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Superannuation Amendment (PSSAP Membership) Bill 2020

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2019-2020

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

SUPERANNUATION AMENDMENT (PSSAP MEMBERSHIP) BILL 2020

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the Minister for Finance,

Senator the Hon Mathias Cormann)



 

SUPERANNUATION AMENDMENT (PSSAP MEMBERSHIP) BILL 2020

General outline

The Superannuation Amendment (PSSAP Membership) Bill 2020 (the Bill) enables certain current and former Commonwealth employees and statutory office holders to continue to be or to become contributory members of the Public Sector Superannuation Accumulation Plan (PSSAP) that are currently not eligible to do so. 

The PSSAP was established on 1 July 2005 and is an open defined contribution scheme. PSSAP is generally available to persons who commenced as Commonwealth employees and persons who were appointed to a statutory office on or after that date, and certain other prescribed persons. PSSAP is the default fund for Australian Public Service (APS) employees. The Commonwealth Superannuation Corporation (CSC) is the trustee and administrator of PSSAP, the closed defined benefit Commonwealth Superannuation Scheme (CSS) and the closed defined benefit Public Sector Superannuation Scheme (PSS).

Existing Arrangements

Since 4 December 2017, former PSSAP contributory members have been able to use their existing PSSAP account for future contributions if the person is no longer in Commonwealth employment and is engaged in employment in respect of which the person’s employer is required to make contributions for the person under the Superannuation Guarantee (Administration) Act 1992 (SG Act).

New Arrangements

The Bill will further expand the circumstances where a former PSSAP contributory member can use their existing PSSAP account for superannuation contributions and also allow an existing PSSAP contributory member to use their account for non-Commonwealth concurrent employment. The Bill will also allow certain members of the CSS and PSS to establish a PSSAP account for future superannuation contributions.

In particular, the Bill will allow:

·          former PSSAP contributory members to use their existing PSSAP account for contributions in respect of any employment (not just employment that attracts an SG obligation) and if they wish to make other contributions, such as, non-concessional contributions;

·          PSSAP contributory members to use their existing PSSAP account for contributions in respect of concurrent non-Commonwealth employment;

·          CSS and PSS contributory members to establish a PSSAP account for contributions in respect of concurrent non-Commonwealth employment;

·          CSS and PSS contributory members who cease such membership after commencement of the Superannuation Amendment (PSSAP Membership) Act 2019 and, for example, become a pensioner or take their lump sum benefit, to establish a PSSAP account for contributions in respect of non-Commonwealth employment or for other contributions, such as, non-concessional contributions; and

 

·          CSS deferred benefit or PSS preserved benefit members to establish a PSSAP account for contributions in respect of non-Commonwealth employment or for other contributions, such as, non-concessional contributions.

PSSAP contributory members and former PSSAP contributory members are referred to in the Bill as an eligible PSSAP member

CSS and PSS contributory members and CSS deferred benefit and PSS preserved benefit members are referred to in the Bill as an eligible CSS/PSS member or former member .

Certain restrictions apply in relation to becoming an eligible PSSAP member or eligible CSS/PSS member or former member . Importantly, a person must have been a Commonwealth employee or office holder for a continuous period of at least 12 months.

The changes in relation to existing and former PSSAP contributory members will mean that these persons will not have to establish another superannuation account if they take up concurrent non-Commonwealth employment, move to non-Commonwealth employment or if they wish to make other superannuation contributions, such as, non-concessional contributions after ceasing Commonwealth employment. This is consistent with the Government’s broader superannuation reforms and initiatives to lower the costs that members incur for the administration and management of their superannuation accounts.

The changes will also allow CSS and PSS members who have or previously had their superannuation monies managed by CSC, to have their future superannuation contributions also managed by CSC.

Financial impact

The Bill does not present any financial impact on the Commonwealth.

Statement of Compatibility with Human Rights

The Bill does not engage any of the human rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .  Consequently, the Bill is compatible with those human rights and freedoms.

 



 

SUPERANNUATION AMENDMENT (PSSAP MEMBERSHIP) BILL 2020

Notes on clauses

Clause 1 - Short Title

1.       Clause 1 provides for the Act to be cited as the Superannuation Amendment (PSSAP Membership) Act 2020 (the Act).

Note: The clauses in the Bill will become sections of the Act on Royal Assent.

Clause 2 - Commencement

2.                   Clause 2 sets out the commencement provisions for the Bill. Commencement details for specific provisions are included in the table in subclause 2(1).

3.                   Item 1 of the table provides that the whole of this Act is to commence on a day fixed by Proclamation. Should Proclamation not occur within 6 months of receiving the Royal Assent, this Schedule commences on the day after the end of that period.

4.                   The note at the end of the table in subclause 2(1) clarifies that the table only relates to provisions of the Act as originally enacted, and that it will not be amended to deal with any later amendments of the Act.

5.                   Subclause 2(2) clarifies that the information in column 3 of the table is not part of the Act.

Clause 3 - Schedules

6.                   Clause 3 provides that legislation specified in a Schedule to the Act is amended or repealed as set out in the applicable items in the relevant Schedule. It also provides that any other item in a Schedule to the Act has effect according to its terms.



Schedule 1 - Amendments

Overview

7.                   Schedule 1 contains amendments to the Superannuation Act 2005 (the 2005 Act) to extend membership of the Public Sector Superannuation Accumulation Plan (PSSAP) to certain persons. Table 1 below sets out the current and new arrangements for extended PSSAP membership.

Table 1 - Current and new arrangements for extended PSSAP membership.

Circumstances

New Arrangements

Existing Arrangements

Person is a former contributory PSSAP member (i.e. has a preserved benefit) - eligible PSSAP member

 

 

The person will be able to use their PSSAP account for non-Commonwealth employment (regardless of whether or not it triggers a Superannuation Guarantee obligation) and/or for other contributions, such as non-concessional contributions.

 

The person can only use their PSSAP account if they take up non-Commonwealth employment that triggers a Superannuation Guarantee obligation for their employer.

Person is an existing PSSAP contributory member - e ligible PSSAP member

 

 

The person will be able to use their existing PSSAP account for contributions in respect of concurrent non-Commonwealth employment.

 

The person cannot use their existing PSSAP account for contributions in respect of concurrent non-Commonwealth employment.

Person is a CSS eligible employee or PSS member - eligible CSS/PSS member or former member

The person will be able to establish a PSSAP account for concessional contributions in respect of concurrent non-Commonwealth employment.

 

The person cannot establish a PSSAP account for concessional contributions in respect of concurrent non-Commonwealth employment.

Person has a CSS deferred benefit or a PSS preserved benefit member at commencement of the Act - eligible CSS/PSS member or former member

 

The person will be able to establish a PSSAP account for concessional contributions in respect of non-Commonwealth employment and/or if they wish to make non-concessional contributions.

 

The person cannot establish a PSSAP account for concessional contributions in respect of non-Commonwealth employment and/or if they wish to make non-concessional contributions.

Person ceased to be a CSS eligible employee or PSS member on or after commencement of the Act - eligible CSS/PSS member or former member

The person will be able to establish a PSSAP account for concessional contributions in respect of non-Commonwealth employment and/or for other contributions, such as non-concessional contributions.

 

The person cannot establish a PSSAP account for concessional contributions in respect of non-Commonwealth employment and/or for other contributions, such as, or non-concessional contributions.

Person ceased to be a CSS eligible employee or PSS member before commencement of the Act and does not have a CSS deferred benefit or a PSS preserved benefit (i.e. took their whole benefit as a pension and/or lump).

The person cannot establish a PSSAP account for concessional contributions for non-Commonwealth employment and/or if they wish to make non-concessional contributions.

 

The person cannot establish a PSSAP account for concessional contributions for non-Commonwealth employment and/or if they wish to make non-concessional contributions.

 

 

8.                   Particular eligibility restrictions apply to a person being an eligible PSSAP member or eligible CSS/PSS member or former member . Importantly, the person must have been a Commonwealth employee or office holder for a continuous period of at least 12 months.

9.                   For the purposes of making contributions to PSSAP an eligible PSSAP member or eligible CSS/PSS member or former member will become sub-categories of an ordinary employer-sponsored member of PSSAP. As set out below, after the changes there will be five sub-categories of ordinary employer-sponsored member .

Ordinary employer-sponsored member,ss18(2) - PSSAP is the person’s chosen fund,ss18(3) - PSSAP is the person’s mandated (default fund),ss18(5) - a person who is not covered by the Superannuation Guarantee (SG) requirements
 
 ,new ss18(7) - existing and former PSSAP contributory members
 eligible PSSAP member
 ,new ss18(8A) - certain CSS and PSS members 
 eligible CSS/PSS member or former member
 

 

 

 

 

 

 

 

 



-           a person who meets the requirements under existing ss18(7) is known as a former Commonwealth ordinary employer-sponsored member. Under new ss18(7) the circumstances in which a person can meet the requirements is being expanded and therefore the title of persons who meet the requirements is being changed to eligible PSSAP member .

-           ss18(8A) is a new provision.

 

Superannuation Act 2005

10.               Item 1 omits “continue to” in the paragraph of the simplified outline in section 3 of the 2005 Act as these words are superfluous.

11.               Item 2 inserts in subsection 4(1) the term and definition eligible CSS/PSS member or former member to provide that such a person is a person who is an ordinary employer-sponsored member of PSSAP under new subsection 18(8A) as inserted by item 8 . Item 2 also inserts in subsection 4(1) the term and definition eligible PSSAP member to provide that such a person is a person who is an ordinary employer-sponsored member of PSSAP under new subsection 18(7) as inserted by item 8.

12.               Item 3 repeals the definition of former Commonwealth ordinary employer-sponsored member in subsection 4(1). This term is no longer necessary as it is replaced by the new term eligible PSSAP member .

13.               Item 4 inserts new paragraph 13(1)(d) after paragraph 13(1)(c) to provide for a new category of persons that are eligible to choose to become a PSSAP member. The new category covers a person who was a PSS member or an eligible employee for the purposes of the Superannuation Act 1976 at a time after the commencement of the Superannuation Amendment (PSSAP Membership) Act 2020 (the Act), but is no longer such a member or an eligible employee.

 

14.               Section 17 of the 2005 Act currently provides that a designated employer of an ordinary employer-sponsored member other than a former Commonwealth ordinary employer-sponsored member must make contributions to CSC, in accordance with the PSSAP Trust Deed and Rules. That is, a designated employer of a PSSAP member is only required to make contributions under the PSSAP Trust Deed and Rules where the person is an ordinary employer-sponsored member under subsection 18(2), (3) or (5) of the 2005 Act because, in turn, PSSAP is the person’s chosen fund, PSSAP is the person’s mandated fund or the SG requirements do not apply to the person.

15.               The term former Commonwealth ordinary employer-sponsored member is being repealed by item 3. Items 5, 6, 13 and 14 amend paragraph 17(1)(a), the note 2 under subsection 17(2), paragraph 42(1)(a) and paragraph 43(1)(b) by omitting the reference to former Commonwealth ordinary employer-sponsored member and substituting the relevant new references. For items 5, 13 and 14 the reference is to subsection 18(2), (3) or (5) of the 2005 Act.

16.               As is currently the case, a designated employer of an ordinary employer-sponsored member of PSSAP will only be required to make contributions to the Commonwealth Superannuation Corporation (CSC) under the PSSAP Trust Deed and Rules where the person is an ordinary employer-sponsored member of PSSAP under subsection 18(2), (3) or (5) of the 2005 Act.

17.               As an eligible PSSAP member or an eligible CSS/PSS member or former member are not ordinary employer-sponsored members of PSSAP under subsection 18(2), (3) or (5) of the 2005 Act, their designated employer will not be required to make contributions in accordance with the PSSAP Trust Deed and Rules. For example, Rule 2.2.1 of the PSSAP Trust Deed, which requires designated employers to make contributions of 15.4% each pay day, will not apply in respect of an eligible PSSAP member or an eligible CSS/PSS member or former member .

18.               The amended note 2 under subsection 17(2) of the 2005 Act explains that the designated employer of an eligible PSSAP member or an eligible CSS/PSS member or former member is not required by the 2005 Act or the PSSAP Trust Deed and Rules to make employer contributions to PSSAP.

19.               Employer contributions in respect of a person who is either an eligible PSSAP member or an eligible CSS/PSS member or former member will be a matter for their terms and conditions of employment.

20.               The provisions under section 42 of the 2005 Act, relating to CSC requesting a designated employer to distribute information or related to material to their employees who are members of the PSSAP will only apply where the person is an ordinary employer-sponsored member of PSSAP because of subsection 18(2), (3) or (5) of the 2005 Act. The provisions do not apply to an eligible PSSAP member or an eligible CSS/PSS member or former member .

21.               The provisions under section 43 of the 2005 Act which, in general terms, provide that an ordinary employer-sponsored member of PSSAP cannot be retired on invalidity grounds without CSC’s approval will only apply where the person is an ordinary employer-sponsored member of PSSAP because of subsection 18(2), (3) or (5) of the 2005 Act. The provisions do not apply to an eligible PSSAP member or an eligible CSS/PSS member or former member .

 

 

22.               Item 7 omits numeral ‘4’ from subsection 18(1) and substitutes numeral ‘5’ in its place to reflect that, following the insertion of new subsection 18(8A) by item 8 , there will be five situations in which a person can be an ordinary employer-sponsored member of PSSAP. That is, as shown in the diagram in paragraph 9 there will be five sub-categories of ordinary employer-sponsored members.

23.               Item 8 repeals subsections 18(7) and (8) of the Act, and inserts new subsections 18(7), 18(8), 18(8A) and 18(8B) and notes under new subsections 18(7) and 18(8A).

New subsection 18(7) - persons eligible to be an eligible PSSAP member

24.               New subsection 18(7) sets out the circumstances where a person can become an ordinary employer-sponsored member known as an eligible PSSAP member . The circumstances are that the person:

·          at a particular time, is a member of PSSAP (paragraph 18(7)(a)) ; and

·          is, or was previously, an ordinary employer-sponsored member of PSSAP under one or more subsections 18(2), 18(3) and 18(5) (paragraph 18(7)(b)) ; and

·          is, or previously would have been eligible to become a member of PSSAP because of particular employment or holding of one or more particular offices, where the periods of any such employment, and the periods of holding any such office, taken together constitute or constituted a continuous period of at least 12 months (paragraph 18(7)(c)) .

25.               Where a PSSAP member’s period of employment comprises multiple employment arrangements, each of which was for period of less than 12 months, those employment periods are counted as a continuous period of service for the purposes of paragraph 18(7)(c) if there is no break between those periods.

26.               The new note under subsection 18(7) explains that a person who becomes an ordinary employer-sponsored member of PSSAP under subsection 18(7) is to be known as an eligible PSSAP member .

27.               Set out below are examples where persons will be eligible to become an ordinary employer-sponsored member of PSSAP known as an eligible PSSAP member under subsection 18(7).

Example 1

Jane is employed by Department A and is a member of PSSAP. Jane has over 12 months continuous Commonwealth employment.

Jane leaves Department A and becomes employed by XYC Ltd. Jane wishes to have her XYC Ltd employer contributions paid into her PSSAP account.

Jane meets the requirements set out in new paragraphs 18(7)(a), (b) and (c). Therefore, Jane is eligible to become an eligible PSSAP member .

This means Jane can have her XYC Ltd employer contributions paid into her PSSAP account.  

Example 2

Jane in example 1 later returns to Commonwealth employment whilst retaining her employment with XYC Ltd - that is, as a concurrent employment arrangement.

Jane will be eligible to become an ordinary employer-sponsored member of PSSAP in respect of her Commonwealth employment under subsections 18(2), (3) or (5) .

Jane can also continue to have XYC Ltd employer contributions paid into her PSSAP account.

In respect of her employment with XYC Ltd Jane can remain an ordinary employer-sponsored member of PSSAP known as an eligible PSSAP member .   

Example 3

Peter is employed by Department B which is making employer contributions to PSSAP for him. Peter is an ordinary employer-sponsored member of PSSAP.

Peter has over 12 months continuous Commonwealth employment.

While still being employed by Department B, Peter takes up concurrent employment with NMP Pty Ltd. Peter wishes to have his NMP Pty Ltd employer contributions paid into his PSSAP account.

Peter meets the requirements set out in new paragraphs 18(7)(a), (b) and (c). Therefore Peter can choose to become an eligible PSSAP member and have his NMP Pty Ltd employer contributions paid into his PSSAP account.

Example 4

Sue had been employed by Department T for five years and is a member of PSSAP.  She subsequently resigned and preserved her benefits in PSSAP.

Sue establishes a small business and becomes self-employed. Sue wants to increase her superannuation savings by making contributions.

Sue meets the requirements set out in new paragraphs 18(7)(a),(b) and (c). Therefore, Sue can choose to become an eligible PSSAP member .

This means Sue can make her self-employed contributions into her PSSAP account.

New subsection 18(8) - persons not eligible to be an eligible PSSAP member.

28.               New subsection 18(8) provides that if subsections 18(2), 18(3) or 18(5) of the 2005 Act applies to a person in respect of any employment or appointment to a statutory office, the person is not an ordinary employer-sponsored member of PSSAP known as an eligible PSSAP member under subsection 18(7) in respect of that particular employment or the holding of that office. This ensures that employer contributions for a person where PSSAP is the person’s chosen fund, PSSAP is the person’s mandated fund or the SG requirements do not apply to the person will be payable to PSSAP at a rate of 15.4% of their superannuation salary.

29.               The rate of employer contributions for persons who become an employer-sponsored member of PSSAP known as an eligible PSSAP member under subsection 18(7) is a matter for the employment arrangements between the person and their employer and subject to applicable laws.

Example 5

Tim is a member of PSSAP. Tim becomes employed by Department D.

Subsection 18(8) applies to Tim as he is able to become an ordinary employer-sponsored member of PSSAP under subsection 18(2) or (3) of the 2005 Act. Therefore, Tim cannot become an eligible PSSAP member in respect of his employment at Department D.

New subsection 18(8A) - persons eligible to be an eligible CSS/PSS member or former member

30.               New subsection 18(8A) set out the circumstances where a person can become an ordinary employer-sponsored member know as an eligible CSS/PSS member or former member . The circumstances are that the person:

·          at a particular time, is a member of PSSAP (paragraph 18(8A)(a)) ; and

·          is, or previously would have been eligible to become, a member of the PSS or an eligible employee of the CSS because of particular employment or the holding of one or more particular offices where the periods of any such employment, and the periods of holding any such office, taken together constitute or constituted a continuous period of at least 12 months (paragraph 18(8A)(b)) ; and either

-         was a former Australian government superannuation scheme member as defined by the 2005 Act at the time the Act commences (subparagraph 18(8A)(c)(i)) ; or

-         is a member of the PSS or CSS (within the meaning of the Superannuation Act 1976 ) at a time on or after the day the Act commences (subparagraph 18(8A)(c)(ii)) .

31.               A person is a member of PSSAP at a particular time if they had become a member under subsection 14(2) or subsection 14(4) of the 2005 Act at an earlier date, providing that the duration of their membership, as determined by section 15 of the 2005 Act, has continued to that date. A person is not required to have been actively contributing to the scheme in order to be eligible to be an eligible CSS/PSS member or former member .

32.               A former Australian government superannuation scheme member is a person who has a preserved benefit under the PSS that has not yet been paid, or a person who has a deferred benefit under the CSS (subsection 4(1) and declaration made under subsection 4(2) of the 2005 Act).

33.               The new note under subsection 18(8A) explains that a person who becomes an ordinary employer-sponsored member of PSSAP under subsection 18(8A) is to be known as an eligible CSS/PSS member or former member .

34.               Set out below are examples where persons will be eligible to become an ordinary employer-sponsored member of PSSAP known as an eligible CSS/PSS member or former member under subsection 18(8A).

Example 6

John recently resigned and has over 12 months continuous Commonwealth employment. He has a PSS preserved benefit in respect of that employment.

John recently sold his family home and would like to make a one-off downsizer superannuation contribution of $100,000.

John meets the requirements of paragraph 18(8A)(b). John also meets the requirements of subparagraph 18(8A)(c)(i) because as he has a PSS preserved benefit he is also a person who is a former Australian government superannuation scheme member.

Under paragraph 13(1)(b) of the 2005 Act John is eligible to become a member of PSSAP.

 

John can make his contributions to PSSAP by choosing to become a member of PSSAP under subsection 14(2) of the 2005 Act. The contributions would also need to meet any requirements under the broader superannuation and applicable legislation.

John chooses to become a member of PSSAP. Therefore, John becomes an ordinary employer-sponsored member known as an eligible CSS/PSS member or former member and can make his contributions into his newly established PSSAP account.

Example 7

Julia is employed by Department C and has over 12 months continuous Commonwealth employment. Julia is a CSS eligible employee.

Julia retires from Department C after the Act commences and starts being paid a CSS pension.

Julia then commences employment with a non-Commonwealth employer, GHI Ltd.

Julia meets the requirements of paragraph 18(8A)(b). Julia also meets the requirements of subparagraph 18(8A)(c)(ii) because she was a CSS eligible employee at a time after the commencement of the Act.

Under new paragraph 13(1)(d) of the 2005 Act as inserted by item 4 Julia is eligible to become a member of PSSAP.

Julia can have her GHI Ltd employer contributions made to PSSAP by choosing to become a member of PSSAP under subsection 14(2). Should she do so, Julia will become an ordinary employer-sponsored member under subsection 18(8A) known as an eligible CSS/PSS member or former member and can have her GHI Ltd employer contributions paid into her newly established PSSAP account.

Example 8

Harry is employed by Department XV and has over 12 months continuous Commonwealth employment. Harry is a member of the PSS.

Harry retires from Department XV after the Act commences and takes his PSS benefit as a lump sum.

Harry wishes to make personal (non-concessional) contributions to increase his superannuation savings.

Harry meets the requirements of paragraph 18(8A)(b). Harry also meets the requirements of subparagraph 18(8A)(c)(ii) because he was a member of the PSS at a time after the commencement of the Act.

Under new paragraph 13(1)(d) of the 2005 Act as inserted by item 4, Harry is eligible to become a member of PSSAP.

Harry can make his personal contributions to PSSAP by choosing to become a member of PSSAP under subsection 14(2)). Should he do so, Harry will become an ordinary employer-sponsored member under subsection 18(8A), known as an eligible CSS/PSS member or former member , and can make personal contributions to his newly established PSSAP account.

 

 

 

Example 9

Susan is employed on a part-time basis by Department Z and has over 12 months continuous Commonwealth employment. Susan is a member of the PSS.

Susan whilst still employed by Department Z commences a part-time job with WTH Ltd after commencement of the Act - that is, she undertakes the employment concurrently.

Susan meets the requirements of paragraph 18(8A)(b). Susan also meets the requirements of subparagraph 18(8A)(c)(ii) because she is a member of the PSS at a time after the commencement of the Act.

Under new paragraph 13(1)(d) of the 2005 Act as inserted by item 4, Susan is eligible to become a member of PSSAP.

Susan can have her WTH Ltd employer contributions paid to PSSAP by choosing to become a member of PSSAP under subsection 14(2) Should she do so, Susan will become an ordinary employer-sponsored member under subsection 18(8A), known as an eligible CSS/PSS member or former member , and can have her WTH Ltd employer contributions paid to her PSSAP account.

New subsection 18(8B) - persons not eligible to be an eligible CSS/PSS member or former member .

35.               New subsection 18(8B) provides that if in respect of any employment or any holding of an office held by a person:

·          subsections 18(2), 18(3) or 18(5) of the 2005 Act applies to the person;

·          the person is or would be able to become, a member of the PSS or a CSS eligible employee; or

·          paragraph 6(2)(ba) of the Superannuation Act 1990 applies to the person

then the person cannot be an ordinary employer-sponsored member of PSSAP known as an eligible CSS/PSS member or former member under subsection 18(8A) in relation to that employment or office.

Example 10

Robert has a PSS preserved benefit. Robert has over 12 months continuous Commonwealth employment.

Robert becomes employed by Department ST on a part-time basis.

Subsection 18(8B) applies to Robert as he is able to become a PSS member in respect of his employment with Department ST. Therefore, Robert cannot become an eligible CSS/PSS member or former member in respect of that employment under subsection 18(8A).  

If Robert takes up concurrent private sector employment, then he would be eligible to become an eligible CSS/PSS member or former member in respect of that employment.

36.               Item 9 inserts the heading ‘ Minister may determine class of excluded persons’ immediately before subsection 18(9).

37.               Item 10 inserts “or (8A)” after “subsection 18(7)” in subsection 18(9). This provides that a person cannot be an ordinary employer-sponsored member of PSSAP under subsection 18(8A), even if they meet the criteria set out under that provision, if that person is included in a class of persons specified by the Minister in an instrument made under subsection 18(10).

38.               Judges of the Federal Circuit Court of Australia and persons to whom Division 1 of Part 2 of the Parliamentary Superannuation Act 2004 are included in the class of persons specified in the current instrument made under subsection 18(10).

39.               Currently a member of the Defence Force is excluded from being an ordinary employer-sponsored member of PSSAP under existing subsection 18(8). Subsection 18(8) is being repealed by item 6. To maintain the status quo it is intended that the instrument will be amended to also specify a member of the Defence Force. The Commonwealth has specific military superannuation schemes covering members of the Defence Force that recognise the unique nature of military service.

40.               Under new subsections 18(7) and 18(8A) it is not necessary for a person to be in particular employment or hold a particular office to be able to become an ordinary employer-sponsored member known as an eligible PSSAP member under subsection 18(7) or an ordinary employer-sponsored member known as an eligible CSS/PSS member or former member under subsection 18(8A). Items 11 and 12 make consequential amendments to paragraph 19(1)(a) and item 5A in the table in subsection 19(2) of the 2005 Act which defines who is the designated employer of various categories of PSSAP members.

Schedule 2 - Application and transitional provisions

41.               Item 1 provides that a person who is an ordinary employer-sponsored member of PSSAP under subsection 18(7) of the 2005 Act as in force immediately before the commencement of this item continues to be an ordinary employer-sponsored member of PSSAP under that subsection. This preserves the status of a person that had elected for subsection 18(7) to apply to them prior to the amendment of that subsection by the Act.