Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT) 1991 NO. 171

STATUTORY RULES 1991 No. 171

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT)

The Superannuation Act 1976 (the 1976 Act) makes provision for and in relation to an occupational superannuation scheme for Commonwealth employees and for certain other persons.

Section 168 of the 1976 Act provides that the Governor - General may make regulations for the purposes of that Act.

The superannuation scheme provided under the 1976 Act has operated since 1 July 1976. It replaced the scheme provided under the Superannuation Act 1922 (the 1922 Act). The 1922 Act scheme comprised a Pension Scheme for those who met the required medical standard for entry to that Scheme and a lump sum Provident Account for those who did not.

Persons who were contributors to the 1922 Act Pension Scheme or Provident Account on 30 June 1976 were transferred to the 1976 Act scheme on 1 July 1976. Special arrangements apply in relation to the transferred contributors.

Section 183 of the 1976 Act provides that the regulations may modify the 1976 Act in its application to the transferred contributors. Subsection 168(9) of the 1976 Act provides that regulations made within a period of 12 months after 1 July 1990 by virtue of section 183 may be expressed to have taken effect from and including a day not earlier than 1 July 1990.

The special arrangements applicable to the transferred Provident Account contributors are provided by way of modifications to the 1976 Act contained in the Superannuation (Former Provident Account Contributors) Regulations (the Principal Regulations) made under section 183 of that Act.

The Superannuation Legislation Amendment Act 1990 amended the 1976 Act in a number of ways. The Regulations amend the Principal Regulations consequent upon certain of those amendments.

The Regulations also amend the Principal Regulations in relation to certain part-time employees who are members of the 1976 Act scheme and were previously members of the 1922 Act scheme.

The amendments contained in the Regulations are explained in the Attachment. In accordance with subsection 168(9) of the 1976 Act, they operate with effect from and including 1 July 1990, the date of commencement of the amendments to the 1976 Act.

ATTACHMENT

SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT)

REGULATION 1

This provides that the Superannuation (Former Provident Account Contributors) Regulations (Amendment) (the Amending Regulations) operate with effect from 1 July 1990.

REGULATION 2

This provides that the Superannuation (Former Provident Account Contributors) Regulations (the Principal Regulations) are amended as set out in the Amending Regulations.

SUBREGULATION 3.1

This amends the heading of the Schedule to the Principal Regulations as suggested by the Attorney-General's Department to reflect modern drafting standards. The amendment involves matters of style rather than substance.

SUBREGULATION 3.2

Section 55 of the 1976 Act establishes the entitlement to an age retirement benefit of a member who retires on or after reaching age 60.

Subregulation 3.2 makes technical drafting changes to subsections 55(1) and (2) as modified by the Principal Regulations as a consequence of amendments to the subsections by section 42 of the Superannuation Legislation Amendment Act 1990 (the Amending Act).

SUBREGULATION 3.3

Section 56 of the 1976 Act provides the rate of standard (employer-financed) pension payable to a person who is entitled to an age retirement benefit by virtue of section 55. The Schedule to the Principal Regulations modified section 56 to have regard the to special pension accrual rate applicable to former contributors to the Provident Account under the Superannuation Act 1922 (the 1922 Act).

Section 43 of the Amending Act amended section 56 to provide for the rates of pension payable to be calculated on the basis of complete years and part years, instead of complete years only, of contributory service. Subregulation 3.3 modifies the amended subsection 56(3) to have regard to the special pension accrual rate applicable to former Provident Account contributors.

SUBREGULATIONS 3.4 AND 3.5

Section 62 of the 1976 Act enables a person who is entitled to an involuntary retirement benefit to elect to receive a lump sum benefit calculated in accordance with subsection 62(2) instead of the benefits otherwise payable. The Schedule to the Principal Regulations modified subsection 62(2) to provide a special optional lump sum benefit for 1922 Act Provident Account contributors who are "retrenched" in the terms of section 82 of the 1922 Act. The lump sum is an amount equal to whichever is the greater of-

(a)       3.5 times the member's accumulated basic contributions; or

(b)       one-half of the amount of the member's final annual rate of salary,

together with the amount of the member's accumulated supplementary contributions.

The Superannuation (Approved Part-time Employees) Regulations modified the definition of "period of contributory service" in subsection 3(1) of the 1976 Act so that part-time employment included in the period would only be taken into account on a proportionate basis. Those Regulations also inserted in subsection 3(1) a definition of "period of employment" which includes the whole of the member's period of membership, whether as a full-time employee or as a part-time employee, less certain periods of unpaid leave. Consistent with the general approach adopted in the Superannuation (Approved Part-time Employees) Regulations, subregulation 3.4 and 3.5 of the Amending Regulations amend the modified subsection 62(2) and insert a new subsection 62(3) so that the amount of the member's final annual rate of salary will be pro-rated according to the member's period of contributory service and his or her period of employment.

Also, consistent with amendments to the 1976 Act by the Amending Act so that benefits payable will relate to complete years and part years, instead of complete years only, of contributory service, provision is made for the pro-rating of the amount of the member's final annual rate of salary to be on the basis of complete years and part years of contributory service. Protection is provided against the member being disadvantaged by pro-rating on the complete and part year basis rather than complete years only.

Section 47 of the Amending Act inserted references to section 55 of the 1976 Act in subsections 62(1) and (2) as a consequence of amendments to subsection 58(3) by section 44 of the Amending Act. Subregulation 3.4 also inserts in the modified subsection 62(2) a reference to section 55.

SUBREGULATIONS 3.6 and 3.7

Sections 67 and 68 of the 1976 Act provide the benefits payable to certain persons who retire on invalidity grounds before reaching their maximum retiring age. The Schedule to the Principal Regulations modified sections 67 and 68 to have regard to the special pension accrual rate applicable to former 1922 Act Provident Account contributors.

Sections 50 and 51 of the Amending Act respectively amended sections 67 and 68 to provide for the rates of pension payable to be calculated on the basis of complete years and part years, instead of complete years only, of contributory or prospective service. Subregulations 3.4 and 3.5 respectively amend the modified sections 67 and 68 to have regard to the special pension accrual rates applicable to former Provident Account contributors.

SUBREGULATION 3.8

The Schedule to the Principal Regulations inserted a new section 80A in the 1976 Act. Paragraph 80A(2)(b)(ii) provides for the calculation of interest for the purposes of the section at rates applicable under the Superannuation (Interest) Regulations made under the 1976 Act.

Section 81 of the Amending Act inserted section 154A in the 1976 Act to provide for interest payable under that Act to be calculated in accordance with a determination by the Commonwealth Superannuation Board rather than in accordance with regulations under the 1976 Act as was the case before the amendment. Subregulation 3.8 amends paragraph 80A(2)(b)(ii) to have regard to this change.

SUBREGULATION 3.9

Division 3 of Part IX of the 1976 Act (sections 131 to 144) provides arrangements for the preservation of superannuation rights of certain persons who cease to be members of the superannuation scheme provided under the 1976 Act. The arrangements include entitlement to deferred benefits.

Prior to its amendment by section 75 or the Amending Act, subsection 136(2) of the 1976 Act left the determination of the amount of any pension or lump sum constituting, or forming part of, a deferred benefit to the Commissioner for Superannuation. Section 75 of the Amending Act omitted subsection 136(2) and substituted new subsections 136(2) to (2H) to specify the method of calculation of deferred pensions and lump sums. In relation to certain former members described in subsection 131(4) of the 1976 Act, however, the amount of the benefit will continue to be determined by the Commissioner for Superannuation by virtue of subsections 136(2A) and (2F).

Subregulation 3.9 modifies section 136 of the 1976 Act to specify the method of calculation of a deferred lump sum benefit payable in accordance with section 197, 200, 201, 204, 205, 209 or 210 as inserted in the 1976 Act by the Schedule to the Principal Regulations. The method of calculation specified in the Act and in the modifications reflects the methodology adopted by the Commissioner for superannuation prior to the amendments.

REGULATION 3.10 TO 3.19

The Schedule to the Principal Regulations inserted in the 1976 Act sections 196 to 212 which relate to a lump sum benefit available in certain circumstances to certain former 1922 Act Provident Account contributors or their spouses or orphan children instead of the benefits otherwise payable. The amount of the lump sum benefit is calculated in accordance with subsections 197(2) and (3), section 200, subsection 201(2) and (3), section 204, subsection 205(2) and (3), section 209, subsection 210(2) and (3) or section 211 depending upon the circumstances of the case. The lump sum benefit is, in the generality of cases, an amount equal to whichever is the greater of-

(a)       3 times the member's accumulated basic contributions; or

(b)       one-half of the amount of the member's final annual rate of salary,

together with the amount of the member's accumulated supplementary contributions.

Subregulations 3.10 and 3.11 and 3.13 to 3.19 respectively amend section 196, subsection 197(2), section 200, subsection 201(2), section 204, subsection 205(2), section 209, subsection 210(2) and section 211 in relation to approved part-time employees to achieve the same result in relation to paragraph (b) in the preceding paragraph as does the amendment to the modified subsection 62(2) by subregulations 3.4 and 3.5.

In the case of section 197, subsection 197(4) sets out the circumstances in which the optional lump sum is not available. Paragraph 197(4)(b) excludes from the option a person who has elected for a lump sum benefit under section 64 of the 1976 Act. As a consequence of amendments to subsection 58(3) by section 44 of the Amending Act, regulation 3.12 also amends paragraph 197(4)(b) so that it will also exclude a person who has elected for a lump sum benefit under section 62 of the 1976 Act.

SUBREGULATION 3.20

Section 211 inserted in the 1976 Act by the Schedule to the Principal Regulation provides an additional benefit for a person who paid into the 1922 Act scheme a transfer value from a superannuation scheme of which he or she was previously a member. Where a deferred benefit becomes payable to or in relation to such a person the amount of the benefit is now determined by the Commissioner for Superannuation in accordance with subsection 136(2A) or (2F) of the 1976 Act.

Subregulation 3.20 therefore inserts subsection 211(3) in the 1976 Act to provide that section 211 does not apply to a person to whom subsection 136(2A) or (2F) applies.