South Australian Numbered Acts

STATUTES AMENDMENT (TRANSITION TO RETIREMENT--STATE SUPERANNUATION) ACT 2008 (NO 4 OF 2008) - SECT 10

10—Insertion of section 26A

After section 26 insert:

26A—Transition to retirement

        (1)         A contributor may apply to the Board for the benefit of this section if—

            (a)         the contributor has reached—

                  (i)         the age of 55 years; and

                  (ii)         his or her preservation age; and

            (b)         the contributor has entered into an arrangement with his or her employer—

                  (i)         to reduce his or her hours of work; or

                  (ii)         to alter his or her duties,

or both, with the effect that there is a reduction in the contributor's salary; and

            (c)         the purpose for establishing the arrangement referred to in paragraph (b) relates to the proposed retirement of the contributor in due course (including by allowing the contributor to scale down his or her work in the lead-up to retirement).

        (2)         The Board may require that an application under subsection (1)—

            (a)         be made in such manner as the Board thinks fit; and

            (b)         be accompanied by such information or other material specified by the Board to assist the Board to be satisfied as to the matters set out in paragraphs (b) and (c) of that subsection.

        (3)         If the Board is satisfied that a valid application has been made under subsection (1), an entitlement will arise as follows:

            (a)         the Board will determine a benefit (a "draw down benefit") on the basis of the contributor's application and on the basis that the maximum draw down benefit to which the contributor is entitled will be determined as follows:

Where—

"B" is the maximum draw down benefit

"SP" is the amount that would be payable under section 27 and 47B if the contributor had retired from employment immediately before the date of the determination

"FS" is the contributor's actual salary immediately before the commencement of the arrangement envisaged by subsection (1)(b)

"NS" is the contributor's actual salary on the commencement of the arrangement envisaged by subsection (1)(b);

            (b)         the Board will then, according to an election made by the contributor as part of his or her application to the Board for the benefit of this section, invest (on behalf of and in the name of the contributor) the draw down benefit—

                  (i)         with the Superannuation Funds Management Corporation of South Australia; or

                  (ii)         with another entity that will provide a non-commutable income stream for the contributor while the contributor continues to be employed in the workforce,

so that the contributor receives (and only receives) a payment in the form of a pension or an annuity (a "draw down payment") on account of the benefit.

        (4)         The investment of a draw down benefit under subsection (3)(b)(i) will be on terms and conditions determined by the Board.

        (5)         An entitlement to a draw down payment is not commutable.

        (6)         However—

            (a)         a contributor may, after commencing to receive a draw down payment and before retiring from employment under this Act, take steps to bring the investment to an end and pay the balance of the investment into a rollover account (which may need to be established) in the name of the contributor as if the balance were being carried over from another superannuation scheme into the scheme pursuant to section 47B; and

            (b)         the value of an investment under subsection (3)(b)(i) may be redeemed in due course under subsection (11).

        (7)         When the Board has determined a draw down benefit—

            (a)         the account maintained by the Board in the name of the contributor under section 20A, and any account maintained for the purposes of section 47B, will be immediately adjusted by a percentage equal to the percentage that the draw down benefit bears to the total benefit that would have been payable had the contributor retired from employment to take into account the payment of the draw down benefit; and

            (b)         the contributions payable by the contributor under section 23 will (despite any provision made by section 23 to the contrary)—

                  (i)         be fixed on the basis of the contributor's salary under the arrangement established with his or her employer (for so long as the arrangement continues); and

                  (ii)         as so fixed, be payable in respect of this salary from the first full pay period after the Board's determination of the draw down benefit; and

                  (iii)         be at the contributor's standard contribution rate under that section; and

            (c)         the contributor's contribution points will accrue, from the date of the determination until the cessation of the relevant arrangement (unless the contributor ceases to make the contributions envisaged by paragraph (b)), at a rate for each contribution month determined as follows:

Where—

"CP" is a proportion of 1 contribution point

"AS" is the contributor's actual salary under the relevant arrangement (as adjusted from time to time)

"FSA" is the contributor's actual salary immediately before the commencement of the relevant arrangement, adjusted from time to time to take into account any changes to the salary that would have occurred had the contributor not entered into the relevant arrangement but rather continued to be entitled to that salary.

        (8)         If the employment arrangements of a contributor who is receiving a draw down payment under this section alter so that there is an alteration in his or her salary—

            (a)         in the case of a reduction in salary—the contributor may apply to the Board for a further benefit in accordance with the provisions of this section and this section will then apply to the application and with respect to the relevant arrangement—

                  (i)         as if FS under subsection (3)(a) is the contributor's actual salary immediately before the relevant reduction in salary; and

                  (ii)         as if NS is the contributor's actual salary immediately after the relevant reduction in salary; and

                  (iii)         by applying such other modifications as may be necessary for the purpose or as may be prescribed; and

            (b)         in the case of an increase in salary—the draw down payment will continue as if the increase had not occurred and where the contributor makes contributions to the scheme under this Act in respect of the increase in salary the contributions payable by the contributor and the accrual of contribution points must be adjusted to take into account the increase.

        (9)         When a contributor retires from employment (and is thus entitled to a benefit under section 27), the contributor's entitlement under section 27 will be adjusted in the manner prescribed by the regulations to take into account the draw down benefit provided under this section (and that section will then have effect accordingly).

        (10)         If a contributor's employment is terminated by the contributor's death, any entitlement under section 32 will be adjusted in the manner prescribed by the regulations to take into account the draw down benefit provided under this section (and that section will then have effect accordingly).

        (11)         When a contributor retires or dies (whichever first occurs), an investment being held under subsection (3)(b)(i) may be redeemed (subject to any rules or requirements applicable to the exercise of a power of redemption).

        (12)         A contributor may, in conjunction with an application under subsection (1), apply for any benefit that would be payable under section 32A as if the contributor had resigned from employment and, in such a case—

            (a)         the application will be taken to be an election under that section; and

            (b)         the amount of entitlement payable under that section will be added to the draw down benefit under subsection (3)(a) (and then invested under subsection (3)(b)).

        (13)         Despite a preceding subsection, if the maximum draw down benefit under subsection (3)(a) is not sufficient to be invested under subsection (3)(b) to obtain a draw down payment—

            (a)         unless paragraph (b) applies—the draw down benefit must be an amount equal to the minimum required to obtain a draw down payment (and subsection (3)(a) will apply accordingly);

            (b)         if the minimum amount required to obtain a draw down payment is greater than SP under subsection (3)(a), the Board must reject the application under this section (and no entitlement will arise under subsection (3)).

        (14)         The determination of a benefit under this section must take into account the operation of any provision under Part 5A.

        (15)         The Governor may, by regulation, declare that any provision of this section is modified in prescribed circumstances (and the regulation will have effect according to its terms).