part of the arrangements  to offer choice of fund to Commonwealth civilian employees the PSS will be closed to new entrants from 1 July 1998 (see Schedule 3)    Existing CSS and PSS members are to be able to choose to leave those schemes from 1 July 2000 where their employer offers choice.   Some inactive members of the CSS and the PSS (eg, people with preserved entitlements will be able to rejoin their scheme if they take up employment with an employer which participates in that scheme

5.     As both the closed CSS and the closed PSS  will continue to operate for existing members for some considerable time, it is intended to streamline and simplify both the administrative arrangements for the schemes and, in some aspects, the rules of the schemes.

6.     The Commonwealth Superannuation Board Bill 1997 will provide for a new Commonwealth Superannuation Board to administer the CSS and PSS and take over management of the CSS and PSS Funds, which will continue to be maintained as separate Funds for members of the schemes.

7.     The statutory office of the Commissioner for Superannuation is to be abolished and as a consequence the legislated monopoly of the Commissioner (and the Commissioner’s staff at ComSuper) to provide administrative services in respect of the CSS and the PSS will cease.  However, the new Board will be free to contract with ComSuper for such services.

Item 1 - Definition of 'approved authority'

8.     Item 1 repeals the existing definition of "approved authority" and provides that the term is defined by the new section 3D inserted by item 18.

Item 2 - Definition of 'AWOTE'

9.     Item 2 inserts a definition of AWOTE.  This term is used in the provisions of the Act which deal with indexation of salary in certain circumstances.

Item 3 - Definition of 'Board'

10. Item 3 repeals the definition of and replaces it with one referring to the new Board.

Item 4 - Definition of  ‘Commissioner for Superannuation’

11. Item 4 repeals and inserts a new definition of the term ‘Commissioner’.

Items 5 to 9 - Definition of ‘eligible employee’

12.These items, together with item 31 which repeals section 14A, simplify the provisions which describe a CSS member, ensure that members covered by the repealed section 14A can continue to be members and make a consequential change as a result of the repeal of the provisions providing for the office of Commissioner for Superannuation.

13. Items 5 and 7 amend the definition of 'eligible employee' as a consequence of item 31 of this Schedule.

14. Item 6 repeals the paragraph of the definition that provides for automatic membership of the CSS for the Commissioner.  The item then inserts a new paragraph (g) which gives the Minister the power to declare a class of persons to be CSS members. 

15. Item 8 repeals paragraph (j) which provides for the making of regulations to exclude classes of persons from CSS membership and replaces it with two paragraphs.  Paragraph (i) ensures that persons who were excluded from membership immediately before the commencement of the amendments by regulations under the repealed paragraph (j) will continue to be excluded.  The new paragraph (j)) provides that the Minister may exclude classes of persons from membership by declaration.  Item 14 of this Schedule includes provision about the date of effect of Ministerial declarations under the definition  and provides that those declarations are disallowable instruments.

16. Item 9 amends the definition as a consequence of item 18 of this Schedule.

Item 10 - Definition of  ‘preservation fund’

17. Item 10 repeals the definition of preservation fund.  The term will not be used following other amendments.

Items 11 and 12 - Definitions of PSS Board and PSS Fund

18. Items 11 repeals the definition of the PSS Board and item12 inserts a definition of PSS Fund.

Item 13 - Definition of ‘voting share’

19. Item 13 inserts a definition of 'voting share'.

Item 14 - Dates of effect of declarations made for the purposes of the definition of eligible employee

20.Subsections 3(1A) and (1B) relate to the making of regulations under the repealed paragraph (j) of the definition of 'eligible employee'.  Because no further regulations will be able to be made because of the amendments made by item 8, the subsections are no longer required.

21. Item 14 repeals the subsections and inserts new subsections which include similar powers in relation  to the Minister's powers under paragraphs (g) and (j) inserted into the definition of 'eligible employee' by items 6 and 8.  The new subsections allow the Minister to make declarations with retrospective effect but not in such a way as to disadvantage a person who had been making contributions to the CSS and been treated as a member of the scheme.

Item 15 - Consequential amendment

22. Item 15 repeals subsection 3(2A) as a consequence of the changes to the definition of 'approved authority' made by items 1 and 17 of the Schedule.

Item 16 - Preservation fund

23. Item 16 repeals section 3B as a consequence of other amendments intended to simplify the treatment of benefits payable under the Act that are intended to be preserved according to the rules of SIS.  Rather than specifying in detail how these benefits should be paid, it is intended that they treated according to SIS.  The term preservation fund will not be used.

Item 17 - Definition of approved authority and provision of choice

24. Item 17 inserts two new provisions, sections 3D and 3E.

25.New section 3D determines whether or not an authority or body is an approved authority for the purposes of the 1976 Act and replaces the definition repealed by item 1 of this Schedule. Staff of approved authorities may be eligible to be CSS members.  The intention is to streamline the administration of the provision which currently requires case-by-case consideration of each request for a body to be declared to be an approved authority.   The revised definition, however, does not cease approved authority status for any approved authority covered by the repealed definition while it remains in its present form.

26.Paragraph (a) of the previous definition described the type of authority or body that could be declared by the Minister to be an approved authority for the purposes of the Act and provided for the Minister to make the declaration.  Paragraph (b) of the previous definition provided that a body that was an  approved authority under the superseded Act on 30 June 1976 continued to be an approved authority under the 1976 Act.

27.Section 3D describes a body that is an approved authority for the purposes of the Act unless the Minister declares otherwise under subsection 3D(8).

28.Subsection 3D(2) includes an authority or body that is an approved authority at the time of commencement of the section.  

29.Subsections 3D(3), (4), (5) and (6) provide that certain Commonwealth bodies are approved authorities if their Chief Executive Officer agrees to contribute towards the cost of providing membership to employees of the body. This applies provided the body :

(a)  is fully Commonwealth controlled;

(b)  is not operating in a competitive environment; or

(c)  30% or more of its funding is received from the Commonwealth Budget (otherwise than by way of  taxes imposed by the Commonwealth).

30.Subsection 3D(7) provides that the Minister may declare any other authority or body to be an approved authority. 

31.Subsection 3D(8) provides that the Minister may, despite the other provisions of the section, declare that an authority or body is not an approved authority for the purposes of the Act.

32.The declarations under section 3D are all Statutory Rules and disallowable instruments as provided by section 4A of the 1976 Act.   They may be made with retrospective effect in some circumstances as provided by that section as amended by items 19, 20 and 21 of this Schedule.

33.New section 3E is inserted into the Act to allow CSS members to choose to leave the scheme without ceasing to be employed.  Members may only exercise this option on or after 1 July 2000 and only if their employer agrees to contribute to another superannuation scheme or retirement savings account on their behalf.

Item 18 - Consequential amendment

34. Item 18 amends section 4AA as a consequence of the abolition of the office of the Commissioner.

Items 19, 20 and 21 - Consequential amendments

35. Items 19, 20 and 21 amend subsections 4A(1) and (3) as a consequence of the substitution of the definition of approved authority with section 3D and add subsection (4) and (5) to section 4A.  Those subsections allow the Minister to make declarations concerning the status of an authority or body with retrospective effect in certain specified circumstances.  In particular, declarations to include an authority or body as an approved authority with retrospective effect can be from a date earlier than the commencement of the new definition.  (Subsection 4A(3) allows declarations to be made with retrospective effect for up to 12 months.)   The section also allows an authority or body to be excluded from the definition retrospectively to the commencement of the new definition if employees of the authority or body have not been treated as CSS members.

Item 22 - Consequential amendment

36. Item 22 amends paragraph 4B(c)(iii) as a consequence of the abolition of the office of Commissioner.

Items 23 to 25 - Salary

37.Generally, contributions and benefits under the Act are based, either directly or indirectly, on a CSS member’s annual rate of salary.  Section 5 of the 1976 Act defines annual rate of salary as the salary payable to the member or such other amount specified in regulations.  Regulations under section 5 recognise, amongst other things, an annual rate of salary agreed between the member and his or her employer through a certified agreement or Australian Workplace Agreement and certain other flexible remuneration arrangements.   This recognises that, in the new flexible workplace agreement making arrangements, some CSS members may wish to have recognised a salary for superannuation purposes which is either higher or lower than would otherwise be the case, for example, by trading off some cash salary for increased superannuation salary.   

38. To allow all members the opportunity to agree a superannuation salary with their employer and to ensure that references to agreements may be to those agreements as applying from time to time (this is not generally permitted in regulations), the amendments made to section 5 by item 24 provide that a member’s annual rate of salary may be an amount agreed between the member and his or her employer.  If there is no agreement, the existing provisions of the Act or the regulations will continue to apply.   A member cannot be disadvantaged by this changes because even if a reduced annual rate of salary is provided for in a workplace agreement section 47 of the 1976 Act ensures that a person’s annual rate of salary cannot be reduced unless the member elects that it be reduced

39.   Item 25 amends the provisions in section 5 that provide for a previously higher salary than is received by a CSS member is to be recognised for calculating benefits if the member has been receiving a partial invalidity pension.  The amendment will provide for that higher salary to be updated by AWOTE instead of either by reference to actual salary rates that might have applied or, if they are not known, by AWOTE (see section 154B).  With the workplace agreement making arrangements and the future conversion of awards to minimum rates awards this change should ensure that these salaries can continue to be updated using readily available data .

40. Item 23 amends subsection 5(2) as a consequence of the changes made to section 5 by items 24 and 25.

Items 26 to 32 - Membership of the CSS

41.Sections 11 to 15A describe, amongst other things, persons who are, or may choose to be, CSS members.  Membership of the scheme is only available to persons who were members on 30 June 1990 or who have residual rights to return to the scheme.  Where a person with residual rights of return becomes a permanent employee as defined in subsection 3(1) the person immediately becomes a member without option.  Persons with residual rights who become temporary employees or statutory office holders as defined, may elect, at any time to again become members.

42. Items 26 to 30 and 32 amend sections 11, 13, 13A and 14 and repeal and replace section 15A to ensure that, from 1 July 1998, membership of the scheme is only open to continuing members and persons who left the scheme prior to 1 July 1998 with residual rights of return (ie, certain persons with preserved rights from previous membership or entitled to certain invalidity pensions).  The amendments also extend choice to such persons who again become permanent employees from that date by giving them three months, after the first occasion of becoming a permanent employee, in which to elect to join.  In the case of temporary employees or statutory office holders, the option to rejoin the scheme will be reduced to three months after the first occasion of again becoming a temporary employee or statutory office holder.

43.No CSS members who leave the scheme on or after 1 July 1998 will be able to return to the scheme.

44. Item 31 repeals section 14A.  Persons who were CSS members because of the effect of that section continue as members because of amendments made by item 5 of this Schedule.  The Saving and Transitional Bill saves the modifications made under the repealed section.

Items 33 to 35 - The superseded Act

45.Part II of the 1976 Act provides for the office of the Commissioner and for his or her responsibilities under the Act including certain residual powers under the 1922 Act. 

46. Items 33 to 35 have the effect of abolishing the statutory office of the Commissioner and transfer his or her responsibility to keep proper records of benefits paid under the 1922 Act to the CS Board.

Items 36 to 47 - Functions, duties and powers of the Board

47. Items 36 to 47 amend the provisions of Part IIA of the 1976 Act which provide for the CSS Board which has responsibility for the CSS Fund and the administration of the CSS.  It is intended that the CS Board have responsibility for the administration of the CSS from 1 July 1998 while maintaining the CSS Fund as a separate entity.

48. Items 36 to 38 have the effect of replacing the CSS Board with the CS Board.  The definition of "Board" in subsection 3(1), as amended by item 3 of this Schedule, means that all references to Board in the Act now refer to the CS Board.

49. Item 39 amends the section 27C of the 1976 Act which provides for the functions of the CSS Board to ensure that the CS Board has responsibility for the management and investment of the CSS Fund under this Act.  The Board Bill will provide the CS Board with responsibility for the administration of this Act.  Although the 1976 Act is repealed by Schedule 2 of the Bill, the Saving and Transitional Bill will continue the operation of section 27C and the CS Board’s responsibility for the CSS Fund.

50. Items 40 and 41 make amendments to section 27C as a consequence of the amendments made by item 40.

51. Item 42 repeals paragraph 27C(2)(e) which requires the Board to liaise with relevant industrial organisations about the management and investment of the CSS Fund.  Instead, the Board will be required by SIS to report annually to CSS members on these matters. 

52. Item 43 is a consequential amendment to section 27C in relation to changes made by item 43. 

53. Items 44 to 47 repeal provisions about the constitution, meetings and business of the CSS Board.  Similar provisions are included in the Board Bill in relation to the CS Board.

Items 48 to 52 - Maintenance of salary

54.The annual rate of salary to be used for the payment of contributions under the Act is adjusted every year on the member's birthday.  Section 47 of the 1976 Act provides that the rate of salary to be used should be the highest annual rate payable during the year.  That is, if the person has suffered a reduction in salary during the year, it is the higher annual rate that is used for the purposes of the payment of contributions.    (The member may, under the section elect to use the lower rate of salary for contribution purposes.)

55.That higher annual rate of salary should continue to apply in the future, updated at each birthday, by generally-applying salary increases.  However, because of considerable change to the workplace relations processes in the APS generally applying salary increases are unlikely to occur in the future.  Section 154B of the Act already provides that, where it is impossible to establish an annual rate of salary for maintenance purposes, AWOTE should be used.  It is now intended to apply AWOTE increases to annual rate of salary in all cases where there is a maintained rate.

56. Items 48 to 51 amend section 47 of the Act to allow the updating of maintained annual rate of salary by AWOTE rather than attempting to establish the annual rate that would have been paid if the member had not suffered a reduction.

57. Item 52 ensures that the existing provisions continue to apply prior to 1 July 1998.

Item 53 - Supplementary contributions

58.Section 48 of the Act allows CSS members to pay supplementary contributions at any time but limit the amount to being no more than a basic contribution (usually 5% of a person’s fortnightly rate of salary).  As supplementary contributions remain in the CSS Fund until benefits are payable, earn the Fund rate of interest during that time and do not attract any additional employer contribution, there is no reason to put a limit on the amount that a CSS member wishes to contribute.

59. Item 53 amends section 48 of the Act which provides for the payment of supplementary contributions by a CSS member, to allow that member to pay any amount of supplementary contributions.

Items 54 to 62 - The payment of contributions on leave without pay

60.Section 51 currently provides various rules relating to leave without pay.  The effect of these rules is generally that a CSS member cannot pay contributions while on leave without pay except in particular circumstances.  Where a member is permitted to pay contributions in these circumstances, full employer benefits also accrue during the period.  Because employer-funded benefits are based on the salary payable to the person on cessation and paid by the Commonwealth, it was reasonable to restrict the circumstances in which a person on leave without pay may contribute where they are employed during that leave by employers outside the umbrella of the Commonwealth.

61.However, because since 1 July 1995 all participating employers have been required to make payments to the Commonwealth towards the benefits payable to their employees who are CSS members it is now possible to simplify the provision to provide that a member may pay contributions while on leave without pay where the member's employer continues to make payments to the Commonwealth in relation to that member's future benefits.

62. Item 54 amends section 51 to provide that contributions are not payable where a CSS member is on leave without pay if the member's designated employer does not continue to make payments  to the Commonwealth in respect of the benefits payable to the person under the Act.

63. Items 55 to 61 amend section 51 to ensure that powers currently exercised by agreement between the CSS Board and the Minister which have the effect of allowing CSS members to contribute during leave without pay in circumstances not already referred to in the section, may in future be exercised by the CS Board acting alone.  Because of the amendment made by item 54, it is expected that any actions taken under these provisions will be very rare.

64. Item 62 provides that section 51 continues to apply without amendment to any period of leave without pay that commenced prior to 1 July 1998, although not to any extension of such a period of leave without pay.

65.Existing section 51 provides that, where a person is on sick leave without pay, that person must continue to contribute to the CSS.  The amendments to the section will not affect the rights of CSS members who are now, or will in the future be, in this situation.

Items 63 and 64 - Benefits to be preserved under SIS

66.Some of the benefits payable under the 1976 Act are intended to be treated as preserved benefits for the purposes of SIS.  However, because not all of those benefits necessarily come under the SIS definition of preserved benefits, the payment provisions of the Act in relation to those benefits have attempted to duplicate the requirements for the payment of SIS preserved benefits.  Because changes have been made to the SIS requirements it has been necessary to make regular amendments to those payment provisions.

67.In order to allow the CSS to continue to comply with SIS without the necessity for future legislative amendments it is intended to amend the Act to specify the benefits which are to be preserved benefits for the purposes of SIS and to provide that they be dealt with accordingly.

68. Items 63 and 64 amend section 62 of the Act to provide that benefits payable under that section after 1 July 1999 are to be preserved benefits for the purposes of SIS and will be dealt with accordingly.  The member may, however, choose to receive payment in cash of his or her own contributions with interest, in which case the remaining benefit is to be a preserved benefit and dealt with accordingly.

Item 65 - Consequential amendment

69.Item 65 makes an amendment to section 62B of the 1976 Act as a consequence of the abolition of the office of the Commissioner.

Items 66 and 67 - Use of AWOTE to update salary

70.Section 73A of the 1976 Act provides for the reduction of invalidity pensions because of earnings in certain circumstances and in determining whether a reduction is to occur refers the pensioner’s “relevant maximum rate”.  That definition uses, in part, the pensioner’s final annual rate of salary updated in a similar way to that used in section 47.  Section 47 is being amended by this Bill to provide that, from 1 July 1998, amounts recognised as annual rate of salary under that provision will be indexed by AWOTE rather than by salary movements, or if that is not known, AWOTE.

71. Item 66 amends section 73A to provide that AWOTE be used to update the final annual rate of salary in all circumstances.  This recognises that difficulties in establishing salary rates for particular positions as a result of current workplace relations arrangements.

72. Item 67 ensures that the existing method of updating salary continues to apply up to 30 June 1998 with the new method applying after that date.

Item 68 - Variation of Table of productivity contributions

73.Section 110C of the 1976 Act provides a Table for the calculation of productivity contributions payable under the Act.  Section 110D provides that the Minister may vary that Table.

74. Item 68 amends section 110D of the 1976 Act to transfer the power to vary the Table under section 110C from the Minister to the Board but provides that the Board should vary the Table as advised by the Minister.

Item 69 - Consequential amendment

75.Item 69 makes an amendment to section 110Q of the 1976 Act as a consequence of the abolition of the office of the Commissioner.

Items 70 and 71 -Productivity benefits to be treated as preserved benefits under SIS

76.Productivity benefits payable under section 110R of the 1976 Act are intended to be preserved benefits for the purposes of SIS.

77. Item 70 provides that benefits payable under section 110R are to be treated as preserved benefits for the purposes of SIS and dealt with accordingly.  The item also ensures that benefits payable may be used for the purchase of additional pension in certain circumstances.

78. Item 71 repeals the existing provisions of 110R which attempt to replicate the SIS preservation requirements.

79.The notes for items 63 and 64 in this Schedule provide further details.

Item 72 - Consequential amendment

80. Item 72 makes a consequential amendment to section 110SB as a result of the amendments made by item 87 of this Schedule.

Item 73 - Consequential amendment

81. Item 73 makes an amendment to section 110SE of the 1976 Act as a consequence of the abolition of the office of the Commissioner.

Item 74 - Top-up benefits to be treated as preserved benefits under SIS

82.Sections 110SG, 110SH and 110SJ provide for the payment of a top-up benefit under Part VIAA of the 1976 Act.  The sections replicate the SIS requirements when those sections were inserted into the Act.

83. Item 74 repeals section 110SG, 110SH and 110SJ and replaces them with a new section 110SG which provides that a top-up benefit is a preserved benefit for the purposes of SIS and is to be dealt with accordingly.  The section also provides for the payment of the benefit where the person has died.

84.The notes for items 63 and 64 in this Schedule provide further details.

Item 75 - Consequential amendment

85. Item 75 makes a consequential amendment to section 110TA as a result of the amendments made by item 87 of this Schedule.

86.The notes for items 63 and 64 in this Schedule provide further details.

Item 76 - Use of AWOTE to update salary for the payment of a postponed benefit

87.Part VIB of the 1976 Act allows a CSS member entitled to a retirement benefit to postpone the payment of that benefit.  When the benefit becomes payable, the annual rate of salary to be used for the calculation of the benefit is the final annual rate of salary updated to the time of payment.

88. Item 76 amends section 110TC of the Act to provide that AWOTE is to be used to update the annual rate of salary to be used for the purposes of calculating a postponed benefit.

Items 77 to 79 - Consequential amendments

89. Items 77 to 79 make consequential amendments to sections 110TD, 110TF and 110TG as a result of the amendments made by item 87 of this Schedule.

Item 80 - Benefits payable after a CSS member has chosen to leave the scheme

90. Item 80 inserts Part VIC into the 1976 Act to provide for the benefits that will be payable, and the timing of the payment, where a CSS member has chosen, under section 3E, to cease membership of the scheme.

91.Division 1 of Part VIC provides for the definition of various terms used in the Part, for the application of the Part to persons who cease CSS membership through choice and for no benefits to become payable to such a person under other provisions of the Act, other than as a consequence of the death of another member.

92.No benefit becomes payable to the person at the time of exercising choice.  In general, benefits will become payable when the person reaches at least minimum retiring age and ceases to be employed.  However, certain benefits may become payable when the person resigns, or is involuntarily retired from employment during which their CSS membership could have continued if they had not chosen to leave the scheme.

93.The benefits that will become payable vary depending on whether or not the person had attained minimum retiring age (typically age 55) when exercising choice.

Where choice exercised prior to minimum retiring age

94.Divisions 2 and 3 of the Part provides for the benefits that will become payable where a person exercises choice prior to minimum retiring age.

95.The basic form of those benefits will be similar to the deferred benefits that would have applied to the person if he or she left the CSS on resigning from Commonwealth employment and elected for preservation under section 137.  However, there will be some variation to those benefits to ensure there are no windfall gains to individuals or any increase in CSS unfunded liabilities.

96.New section 110TK provides that the choice benefit should be similar to the deferred benefit calculated by section 136 with several variations.

97.Under section 136, the employer component of deferred benefits is based on 2.5 times the basic member contributions with interest earned to the date on which the benefit becomes payable.  In calculating the benefit payable after choice, the factor of 2.5 times is varied according the factor applicable to the person under the Table provided in Schedule 12 as inserted into the 1976 Act by item 122 of this Schedule.  That Table provides factors relating to the person's non-contributory period.    These factors were developed by the Australian Government Actuary to ensure the required result of no windfall gains to individuals or any increase in CSS unfunded liabilities.

98.Non-contributory period is defined to mean the person's age at exercising choice less the person's years of contributory CSS membership, both in complete years.  This will generally result in the non-contributory period being the person’s age at commencement of CSS membership except where a person has had breaks in that membership.

99.New section 110TL provides for the timing of the payment of the choice benefit.  The section duplicates section 138 which provides for the timing of the payment of deferred benefits.  However, section 111A of the Act provides that a benefit may not become payable under the Act if SIS would not allow the payment and may override section 110TL.  SIS does not allow a benefit to become payable to a person if that person has not ceased to be employed by an employer who had, at any time, made payments to the scheme from which the benefit may become payable on behalf of the person.  Section 111A will not choice benefits to become payable until the person ceases the relevant employment.

Election to receive “immediate” choice benefits in certain circumstances

100.Division 3 of Part VIC provides for certain exceptions to the payment times described in section 110TL and to the benefit payable, if the former member who has exercised choice so chooses.

101.New section 110TM provides that a person to whom choice benefits are applicable, who would have continued as a CSS member apart from exercising choice, ceases to be employed, other than on death or invalidity, and may elect, within the period prescribed, to receive immediate payment of benefits in the form provided by sections 110TN to 110TR.

102.New section 110TN provides for the immediate benefit payable as a result of an election under section 110TM to a person who is not taken to have been involuntarily retired in the terms of the Act.  The benefit is, a return of all member contributions with interest, the productivity benefit (if applicable) a Superannuation Guarantee top-up benefit (where applicable), and any amounts  transferred into the CRF or the CSS Fund by or in respect of the person, also with interest.  The Board may reduce these benefits if the person's surcharge debt account is in debit when the benefit becomes payable.

103.New sections 110TO and 110TQ provide for payment of an immediate benefit as a result of an election under section 110TM to a person who is taken to have been involuntarily retired in the terms of the Act.  The benefit is the immediate payment of the deferred choice benefit either as a lump sum or an annuity.  The employer component of the deferred choice benefits are calculated by the application of a factor contained in Table 1 of Schedule 11 of the Act to the various lump sums calculated under section 136 as modified by this section.  Because the benefits becoming payable under section 110TO may become payable at an age earlier than deferred benefits it is necessary to amend Table 1 in Schedule 11 of the 1976 Act to provide additional factors.  The amended Table is inserted by item 121 of this Schedule The person is also entitled to a member financed benefit of a lump sum (as well as any productivity benefit) or additional pension based on that lump sum.

104.New section 110TP provides that benefits under these sections become payable on the day after the day on which the person would have been taken to have been involuntarily retired.  New section 110TQ provides for the person to elect to receive the immediate benefit as a lump sum.

105.Where a person, who would have continued to be a CSS member if he or she had not exercised choice, has resigned from employment in circumstances connected with the sale of an asset or the transfer of a function an immediate benefit may become payable.  New section 110TR provides that the benefit should be based on the benefit payable under Part VID of the 1976 Act with modifications to ensure that the factors provided in Schedule 12 are used in the calculations.  

Where choice is exercised at or after minimum retiring age

106.Division 4 of Part VIC provides for the benefits that will become payable to a person who exercises choice to cease to be a CSS member at, or after, minimum retiring age (typically age 55).  New section 110TS applies the Division to such persons.

107.New section 110TT provides that the choice benefit payable to a person under the Division is based on the postponed benefit option provided for under Part VIB of the 1976 Act with a modification.  That modification relates to the calculation of the final annual rate of salary which is to be used for the calculation of the postponed pension. 

108.Existing section 110TC provides that where a CSS member resigns or retires after minimum retiring age and opts for a postponed pension, that pension when paid will be calculated by reference to final annual rate of salary as updated to reflect the annual rate of salary that would have been payable to the person if the person had continued membership.  New section 110TT provides that the final annual rate of salary to be used for the calculation of a postponed choice benefit, should be the person's annual rate of salary payable when choice was exercised increased by reference to movements in the consumer price index.   This is intended to limit any increases in unfunded liabilities as a result of CSS members exercising choice.

Election to receive immediate choice benefits

109.New section 110TU provides that, where a person to whom postponed choice benefits are applicable is taken to have been retired involuntarily in the terms of the Act, he or she may elect to receive the immediate payment of a lump sum in place of the postponed benefit. In such cases, however, the major component of the lump sum is to be calculated using the sum of one and the relevant factor applying under Schedule 12 rather than the multiple of 3.5 as applied where a scheme member is retired involuntarily. 

Item 81  - Payment of benefits to be preserved benefits under SIS

110. Item 81 amends section 111A which applies the SIS preservation rules to the payment of benefits under the CSS to ensure that a benefit which may not be paid in cash because of SIS continues to be treated as a preserved benefit under SIS and will be dealt with accordingly.

Item 82 - Application of SIS preservation rules to choice benefits

111. Item 82 amends section 111A to ensure that choice benefits under Part VIC continue to be preserved until SIS allows payment.

Items 83 and 84 - Consequential amendments

112. Items 83 and 84 make consequential amendments to sections 111 and 126A of the 1976 Act as a result of the amendments made by item 87 of this Schedule.

Items 85 to 87 - Transfer value provisions

113.Sections 127 and 128 allow for the payment of transfer values to the CSS in certain circumstances.  The provisions are complex because of the way the various components of a transfer value are treated within the scheme.  Because the CSS is closed to new members very few transfer values are now payable under those provisions.

114.However, CSS members may take other employment either when on leave without pay or on a part-time or casual basis.  Their employers during that leave may be required by the SGA to pay superannuation contributions into other superannuation funds or retirement savings accounts on their behalf.  To allow members to consolidate all their superannuation benefits in the one scheme, it is intended that CSS members be able to pay any superannuation amount that becomes payable on cessation of other employment into the CSS. 

115.It is intended that these amounts should be paid into the CSS Fund and accumulate interest until benefits become payable to the member.  The current arrangements for distribution of the various components of a transfer value between the CSS Fund and CRF should no longer apply to transfer values paid in from 1 July 1998 with one exception.   Some CSS members who have left the scheme and paid a CSS transfer value to another superannuation scheme have a right to return to the scheme in the future.  In that case, if they wish to pay a transfer value back to the CSS including the previous CSS component, that transfer value should be treated under sections 127 and 128 before these amendments so that the person’s previous period of membership can be recredited to them.

116. Item 86 amends section 127 to provide that an amount paid to the CSS after the 30 June 1998 is not to be a transfer value for the purposes of that section unless it is payable in relation to a person who is bringing back to the scheme a previously paid CSS transfer value.

117. Item 87   inserts Subdivision B into Division 2 of Part IX of the 1976 Act.   The new Subdivision provides for the payment of transferred amounts into the scheme.

118.New section 130A defines transferred amounts as broadly as possible but does not include an amount that includes a previously paid CSS transfer value.  Also, it is not intended that members be able to pay to the scheme amounts received from other employers until that employment has ended.

119.New section 130B provides that a transferred amount that has been paid to the Board by a CSS member must be paid into the CSS Fund.  New section 130C provides that a person will be entitled to the payment of a benefit under this Subdivision when other benefits become payable under this Act.

120.New section 130D provides that the benefit to which a person becomes entitled is the amount paid into the Fund under section 130B less any income tax payable, plus interest on the amount.

121.New sections 130E and 130F provide for the payment of a benefit under this Subdivision where the person has died.

Items 88 to 90 - Eligible superannuation schemes

122.Section 134 provides for the CSS Board and the Minister to agree that a particular public sector superannuation scheme should be an eligible superannuation scheme in order to allow the payment of transfer values from the CSS to that scheme.  The requirements to be satisfied before the Board and the Minister agree are complex and restrictive and no new schemes have agreed to enter into these arrangements for some time.  It is therefore proposed that no new agreements be made under the section with the exception of a successor scheme to an existing eligible scheme.

123.Items 88 to 90 amend section 134 to provide that no further schemes become eligible schemes after 30 June 1998.  However, the Board may determine that a successor scheme to an existing eligible scheme is an eligible superannuation scheme after that date.

Item 91 - Consequential amendments

124.Item 91 amends section 135 of the 1976 Act as a consequence of the amendments made by item 87 of this Schedule.

Items 92 and 93- Consequential amendment

125.Items 92 and 93 amend section 135 of the 1976 Act as a consequence of the abolition of the statutory office of the Commissioner.

Items 94 and 95 - Consequential amendment

126.Items 94 and 95 amend subparagraphs 136(2)(b)(iii) and 136(2)(b)(iv) as a consequence of the amendment made by item 100 of this Schedule.

Items 96 to 99 - Consequential amendments

127.Items 96 to 99 amend section 136 as a consequence of the abolition of the statutory office of the Commissioner.

Item 100 - Productivity component of deferred benefits to be preserved under SIS

128.Item 100 replaces section 139AA with the effect that any part of deferred benefits that arises from productivity benefits is to be treated as a preserved benefit under SIS and dealt with accordingly.

Items 101 to 103 - Consequential amendments

129.Items 101 to 103 amend section 140 of the 1976 Act as a consequence of the amendments made by item 87 of this Schedule.

Item 104 - Indemnification of members of Reconsideration Advisory Committees

130.Item 104 repeals section 153AF as a consequence of the Board Bill which will provide for all necessary indemnifications.

Item 105 - Reconsideration of Commissioner's decisions

131.Section 154 of the 1976 Act provides an affected person may appeal to the Administrative Appeals Tribunal (AAT) against a decision of the Commissioner under the 1976 Act or the 1922 Act.  This provision is being repealed by Item 105 as a consequence of the abolition of the statutory office of the Commissioner.  The Saving and Transitional Bill will provide that any decisions of the Commissioner will be taken to be decisions of the CS Board.  Decisions of superannuation trustees such as the CS Board are subject to appeal to the Superannuation Complaints Tribunal.

132.The Savings and Transitional Bill will allow any person in the process of appeal to the AAT on 1 July 1998 to continue through the process as if the amendments to this Act in item 105 of this Schedule had not been made.

Item 106 - Consequential amendment

133.Item 106 amends section 156A as a consequence of the abolition of the statutory office of the Commissioner.

Item 107 - Responsibilities of the CSS Board to be assumed by the CS Board

134.Item 107 repeals various provisions of the 1976 Act as a consequence of the assumption by  the CS Board of the powers and responsibilities of the CSS Board as provided for in  the Board Bill.  Equivalent provisions will be in that Bill.

Item 108 to 117- Consequential amendments

135.Items 108 to 117 amend various sections as a consequence of the abolition of the statutory office of the Commissioner.

Item 118 and 119 - Consequential amendments

136.Items 118 and 119 amend sections 240 and 246 of the 1976 Act as a consequence of the amendments made by item 87 of this Schedule.

Item 120 - Consequential amendment

137.Item 120 repeals and replaces sections 248 and 249 of the 1976 Act as a consequence of amendments made in relation to the PSS Board by Schedule 3 to this Bill and the provisions of the Board Bill and to allow the Board to be responsible for decisions about transfers of assets from the CSS Fund.

Item 121 - Replacement Table

138.Item 121 replaces Schedule 11 Table 1 as a consequence of the amendments made by item 81 of this Schedule.

Item 122 - New Schedule

139.Item 122 inserts Schedule 12 into the 1976 Act as a consequence of the amendments made by item 80 of this Schedule.

 

Part 2 - Amendments relating to the marital status of deceased retirement pensioner

140.In the CSS, the PSS and the PCSS when a pensioner begins a marital relationship, legal or de facto, after age 60, no reversionary benefit is payable to the spouse on the death of the pensioner unless the relationship had lasted 5 years prior to the death.  A relationship of this kind is known as a "post-retirement marriage".

141.It is proposed, in all of these schemes, to remove this restriction on eligibility for benefits and provide for a phase-in of the benefit on a pro-rata basis where the relationship has existed for less than 3 years prior to the death.

142.While the existing arrangements produce inequities because of the absolute nature of the cut-off point, providing full benefits in all cases could significantly increase scheme costs. A three year phase in period is seen as a compromise between the two extremes.

143.This Part amends the 1976 Act to remove the bar on reversionary benefits becoming payable in the case of a post-retirement marriage which did not last for five years prior to the death of a pensioner.  It further amends the complex reversionary provisions of the 1976 Act to enable the calculation and payment of a benefit where the pro-rata applies.  

144.Where the relationship has been of a very short term prior to the pensioner’s death the pro-rata calculation may result in a very low rate of annual pension becoming payable and, in those circumstances, it is proposed to allow the person to whom the benefit has become payable, to request the Board to commute the pension into a lump sum.

Items 123 to 128 - definitions

145.Items 123 and 125 to 128 amend the various definitions relating to the eligibility of spouses and children to receive reversionary benefits under the 1976 Act or repeal related provisions to remove the restrictions that apply to the payment of benefits where a relationship had commenced after a pensioner reached the age of 60 and lasted less than five years before his or her death.

146.Item 124 defines a late short-term marital relationship as one that commenced after the pensioner reached the age of 60 and within three years of his or her death.  Where a person who has been in a late short-term marital relationship with a pensioner, after the death of a pensioner, the benefit payable is to be calculated on a pro-rata basis in relation to the length of the relationship prior to the death.

Items 129 to 137 - calculation of reduced rate and optional commutation to benefits payable to spouse

147.Items 129 to 132, 134 and 135  amend the reversionary spouse’s benefit provisions to allow for a reduced benefit to be payable where the benefit arises from a late short-term relationship.

148.Items 133 and 136 insert sections 95A and 96AA to provide for the commutation of a pension to a lump sum where:

(a)  the pension is payable at a reduced rate because of a late short-term relationship;

(b)  the annual rate of that pension is less than an amount determined by the Board; and

(c)  the person entitled to the pension has requested that it be commuted.

149.Item 137 inserts section 96AB to provide the pro rata rate of pension that is payable as a result of the amendments made by items 129 to 132, and 134 and 135.

Items 138 to 161 - calculation of reduced rate of benefit and optional commutation to orphans and where there is more than one family entitled to a benefit

150.Items 138 to 161 apply the new arrangements for a pro rata rate of pension and the capacity to commute a low annual rate to a lump sum, by amendments to existing provisions and insertion of new sections similar to sections 95A, 96AA and 96AB, to;

(a)  extra spouse's pension that becomes payable as a result of a late short-term relationship (section 96BA);

(b)  benefits payable to orphans (section 108A)

(c)  benefits payable where there is at least one child not in the care, custody and control of the spouse (section 109AB);

(d)  benefits payable where there is more than one spouse (section 110); and

(e)  benefits payable where a person to whom deferred benefits are applicable has died before the benefit becomes payable (section 136).

Item 162 - to ensure no reduction in benefits

151.Item 162 provides that the amendments made by this Part will not reduce any benefits payable under Part IV of the 1976 Act that would have been payable if the amendments had not been made.

 

Part 3 - Reduced age retirement and early retirement benefits and increased benefits to spouse or orphans

152.When a CSS pensioner dies, the benefit payable under the 1976 Act to an eligible spouse is 67% of the benefit that had been payable to the pensioner with an additional 11% payable for each child up to a maximum of 100% of the pension payable at the time of death.  Some CSS members have expressed a wish to take a lower initial pension and make more generous provision for their dependants on their death.

153.This Part proposes to amend the 1976 Act to allow a CSS member, on becoming eligible for an age or early age retirement pension, to elect to receive that pension at a reduced rate of 93% of the benefit that would otherwise have been paid.  Where a pensioner who has made such an election dies, the reversionary benefits payable to the eligible spouse would be paid at 85% of the benefit being paid to the member at date of death.  That rate would increase to an aggregate of 97% where there is one eligible child or 108% where there are two or more such children.  The rate of 108% of the actual benefit payable is equal to 100% of the benefit that would have been payable at death if the pensioner had not elected for a reduced initial rate of pension.

154.The various percentages have been actuarially calculated to ensure that there is no increase in the costs of the scheme.  The amendments do not apply to CSS members who are retiring on the grounds of invalidity as it would not be possible to determine appropriate rates of reduction to apply in such cases because of the increased possibility of the premature death of the pensioner.

Items 163 and 164 - interpretation

155.Items 163 and 164 insert definitions of "category 1 deceased pensioner" and "category 2 deceased pensioner" into subsection (3)(1) of the 1976 Act.  A category 1 deceased pensioner is one who takes the full rate of initial pension and a category 2 deceased pensioner is one who has elected for the lower initial rate.

Items 165 to 173 - election to receive reduced rate of initial pension on age retirement

156.Items 165 to 172 amend sections 55, 56 and 57 of the Act that allow for the calculation of age retirement pensions, as a consequence of the member making an election under section 57AA.

157.Item 173 inserts section 57AA into the Act to allow a retiring member to elect, within a period of three months before or three months after retirement, for a reduced rate of benefit on age retirement.  The reduced rate payable is 93% of the benefit that would otherwise be payable.

158.A person who elects for postponement of their retirement benefits under Part VIB may not make an election under section 57AA (such a person may make an election under the relevant provision in that Part).  Similarly, a person who is electing under section 76A to renounce the payment of an invalidity benefit in favour of an age retirement benefit may not make an election under section 57AA (such a person has been retired on the grounds of invalidity and benefit has already been paid).

Items 174 to 180 - election to receive reduced rate of initial pension on early age retirement

159.Items 174 to 178, and 180 amend sections 59, 60, 61 and 65 of the Act that allow for the calculation of early age retirement pensions, as a consequence of the member making an election under section 61AB.

160.Item 179 inserts section 61AB into the Act to allow a retiring member to elect, within a period of three months before or three months after retirement, for a reduced rate of benefit on early age retirement.   The reduced rate payable is 93% of the rate that would otherwise have been payable.

161.A person who elects for postponement of their retirement benefits under Part VIB may not make an election under section 61AB (such a person may make an election under the relevant provision in that Part).  Similarly, a person who is electing under section 76A to renounce the payment of an invalidity benefit in favour of an age retirement benefit may not make an election under section 61AB (such a person has been retired on the grounds of invalidity and a benefit has already been paid).

Items 181 to 190, and 203 -rates of reversionary benefits payable to a spouse

162.Items 181 to 184 amend sections 94 and 95 of the 1976 that set the annual rates of standard and additional pension payable to a spouse on the death of a pensioner.  The amendments provide for different rates of benefits on the death of category 1 and category 2 pensioners to allow for a higher rate to be payable as a result of the election made by the category 2 pensioner. 

163.The minimum benefit payable to an eligible spouse on the death of a category 1 pensioner is 67% of the benefit payable to the pensioner at death, rising to a maximum of 100% where there are 3 or more children.  The minimum benefit payable to an eligible spouse on the death of a category 2 pensioner is 85% of the benefit payable to the pensioner at death, rising to a maximum of 108% where there are 2 or more children.  The maximum rate of 108% is equal to 100% of the benefit that would have been payable to the category 2 pensioner if he or she had not made the election for a reduced rate of initial pension.

164.Items 185 to 190 amend section 96B of the Act which provides for extra spouses pension to be paid where there is a partially dependant child, to allow an increased rate to be payable where the deceased pensioner was a category 2 pensioner.

Items 191 to 193 - rates of reversionary benefits payable to orphans

165.Items 191 to 193 amend section 109 to provide for the rates at which benefits should be payable to an orphan or orphans on the death of a pensioner.  Different percentages of the pension payable at the pensioner's death are payable in respect of a category 1pensioner  (ranging from 45% to 100%) and category 2 pensioner (ranging from 51% to 108%).

Items 194 to 197 - rates of reversionary benefits payable where there is a child not in the custody, care and control of the spouse

166.Section 109AB of the 19976 Act provides for the rates of benefits payable on the death of a pensioner where there is both a spouse and at least one child not in the custody, care and control of that spouse.  Items 194 to 197 amends that provision to allow a higher rate of benefit to be paid on the death of a category 2 pensioner.

Items 198 to 202 - rates of reversionary benefits payable where there is more than one spouse

167.Sections 110 and 110AB of the 1976 Act provide for the rates of benefits payable where a pensioner is survived by more than one spouse and for an additional amount to be available in certain circumstances.  The section allows the Board to allocate the available benefit among the spouses, after taking certain prescribed matters into account.  Items 198 to 202 provide for higher rates of benefits to be available for allocation in the case of the death of a category 2 pensioner.

Item 203 - Consequential amendment

168.Item 203 amends section 110R as a consequence of the amendments made by items 173 and 179.

Items 204 and 205 - election by a person who has postponed the payment of pension

169.Item 204 inserts new section 110TBA and then item 205 amends section 110TC to allow a person who has made an election to postpone the payment of his or her age or early age retirement benefit, to elect, within a period of three months before or three months after the postponed benefit becomes payable, to receive that benefit at a reduced rate.  When a person makes that election, the other provisions relating to the reduced initial pension and increased reversionary pension apply.

Items 206 to 214 - election by a person to whom deferred benefits are applicable

170.Section 137 of the 1976 Act allows certain persons, on ceasing to be a CSS member   to elect to forgo immediate benefit but preserve their entitlements.  In most cases the election makes deferred benefits applicable to that person which become payable to or in respect of the person, in certain circumstances at a later time.  Where deferred benefits become payable, section 136 provides for the rates of benefits that are to be paid.

171.Item 213 inserts section 137A to allow a person to whom deferred benefits are applicable, to elect, within a period of three months before and three months after those benefits become payable to receive the benefits at a reduced rate.  Item 214 repeals and replaces Table 1 of Schedule 11 to the Act to provide new factors for the calculation of pension benefits payable where the person has made an election under 137A.

172.Items 206 to 212 amend various provisions of section 136 to allow for different rates of reversionary benefits to be payable where a person has elected under 137A.

 

Part 4 - Payment into fund of amounts held in other superannuation funds or payable under superannuation arrangements

173.Under an industrial agreement that earlier applied to the Australian Public Service performance based pay (PBP) was available to some CSS members.  Members could elect to pay 5 % of that PBP to certain superannuation funds that were declared funds under the PB Act. This contribution was matched by an additional amount equal to 15% of the PBP also paid to those funds in respect of the member by his or her employer.  This arrangement is no longer available and some CSS members have small amounts in those funds which cannot, under the current arrangements, be transferred to the CSS.

174.In order to allow CSS members to consolidate their superannuation benefits it is intended to allow members to elect to transfer those PBP amounts into the CSS with the agreement of the trustees of the other funds.

175.This Part amends the Act to allow PBP amounts, and any additional amounts in the member's accounts at the time, to be paid to the CSS Fund.  These amounts will remain in the Fund until other benefits become payable, accumulating interest as determined by the Board.   When a member becomes entitled to the payment of benefits from the fund, the new accumulation is to be treated as a preserved benefit under the SIS Act and paid accordingly.

176.PBP amounts transferred to the CSS do not attract any further employer subsidy from the Commonwealth.

Item 215 - interpretation

177.Item 215 inserts definitions of "accumulated performance pay employee contributions" and "accumulated performance pay employer contributions "which make up a PBP amount into subsection 3(1) of the 1976 Act.  It is necessary to differentiate between the employee and employer components of the PBP amounts because the SIS Act imposes different preservation requirements on the components.

178.The item also inserts definitions of "employer component", "superannuation entity" and "transferable productivity amount" into subsection 3(1).

Item 216 - consequential amendment

179.Item 216 amends subsection 110SB(1) of the 1976 Act as a consequence of the amendments made in relation to the transfer of PBP amounts.

Item 217 - insertion of new Part to allow the transfer of PBP amounts

180.Item 217 inserts Part VIAB into the 1976 Act to provide for payment into the CSS Fund of amounts held in other superannuation funds.

181.New sections 110SK and 110SL provide for a CSS member to request payment of PBP amounts ( and other amounts to the person's account with the other fund) to the Board and for the Board to pay those amounts into the Fund.  PBP amounts that have been transferred from a declared fund to another fund may also be paid to the Board and transferred to the Fund.

182.Sections 110SM and 110SN provide for the circumstances in which a CSS member is entitled to a benefit under the new Part and for the amount of benefit that becomes payable.  The benefits will be basically the transferred amounts with appropriate reductions for income tax and additions of interest.

183.Section 110SO ensures that the employer component of the benefit is to be treated as a preserved benefit under the SIS Act.

184.Sections 110SP to 110SQ provide for the payment of the benefit on the death of a member.

185.Items 218 to 231 make amendments to various provisions of the 1976 Act as a consequence of the new Part VIAB.

 

Part 5 - Amendments relating to elections under section 137 made outside the prescribed period

186.Many provisions of the 1976 Act require, or allow, a member to make an election within a certain time-frame.  Section 157 of that Act allows the Board to treat an election made under many of those provisions outside the statutory time-frame as if it had been made within the period.  The Board may take this action if it is satisfied in all the circumstances of the case that it is desirable that the election should be recognised.

187.This "late election" provision was intended to ensure that CSS members were not disadvantaged where they were unable because of exceptional circumstances to make an election within the required time.  Generally, the late election power has been used only for that purpose.

188.However, there is one circumstance where the extent of the power has been interpreted by judicial and Administrative Appeal Tribunal (AAT) decisions to have a much broader meaning.

189.Where a CSS member leaves the scheme before qualifying for a retirement pension or invalidity pension the person has a choice to take the available lump sum, which only includes the equivalent of the Superannuation Guarantee minimum employer contribution) or to preserve his or her contributions in the scheme.  Preservation results, generally, in payment of a deferred benefit at retirement age which includes the full employer component.

190.In the past, most CSS members on resignation withdrew their contributions from the scheme and only received the minimum employer benefit.  Occasionally those members would, at a later date, request that the Board accept a late election to preserve and, if successful, they would be required to pay back the lump sum benefit into the scheme.  Generally, late elections were only recognised where it could be established that the person had not been able to make the election at the time for various reasons such as medical incapacity.

191.In recent years, however, people have become more aware of the value of superannuation and there has been a considerable increase in the level of requests for late elections to preserve.  Some of these requests, initially rejected by the Commissioner or the Board, have been allowed by the AAT or the Federal Court.  Their decisions have extended the original intention behind the late election power.  For example, even where the person has used the lump sum available to purchase a business (which would normally rule out the recognition of the late election) and the business did not succeed, late elections have been accepted because of events that occurred long after the time in which the election could have been made.  This extension of the original intention of the late elections power has the potential to considerably increase the costs of the scheme.

192.This Part amends the provisions of the Act in relation to the recognition of a late election for preservation of rights, to restore the original intention of the legislation.  The amendments, which only apply to late elections for preservation, will allow the Board to recognise such an election only in certain circumstances. 

193.In addition, where a person is successful in making a late election for preservation, he or she will be required to pay to the Board, at the same time as returning the original benefit paid, an amount equal to the amount of interest that that amount would have earned if it had remained in the Fund.  This will restore the member to the situation that would have applied if the election had been made within the statutory time frame.

194.The amendments included in this Part take effect from 5 December 1997 except as provided for by Item 240 in relation to elections made before that date.

Items 232 to 233 - Interpretation

195.Items 232 and 233 amend the definitions of accumulated basic contributions and accumulated supplementary contributions to include the amounts, in respect of interest forgone, required to be paid to the CSS Fund under paragraphs 140(4)(a) and (b) as inserted by item 238 of this Schedule.

Item 234 - Additions to productivity contributions

196.Item 234 amends section 110Q of the 1976 Act to include in accumulated employer contributions the amount, in respect of interest forgone, required to be paid to the Fund by a CSS member under paragraph 140(4)(c) as inserted by item 238 of this Schedule.

Item 235 - Board may accept a late election under section 137

197.Section 137 of the 1976 Act allows a CSS member to elect for preservation of rights on cessation of membership in certain circumstances.

198.Item 235 inserts subsection (3) and (4) into section 137 to allow the Board to treat an election made under that section after the relevant period as if it had been made within the relevant period.  In order to accept the late election, the Board has to be satisfied, on the evidence provided by the person, that the person was unable to make the election within the relevant period because of exceptional circumstances or physical or mental incapacity.  The Board is also required to be satisfied that the person attempted the make the election as soon as practicable after the circumstances which interfered with his or her capacity to make the election had been alleviated or when the person became aware of the possibility of making a late election.

Items 236 to 238 - Repayment of moneys

199.Section 140 of the 1976 Act provides that, if a person makes an election under section 137 after receiving any other benefit under the Act, the person must repay that other benefit before the election under section 137 can be effective.

200.Items 236 to 238 amend section 140 to provide that where a person is successful in making a late election under section 137, the person must pay to the Board, not only the amount of benefit previously received, but an amount equivalent to the interest that that benefit would have earned if it had remained in the Fund.

Item 239 - Amendment to late election provision

201.Section 157 of the 1976 Act provides that the Board may accept a late election under other provisions of the Act in certain circumstances.

202.Item 239 amends section 157 to remove elections under section 137 from consideration under that section.

Item 240 - Application of amendments

203.Item 240 provides that, if a person has requested the CSS Board to consider a late election under section 137 prior to 5 December 1997, the Board should consider that request as if the amendments in this Part had not been made.

 

Part 6 - Amendments relating to powers of Reconsideration Advisory Committees

204.Item 241 amends section 27Q in respect of the delegation of the Board's powers to allow delegation to a Reconsideration Advisory Committee established under the Act.

205.Items 242 to 244 amends sections 153AD, 153AL and 153AS of the 1976 Act to allow a Reconsideration Advisory Committee to reconsider a decision referred to it where the CSS Board has delegated its power of reconsideration to the Committee.

Part 7 - Miscellaneous

Item 245 - Indemnification of Board members etc

206.Item 245 amends section 27R to ensure that Board members may only be indemnified in circumstances permitted by SIS.

Item 246 - Involuntary retirement on sale or transfer

207.Subsection 58(3A) of the 1976 Act provides that, where a person has ceased to be a CSS member in circumstances connection with the sale of an asset or the transfer of a function, that person will not be taken to have been involuntarily retired if he or she had accepted an offer of employment or rejected an offer of equivalent employment in connection with that sale or transfer.

208.Item 246 repeals the subsection so that a person who ceases to be a CSS member in those circumstances is treated in the same way as other CSS members who cease membership.

Items 247 and 248 - Restriction on lump sum cash benefits on involuntary retirement

209.Section 62 of the 1976 Act provides for lump sum benefits to be payable, on election of the member, where a person is subject to involuntary retirement.  From 1 July 2000, those lump sum benefits are not able to be paid in cash to the person where the person has not reached age 55 and retired from the workforce. 

210.The SIS rules for preservation of benefits are intended to change from 1 July 1999 to restrict access to cash benefits unless the person has reached the preservation age (currently 55) and retired from the workforce.

211.Items 247 and 248 amend section 62 to change the date from which lump sum benefits under that section will not be available in cash from 1 July 2000 to 1 July 1999.

212.Lump sum benefits under that section will, from that date, be treated as preserved benefits under SIS and dealt with accordingly.  The person will, however, have access to his or her own contributions and interest on those contributions or can choose one of the other benefit options available in these circumstances, ie, an immediate pension or a prescribed entitlement.

Item 249 - Benefit on cessation of membership following sale or transfer

213.Where an asset is sold or a function is outsourced (transferred) CSS members may be involuntarily retired or may have to resign to take up an offer of employment with the new provider or owner depending on the process used.  Also, in some circumstances a person may cease to be a CSS member because the business in which they are employed is no longer owned by the Commonwealth, eg, where the Commonwealth has sold its shares in a company.  Where a person ceases membership in these circumstances, benefits payable from the CSS do not include involuntary retirement benefits.  Because the person who resigns may not have any more choice in the matter than the person who is retired involuntarily, it is intended to make a new benefit available.  The Part is taken to have had effect from 27 June 1997 the date of announcement of the changes.

214.This benefit is equivalent to the lump sum benefit available on involuntary retirement but it must be preserved according to SIS and not paid in cash to the person.

215.Item 249 inserts a new Part VID to provide this benefit.  New section 110TV provides that the Part applies to CSS members who cease membership on or after 27 June 1997 in circumstances connected with the sale of an asset or the transfer of a function.

216.New section 110TX describes the benefit that becomes payable to the person under the Part and allows for the reduction of that amount where the person's surcharge debt account is in debit when the benefit becomes payable.

Item 250 - Payment of a preserved benefit

217.Item 250 amends section 111A of the 1976 Act to provide that, where SIS has not permitted the payment of deferred benefits to a person, the benefits will become payable as soon as the person notifies that the payment has become permissible under SIS.

Item 251 - Judgment orders

218.Section 119 of the 1976 Act provides that the CSS Board may make payments to the  creditor of a CSS member in certain circumstances.  The section had been drafted to allow those payments to be made only with the permission of the ISC but the ISC has since advised that that is not necessary.

219.Item 251 amends section 119 to remove the requirement that the ISC must approve payments to creditors under that provision.

Item 252 - Minor drafting amendment

220.Item 252 makes a minor drafting amendment to section 136 of the 1976 Act.

Item 253 - Correction of drafting error

221.Item 253 corrects a drafting error in section 138 of the 1976 Act.

Item 254 - Compliance with SIS

222.Section 138 of the 1976 Act was amended by the Superannuation Legislation Amendment Act  (No. 1) 1995 to comply with the SIS requirement for release of preserved benefits as understood at the time.  A later understanding of those requirements meant that section 138 was applying more stringent preservation rules of preservation than required.  Regulations were made under section 155C of the1976 Act to allow benefits to be released as required by SIS.  These regulations are included in Statutory Rule 1995 No 406 (Superannuation (Deferred Benefit) Regulations).  When section 155C was inserted into the Act it was on the understanding that any regulations modifying the Act under that section would result in amendments to the Act at the earliest possible opportunity.

223.Item 254 amends section 138 in the same was as the regulations made under section 155C.

Items 255 to 257 - Consequential amendments

224.Items 255 to 257 amend section 140 as a consequence of the amendments made by item 248 of this Schedule.

Item 258 - Consequential amendment

225.Item 258 amends section 153AA as a consequence of the amendments made by items 120, 266 and 267 of this Schedule.

Item 259 - Actuarial advice

226.Item 259 amends section 154AB to allow the Board to choose any actuary to give advice concerning the reduction of pension benefits where the member's surcharge debt account is in debit at the time of cessation of membership.

Item 260 - Clarification of regulation making power

227.Section 155B provides for the making of regulations to modify the Act in relation to CSS members who cease membership of the sale of an asset or the transfer of a function.  The provision was intended to apply to all persons who cease membership in those circumstances but this is unclear.

228.Item 260 amends section 155B to make clear that it applies to all persons who cease CSS membership in circumstances described in the section.

229.The amendment has effect from 18 December 1992, the date of effect of the provision.

Item 261 - Section not to apply after 26 June 1997

230.Item 261 amends section 155B to provide that it  does not apply to a person who ceases to be a CSS member after 26 June 1997.  As with the amendment made by item 244 of this Schedule, it is intended that CSS members who are taken to be involuntarily retired in the circumstances of a sale or transfer should be treated in the same way as other CSS members who are taken to be involuntarily retired.   There is no need, therefore, to have powers to make special benefit arrangements for such persons by regulation.

Item 262 - Unclaimed money

231.Section 158A of the 1976 Act provides for the treatment of unclaimed money.  Item 262 amends the provision in order to comply with variations to the rules for the dealing with such amounts under SIS.

Item 263 - Employers to distribute information

232.Item 263 inserts a new section 163AB to allow the Board to send information to designated employers under the Act and request those employers to distribute the information to CSS members.  The section requires the employer to distribute that information.

Item 264 - Foreign currency exchange rate

233.Item 264 amends section 166 of the 1976 Act to provide that, where an amount under the Act has to be converted to a foreign currency other than sterling, the conversion rate should be agreed between the CSS member and his or her designated employer.

Item 265 - Consequential regulations

234.Section 168 of the 1976 Act provides for the making of regulations under the Act.  Item 265 inserts a new subsection (17) to provide that, where regulations under the Act no longer have their intended effect because of later 1976 Act amendments, the Board may treat those regulations as if consequential amendments had been made to them.

Items 266 to 268 - Transfer of Ministerial power to the Board

235.Section 240 of the 1976 Act requires that the Minister and the Board agree concerning the transfer of assets from the CSS Fund to an approved fund.  As the Board has full responsibility for the Fund it is appropriate that the Board have full responsibility for transfers from that Fund.

236.Items 266 to 268 transfer the Minister's powers under section 240 to the Board and make a consequential amendment to section 241.

 

schedule 2 - repeal of the superannuation act 1976

Item 1 - Repeal of the Act

237.Item 1 of Schedule 2 repeals the 1976 Act with effect from 1 July 1998 immediately after the commencement of Part 1 of Schedule 1 of this Act.

238.The Saving and Transitional Bill will provide that the Act continues to apply to persons currently covered by its provisions as if it had not been amended.

schedule 3 - amendment of the superannuation act 1990

Part 1 - Amendments relating to the scope and administration of the Act and the Trust Deed and the rights of members to transfer to other superannuation schemes

Item 1 - Definition of 'approved authority'

239.Item 1 repeals the existing definition of  'approved authority' and provides that the term is defined by the new section 3AAA inserted by item 9.

Item 2 - Definition of 'Board'

240.Item 2 repeals the definition 'Board' and replaces it with one referring to the CS Board.

Items 3 to 7- Definitions

241.Items 3 to 7 repeal and amend various definitions as a consequence of the transfer of responsibilities to the CS Board under the Board Bill.

Item 8 - Definition of 'voting share'

242.Item 8 inserts a definition of 'voting share'.

Item 9 - Approved authority

243.Item 9 inserts a new provision.

244.New section 3AAA determines whether or not an authority or body is an approved authority for the purposes of the 1990 Act and replaces the definition repealed by item 1 of this Schedule.  Staff of approved authorities may be eligible to be PSS members.  The intention is to streamline the administration of the provision which currently requires case-by-case consideration of each request for a body to be declared to be an approved authority.  The revised definition, however, does not cease approved authority status for any approved authority covered by the repealed definition while it remains in its present form.

245.Paragraph (b) of the previous definition described the type of authority or body that could be declared by the Minister to be an approved authority for the purposes of the Act and provided for the Minister to make the declaration.  Paragraph (a) of the previous definition provided that a body that was an  approved authority for the purposes of the 1976 Act on 30 June 1990 continued to be an approved authority under the 1990 Act.

246.Section 3AAA describes a body that is an approved authority for the purposes of the Act unless the Minister declares otherwise under subsection 3AAA(9).

247.Subsection 3AAA(2) includes an authority or body that is an approved authority at the time of commencement of the section.

248.Subsection 3AAA(4), (5), (6) and (7) provide that certain Commonwealth bodies are approved authorities if their Chief Executive Officer agrees to contribute towards the cost of providing membership to employees of the body.  This applies provided the body:

(a)  is fully Commonwealth controlled;

(b)  is not operating in a competitive environment; or

(c)  30% or more of its funding is received from the Commonwealth Budget (otherwise than by way of taxes imposed by the Commonwealth.

249.Subsection 3AAA(7) provides that the Minister may declare any other authority or body to be an approved authority. 

250.Subsection 3AAA(8) provides that the Minister may, despite the other provisions of the section declare that an authority or body is not an approved authority for the purposes of the Act.

251.The declarations under section 3D are all Statutory Rules and disallowable instruments as provided by section 45 of the Act as amended by items 25 to 28 of this Schedule.  They may be made with retrospective effect in circumstances as provided by that section as amended.

Item 10 - Vesting of Fund

252.Item 10 provides that the PSS Fund is to be vested in the CS Board.

Items 11 to 14 - Membership of the PSS

253.Items 11 to 14 make various amendments to section 6 of the 1990 Act which provides for persons to be, or not to be, members of the PSS.

254.Item 12 is a consequence of the abolition of the statutory office of the Commissioner,  item 13 is a consequence of item 15 which allows a PSS member to choose to leave the scheme.

255.Item 14 provides that the PSS is closed to new members from 1 July 1998.  However, the item allows a person who ceases to be a PSS member prior to that date who has a benefit preserved in the scheme to elect to again become a member within a period of three months after he or she is again covered by the section.  Certain CSS members who will continue to be able to exercise an option to join the PSS under section 244 of the 1976 Act will also continue to be able to join the scheme.  Item 11 is a consequence of item 14.

Item 15 - Provision of choice

256.New section 6AA is inserted into the Act to allow PSS members to choose to leave the scheme without ceasing to be employed.  Members may only exercise this option on or after 1 July 2000 and only if their employer agrees to contribute to another superannuation scheme or retirement savings account on their behalf.

Item 16 - Repeal of redundant provision

257.Item 16 repeals section 6A of the 1990 Act which allowed certain PSS members to take certain actions prior to 1 October 1991 as the section refers to the CSS Board and is now redundant.

Items 17 to 19 - Functions, duties and powers of the Board

258.These items repeals the provisions of the 1990 Act that set up the PSS Board and provide that the functions, duties and powers of the Board are set out in the Trust Deed.  The Board referred to is the CS Board because of the amendment made by item 2 of this Schedule.  The Board Bill will provide the CS Board with responsibility for the administration of this Act.  Item 19 also inserts a new section 22 to provide that the CS Board has the functions, powers and duties set out in the trust Deed under the 1990 Act.

Items 20, 21, 23 and 24 - Powers of PSS Board assumed by CS Board

259.Items 20, 21, 23 and 24 repeal various provisions of the 1990 Act as a consequence of the assumption, by the CS Board, of the powers of the PSS Board to the CS Board by the Board Bill.  Equivalent provisions will be in that Bill.

Item 22 - Repeal of Part 7

260.Item 22 repeals Part 7 of the 1990 Act as a consequence of the abolition of the office of Commissioner.

Items 25 to 28 - Consequential amendment

261.Items 20 to 22 amend section 45 of the 1990 Act as a consequence of the insertion of section 3AAA by item 9 of this Schedule.

 

part 2 - miscellaneous

Item 29 - Consequential amendment

262.Item 29 amends the definition of Trust Deed in subsection 3(1) by omitting the reference to section 5 of the Act as a consequence of amendments made to the Tenth Amending Deed.

Item 30 - Continuity of membership

263.Item 30 inserts new subsection 12(2) which clarifies that where the PSS Rules currently or in the future provide for continuity of membership of the PSS for specified categories of persons, those situations are to be covered by the provisions in the 1990 Act that provide for continuation of membership in certain circumstances.

264.Section 12 of the 1990 Act currently provides for continuity of membership in certain circumstances where there is a break in employment.  The existence of this section raises the question whether there is power for the PSS Rules to cover other situations involving continuity of membership.  Such provisions include where a person resigns to contest an election from Commonwealth, State or Territorial legislature or persons who are re-appointed or re-employed after termination of appointment or employment under provisions in the Public Service Act.

Item 31 - Transfer of power to the Board

265.Item 31 amends section 33D to ensure the Board, which has responsibility for the PSS Funds under SIS, has the responsibility for determining the timing, amounts and nature of assets and liabilities to be transferred to an approved scheme, and that the consent of the Minister is not required.

Item 32 - Reference to the PSS Rules

266.Item 32 amends subsection 33G(2) to remove a reference to Part 6 of the PSS Rules.  This subsection was not amended when amendments were made in the Superannuation Legislation Amendment Act (No1) 1995 to replace references to specific Parts and Divisions of the PSS Rules with more general references in terms of the function involved in the PSS Rules.  These amendments were made to avoid the need for amendment when the PSS Rules are amended.

Item 33 - Employers to distribute information

267.Item 33 inserts a new section 42A to allow the Board to send information to designated employers under the Act and request those employers to distribute the information to PSS members.  The section requires the employer to distribute that information.

Item 34 - Consequential amendment

268.Item 34 amends section 45 as a consequence of the amendment made by item 31 of this Schedule.

Item 35 - Retrospective amendments

269.Item 35 inserts new subsection 45(6) which states that subsection 48(2) of the Acts Interpretation Act 1901 does not apply in relation to an Amending Deed. This will allow retrospective amendments to be made to the Trust Deed in any circumstances permitted by SIS.  Members’ rights and benefits will be protected in accordance with the SIS Act which limits the circumstances in which retrospective amendments can be made to the rules of a superannaution scheme, including that any such amendments must have the consent of the scheme members affected the Insurance and Superannuation Commissioner under SIS regulation 13.16.

Item 33 - Commencement of certain provisions of the Tenth Amending Deed

270.The Ninth Amending Deed, effective from 1 July 1995, remade the PSS Rules in a simplified form.  The simplified Rules were, in the main, a translation of the Rules in force before 1 July 1995.  Some of these translated Rules contained errors that inadvertently advantaged some groups of members, eg the amount of pension benefits to be received on retirement.  These errors were never implemented administratively as they were intended to be a direct translation of the “old” Rules.  The errors were corrected by the Tenth Amending Deed (effective 1 February 1996) after the PSS Board, and the ISC  approved the changes under SIS regulation 13.16(d).

271.The Senate Standing Committee on Regulations and Ordinances questioned the validity of the administration of the affected provision for the period 1 July 1995 to 1 February 1996, between the Ninth and Tenth Amending Deeds.  The Committee agreed with the proposal that to address their concerns, the 1990 Act be amended to validate the administration of those Rules.

272.Item 36 provides for the amendments made by the Tenth Amending Deed to have retrospective effect.

shcedule 4 - repeal of the superannuation act 1990

Item 1 - Repeal of the Act

273.Item 1 of Schedule 4 repeals the 1990 Act with effect from 1 July 1998 immediately after the commencement of Part 1 of Schedule 3 of this Act.

274.The Saving and Transitional Bill will provide that the Act, and any delegated legislation under the Act, continues to apply to persons currently covered by its provisions as if it had not been amended.

schedule 5 - repeal of the superannuation act 1922

The 1922 Act provided for the first superannuation scheme for employees of the Commonwealth.  That scheme was superseded in 1976 by the CSS which was set up under the 1976 Act.   At that time the 1922 Act scheme was closed and all contributors were transferred to the CSS.  However, pensioners at that time, or their dependants, continue to receive benefits payable under that Act which is administered by the Commissioner for Superannuation.

275.As the statutory office of Commissioner is to be abolished from 1 July 1998 (see item 34 of Schedule 1), other arrangements must be made for the on-going administration of pensions payable under the 1922 Act.

276.No substantive amendments have been made to the 1922 Act for some time, other than those required as a consequence of amendments to the 1976 Act and other Government policy (for example, the 1922 Act was amended by the Commonwealth Superannuation Schemes Amendment Act 1992 to comply with the provisions of the Sex Discrimination Act 1984).  People who are entitled to benefits under the Act should be confident that those benefits will continue unchanged in the future.

277.It is proposed that the Act be repealed and the existing provisions continue to apply without change to those people to whom they currently apply.  The administration of the Act will come under the control of the new Commonwealth Superannuation Board who will have responsibility for the on-going payment of benefits.

Item 1

278.Item 1 to the Schedule repeals the whole of the 1922 Act.

279.Savings provisions are included in the Saving and Transitional Bill to ensure that the Act and any delegated legislation made under the Act continues to apply to the persons currently covered by it without change.

schedule 6 - amendment of the superannuation amendment act 1976

280.The Superannuation Amendment Act 1976 amended the 1922 Act in 1976 when the CSS was introduced to provide that the Commissioner should exercise any powers in relation to pensioners under that Act which had previously been exercised by the Superannuation Board under that Act.  This provision ensures that those powers can be exercised by the Commonwealth Superannuation Board.

Schedule 7- amendment of the superannuation (productivity Benefits) act 1988

Items 1 to 7 ­- Amendment of certain provisions

281.These items provide that the Commonwealth Superannuation Board, instead of the Minister, will be responsible for setting the rates of continuing contributions and interest factors, including penalty interest on late payment of contributions to a fund, in accordance with principles to be determined by the Minister.  The Board will also assume responsibility for making declarations in relation to the coverage of certain Commonwealth employees under the Productivity Benefit Act.

SCHEDULE 8 ­­- REPEAL OF THE SUPERANNUATION (PRODUCTIVITY BENEFIT) ACT 1988

Item 1 ­- Repeal of Act

282.The Productivity Benefit Act provides minimum employer support and a Superannuation Guarantee (SG) safety-net arrangement for Commonwealth employees with no other superannuation cover.  This item repeals the whole Act from 1 July 1998.   From that date, minimum SG employer support will be provided under the Superannuation Guarantee (Administration) Act 1992.  Saving and transitional arrangements for certain Commonwealth employees are provided in the Superannuation Legislation (Commonwealth Employment - Saving And Transitional Provisions) Bill 1997.

SCHEDULE 9 ­- AMENDMENT OF THE SUPERANNUATION BENEFITS (SUPERVISORY MECHANISMS) ACT 1990

Item 1 ­- Amendment of Act

283.Section 6 of the Supervisory Mechanisms Act allows the Minister for Finance to determine prescribed requirements for the provision of superannuation benefits in the Commonwealth public sector.  This item makes any determination setting out the prescribed requirements a disallowable instrument.

schedule 10- Amendment of the Papua New Guinea (staffing assistance) act 1973

284.The PNG Act provides that the Commissioner administer the payment of pensions and benefits to persons covered by that Act.  As a consequence of the abolition of the statutory office of the Commissioner, the functions under that act are to be transferred to the CS Board.  The Board Bill will provide that the CS has responsibility for administration of the PNG Act.

285.It is proposed that provisions of the PNG Act providing for the payment of superannuation and retirement income be repealed and the existing provisions continue to apply without change to those people to whom they currently apply.  The administration of the repealed provisions of the Act will come under the control of the new Commonwealth Superannuation Board who will have responsibility for the on-going payment of benefits.

286.Savings provisions are included in the Saving and Transitional Bill to ensure that the repealed provisions of the Act and any delegated legislation made under those provisions continues to apply to the persons currently covered by it without change.

Item 1 - Repeal of definitions

287.Item 1 repeals some definitions of terms in the PNG Act as a consequence of the amendments made by this Schedule.

Items 2 to 4

288.Items 2 to 4 repeal the provisions of the PNG Act that provide for the payment of superannuation benefits and retirement income to persons covered by that Act.

 

schedule 11 - amendment of the parliamentary contributory superannuation act 1948

289.This Schedule amends the Parliamentary Contributory Superannuation Act to improve access to spouse benefits where a retiring member entitled to pension commenced a marital relationship after age 60, in line with the arrangements proposed under the 1976 Act.  The Schedule also rectifies anomalies and technical deficiencies in relation to orphan benefits, the maximum reversionary benefit payable where there is more than one beneficiary and the arrangements relating to transfer values.

290.In addition, the Schedule will cease the application of the inwards transfer value arrangements to persons who become members of Parliament after the date of Royal Assent of the Bill.

Items 1 to 4 - Amendments relating to the marital status of deceased retirement pensioner in respect of spouse benefits

291.These amendments implement the changes to post-retirement marriage reversionary benefits. 

292.Items 1 and 2 amend the definition of “spouse who survives a deceased person”, removing references to post­-retirement marriages.

293.Items 3 and 4 amend the benefit provisions, inserting a provision for a pro-rata benefit where the post-retirement marital relationship after age 60 is less than three years duration.  A discretion is also inserted for the Parliamentary Retiring Allowances Trust to allow commutation of such pro-rata benefits that are less than a threshold amount set by the Trust.

Item 5 and 6 - Amendments correcting anomalies to benefits for eligible children

294.Section 19AA provides for benefits to be paid to eligible children upon the death of a member or former member.  A previous drafting error disentitled some children of former relationships from benefits in circumstances where they should have been entitled.  This was possible where the other parent survived, even if not entitled to any benefit under the Act. 

295.The amendments change the test for eligible children to include dependency on a person entitled to a spouse benefit, rather than existence of a person with whom the primary beneficiary had had a marital relationship.

Item 7 - Amendments relating to the marital status of deceased retirement pensioner in respect of benefits for eligible children

296.This item repeals subsections 19AA(2A) and (2B) to give effect  to the post-retirement marriage changes in relation to eligible children.

Item 8 - Removal of gender specific terminology

297.This item simply corrects a gender specific provision.

Items 9 to 12 - Correction of drafting error relating to apportioning reversionary benefits

298.Section 21AA is intended to enable the Parliamentary Retiring Allowances Trust (the Trust) to apportion reversionary benefits in circumstances where there is more than one beneficiary, and to limit the totality of reversionary benefits to five-sixths of the benefit applicable to the deceased member. 

299.The existing section only applied if there was more than one spouse entitled to a benefit and did not apply where there was a spouse beneficiary and one or more eligible children beneficiaries from a previous relationship.  The effect was that, in such limited circumstances, reversionary benefits exceeding those applicable to the deceased member may have been payable.

300.These amendments ensure that the section applies in all circumstances where there is more than one reversionary beneficiary, ie one or more spouse beneficiaries and/or one or more eligible children.

Item 13 - Amendment to allow selection of actuary

301.This amendment allows the Trust to select its own actuary.

Items 14 to 16 - Removal of transfer value provisions

302.Section 22Q provided for new members to pay to the Commonwealth a lump sum transfer value relating to previous employment outside the Commonwealth parliament.  These provisions were inserted at a time when there was little or no availability of schemes in which to preserve superannuation entitlements.  With the development of the superannuation sector, numerous rollover funds and Approved Deposit Funds are now available to preserve such benefits.

303.These amendments end the transfer value arrangements for persons who become Members of Parliament from the date of Royal Assent.

Item 17 - Validation of certain transfer values

304.Subsection 22Q(1) required the full amount of any previous benefit to be paid to the Commonwealth as a transfer value, ie payment of partial amounts were not allowed.  A small number of partial payments have previously been paid and accepted by the Commonwealth.  This item validates the receipt of those transfer values and the crediting of notional service based on those transfer values.

Items 18 to 21 - Correction of drafting error relating to interest payable of repayment of transfer values

305.Subsection 22Q(5) provides for the refund of a transfer value where a lump sum only benefit is payable under the Act.  The provision allowed interest on this amount, but only in relation to the employer component of the transfer value. 

306.Items 18 to 20 amend the existing interest provisions to ensure that interest is payable on the whole of the transfer value amount, when contributions are repaid together with a Commonwealth supplement.

307.Item 21 inserts a new subsection that provides for interest to be paid on the employer component of the transfer value where a superannuation guarantee safety-net amount is payable under section 16A, without including a second interest amount on the member component.  Interest on the member component is already included in the safety net calculations.

schedule 12 - amendment of other acts

Items 1, 2 and 7 Amendments in relation to the benefits for certain CSS or PSS members who join the Judges Pension Scheme

308.The SG Act imposes a responsibility on employers to provide a minimum level of superannuation for the majority of their employees.  Where this is provided through a defined benefit superannuation scheme, the scheme’s actuary is required to certify that the scheme satisfies the employers’ superannuation guarantee obligations.  The Australian Government Actuary has advised that the PSS may not satisfy that obligation in respect of those PSS members who are appointed to a federal judicial office and who cease scheme membership on joining the scheme governed by the Judges’ Pension Act 1968, the Judges’ Pension Scheme (JPS).

309. The Administrative Appeals Tribunal Act 1975, Law Officers Act 1964 and Workplace Relations Act 1996 limit the superannuation benefits that members of the PSS and CSS can receive on appointment to a judicial office under those Acts, and joining the JPS.

310.The amendments in items 1, 2 and 7 of this schedule remove the provisions in the Administrative Appeals Tribunal Act 1975, Law Officers Act 1964 and Workplace Relations Act 1996 that restrict a person’s entitlement to CSS or PSS benefits on joining the JPS.  This will ensure that the PSS complies with the requirements of the SG Act and that the PSS or CSS benefits for persons who join that scheme are the same as those applying to any other person who voluntarily leaves the relevant scheme.

311.Item 1 amends section 16 of the Administrative Appeals Tribunal Act 1975 by repealing subsections 16(4), (4A) and (4B)

312.Item 2 amends section 14 of the Law Officers Act 1964 by repealing subsections 14(3), (4) and (5).

313.Item 7 amends section 22 of the Workplace Relations Act 1996 by repealing subsections 22(3), (4) and (5).

Items 3 to 6   Amendments to the Superannuation Legislation Amendment Act (No. 1) 1995

314.Items 3 to 6 amend the Superannuation Legislation Amendment Act (No. 1) 1995 to make technical drafting corrections.