Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT) 1993 NO. 353

STATUTORY RULES 1993 No. 353

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. That superannuation scheme has operated since 1 July 1976, having replaced the scheme provided for under the Superannuation Act 1922 (the 1922 Act).

Section 168 of the 1976 Act provides that the Governor-General may make regulations for the purposes of the Act. Section 183 of the 1976 Act provides that the regulations may modify the provisions of that Act in relation to a person who, immediately before becoming a contributor to the scheme, was a member of the superannuation scheme provided for under the 1922 Act. The regulations for the purposes of section 183 are contained in the Superannuation (Former Provident Account Contributors) Regulations and the Superannuation (Former Contributors for Units of Pension) Regulations.

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. 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 1992 (the Amending Act) amended the 1976 Act to provide for additional benefits in certain limited circumstances that are required as a result of the Superannuation Guarantee (Administration) Act 1992 and to provide for certain other changes to Commonwealth superannuation schemes.

The amending Regulations amend the Principal Regulations as a consequence of amendments to the 1976 Act by the Amending Act. In addition, the amending Regulations make a number of minor drafting amendments to the Principal Regulations. All the amendments are technical in nature and most follow directly from the amendment of the 1976 Act. The amendments contained in the Regulations are explained in the Attachment.

The Amending Act amended the 1976 Act by inserting a new subsection 168(12) which provides that regulations for the purposes of section 183 made within a period of 12 months after that amendment may be expressed to have taken effect from and including the day on which that amendment was made.

In accordance with subsection 168(12) of the 1976 Act, regulation 3 is taken as having commenced on 18 December 1992, the date of commencement of that subsection. The retrospectivity will not affect the rights of any person (other than the Commonwealth) in a manner prejudicial to that person, nor will it impose any liability on such a person. The amending Regulations are, therefore, in accord with the Acts Interpretation Act 1901 and do not contravene subsection 48(2) of that Act.

ATTACHMENT

SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT)

THE AMENDMENTS

Regulation 1

In accordance with subsection 168(12), this regulation provides that regulation 3 is taken to have commenced on 18 December 1992. The remainder of the amending Regulations commence on gazettal.

Regulation 2

This provides that the Principal Regulations are amended as set out in the amending Regulations.

Subregulation 3.1

Section 62 of the 1976 Act provides that a person who is deemed to have retired involuntarily may elect to receive his or her total benefit as a lump sum instead of the benefits otherwise payable under the Act. The Amending Act inserted a new Division 2A in Part V of the 1976 Act (comprising sections 62A, 62B and 62C) which provides for the preservation of a portion of a cash-in-hand retrenchment lump sum benefit to enable the CSS to comply with the preservation requirements of the Superannuation Guarantee legislation (the Superannuation Guarantee (Administration) Act 1992).

The Principal Regulations modify section 62 by substituting a new version of subsection 62(2), amending paragraph 62(2A)(a), and inserting a new subsection 62(3) in order to provide for a different method of calculating that optional lump sum benefit in the case of former contributors to the 1922 Act Provident Account. Subregulation 3.1 omits the existing modifications to section 62 and substitutes a new set of modifications which in effect repeat the existing arrangements but also incorporate the new preservation requirements under the Superannuation Guarantee legislation.

Subregulation 3.1 substitutes the modifications to section 62 (which have been made over several years) with a clearer draft of those modifications, and changes the existing arrangements by providing that modified subsection 62(2) is subject to the new section 62B, thus applying the new preservation requirements to lump sums paid under subsection 62(2).

Subregulation 3.2

The Principal Regulations modify the 1976 Act by inserting a new section 80A in that Act. The Amending Act amended the 1976 Act by also inserting a new section 80A in the Act. As a consequence, the section 80A inserted by the Principal Regulations should be renumbered to avoid confusion. Subregulation 3.2 renumbers that provision to section 80AB.

Subregulation 3.3

The Amending Act made a number of amendments to section 128 of the 1976 Act, which provides for the treatment of transfer values paid from other superannuation schemes to the CSS. Subsection 128(4) - which provides for the payment, on cessation of CSS membership and in certain circumstances, of an additional lump sum benefit based on the employer component of the transfer value - was amended to provide that the additional lump sum benefit should also include an amount equal to the interest that would have accrued on that amount if it had been paid into the CSS Fund and not the Consolidated Revenue Fund. (Amounts in the CSS Fund accrue interest in accordance with determinations made by the CSS Board of Trustees.)

The Principal Regulations modify the 1976 Act by inserting section 130A, which provides for the payment of an additional lump sum benefit in circumstances similar to those under subsection 128(4), except that it relates to transfer values paid in under the 1922 Act.

This subregulation amends inserted section 130A to provide that the additional lump sum benefit provided for under those arrangements also includes an interest component. That interest would be calculated from 1 July 1976 or the day the transfer value was paid to the Commonwealth, whichever is the later.

Subregulation 3.4

The Amending Act amended the 1976 Act to insert a new section 139AA which applies the preservation requirements of the Occupational Superannuation Standards to deferred benefits payable from the CSS. The effect of the new provision is that the productivity portion of a deferred benefit should not become payable to a person unless the person has retired from the workforce. The Amending Act also amended the provisions of section 136, which provide for the calculation of deferred benefits, to take account of the preservation requirements.

The Principal Regulations modify the 1976 Act by inserting a new subsection 136(2AA) which specifies the method of calculation of a deferred lump sum benefit in accordance with the special arrangements applicable to former contributors to the Provident Account. Subregulation 3.4 substitutes a new subsection 136(2AA) to take account of the new productivity preservation requirements. The effect of the new provision is to provide for the circumstances under which a person's accumulated employer contributions (ie, productivity benefit) are payable as part of the deferred benefit.

Subregulations 3.5 to 3.11

Subregulation 3.5 renumbers inserted subsection 136(2BA) as 136(2BAA) for clarity of reference, following the insertion of a new subsection 136(2BA) in the 1976 Act by the Amending Act.

Subregulation 3.6 amends the words at the beginning of inserted Part XII, for clarity of interpretation, as a consequence of the insertion of a new Division 8 by subregulation 3.12.

Subregulations 3.7, 3.8, 3.10 and 3.11 provides that the special arrangements under inserted sections 197 and 201, which permit a former Provident Account contributor who becomes entitled to an age or invalidity benefit under the 1976 Act to elect to receive a special lump sum benefit in lieu of the normal benefits payable under the Act, are available subject to the preservation requirements under subregulation 3.12.

Subregulation 3.9 recasts, for improved clarity, the existing construction of subparagraph 201 (1)(a)(ii) in inserted Part XII.

Subregulation 3.12

Subregulation 3.12 inserts a new Division 8 (comprising sections 213, 214 and 215) in Part XII of the 1976 Act. The new Division 8, in effect, repeats the new preservation provisions of sections 62A, 62B and 62C, applying them to the special lump sum benefit options that are applicable to former Provident Account contributors.

Regulation 4

Subregulations 4.1 and 4.2 make a number of minor drafting corrections to the Principal Regulations.