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Amendment Bill 1997
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.*
(a)
to enable the schemes to conform with Commonwealth requirements
applicable to private sector schemes that relate to the following
matters:
(i)
to benefits being able to be accessed at age 65 whether or not the
contributor concerned has retired and to mandatory payments at
age 70,
(ii) to contributions or continuing membership by persons who have
been on leave for up to 7 years for the purposes of raising
children,
* Amended in committee--see table at end of volume.
(iii) to the payment of preserved benefits on the grounds of severe
financial hardship or on compassionate grounds,
(iv) to the acceptance of contributions on behalf of spouses of
members,
to enable provision to be made for payment of the Commonwealth
surcharge on superannuation contributions by contributors to those
superannuation schemes that are defined benefit schemes (payment
may be made without further amendment of the other schemes), and
the subsequent adjustment of benefits under those schemes,
to enable employers to be removed from certain schemes, or remain
subject to conditions, where other superannuation arrangements have
been provided,
to make various amendments to the First State Superannuation
Scheme, established under the First State Superannuation Act 1992, to
provide for payment of pre-tax employer contributions for
superannuation, a new temporary incapacity benefit and the adjustment
of accounts and reserves in the First State Superannuation Fund,
to make other minor amendments.
Clause 2 provides for the commencement of the proposed Act on assent and
for amendments relating to payment of pre-tax contributions to be
commenced on a day to be appointed by proclamation.
Clause 3 is a formal provision giving effect to the amendments to the Acts
set out in Schedule 1.
Schedule 1
Amendment of Acts
Compliance with Commonwealth requirements
The Superannuation Industry (Supervision) Act 1993 of the Commonwealth
and the regulations under that Act set out the requirements and standards to
be met by superannuation funds in order to gain complying status for taxation
purposes. Under an agreement between the Heads of Government, New
South Wales has agreed to apply similar requirements and standards to its
Explanatory note page 2
public sector superannuation schemes. In return the Commonwealth has
exempted the New South Wales public sector superannuation schemes from
the operation of its Act. The amendments relating to benefits at age 65,
contributions on behalf of spouses, benefits on the ground of severe financial
hardship or on compassionate grounds and contributions while on leave all
arise out of Commonwealth requirements for regulated superannuation funds.
Benefits at age 65 and 70
The effect of the amendments is to enable, but not to require, a benefit to be
taken at age 65 even though a contributor has not retired. The amendments
also ensure that benefits must be paid at age 70, that contributions (other than
compulsory employer contributions) may not be made after that age and that
benefits may not accrue after that age. The following Acts are amended:
(a) the Parliamentary Contributory Superannuation Act 1971 to enable a
benefit to be taken at or after age 65 and to require a benefit to be paid
at age 70. A benefit taken at age 65 may be preserved in the
Parliamentary Contributory Superannuation Fund. A person paid a
benefit under the proposed section is not entitled to any further benefit
under the Act or to contribute to the Fund, except in relation to certain
compulsory employer contributions. (Schedule 1.2 [9] and [ 14])
(b) the Police Regulation (Superannuation) Act 1906 to enable a benefit to
be taken at or after age 65 rather than making the benefit automatically
payable at that age and to require a benefit to be paid at age 70. A
benefit taken at age 65 may be preserved in the Police Superannuation
Fund. A person paid a benefit is not entitled to any further benefit
under the Act or to contribute to the Fund. The amendments also make
it clear that the upper age limit for qualification to be a contributor is
70. (Schedule 1.3 [4], [10]-[12])
(c) the Public Sector Executives Superannuation Act 1989 to enable a
benefit to be taken at or after age 65 and to require a benefit to be paid
at age 70. A benefit taken at age 65 may be preserved in the Public
Sector Executives Superannuation Fund. The amendments also make it
clear that the upper age limit for qualification to be a contributor is 70.
(Schedule 1.4 [7]-[10], [ [12]-[14] and [16])
(d) the State Authorities Non-contributory Superannuation Act 1987 to
enable a benefit to be taken at or after age 65 rather than making the
benefit automatically payable at that age. (Schedule 1.5 [1], [3] and
[4])
Explanatory note page 3
(e)
the State Authorities Superannuation Act 1987 to enable a benefit to be
taken at or after age 65 rather than making the benefit automatically
payable at that age and to require a benefit to be paid at age 70. A
benefit taken at age 65 may be preserved in the State Authorities
Superannuation Fund. A person paid a benefit at or after age 65 is not
entitled to any further benefit under the Act or to contribute to the
Fund. The amendments also make it clear that the upper age limit for
qualification to be a contributor is 70. Preserved benefits must also be
paid to persons aged 70 even if they are working between 10 and 30
hours a week. (Schedule 1.6 [4], [5], [7]-[11])
(f)
the Superannuation Act 1916 to enable a benefit to be taken at or after
age 65 rather than making the benefit automatically payable at that age
and to require a benefit (including preserved benefits) to be paid at age
70. A benefit taken at age 65 may be preserved in the State
Superannuation Fund. A person paid a benefit at or after age 65 is not
entitled to any further benefit under the Act or to contribute to the
Fund. The amendments also make it clear that the upper age limit for
qualification to be a contributor is 70. Preserved benefits must also be
paid to persons aged 70 even if they are working between 10 and 30
hours a week. (Schedule 1.7 [4], [7]-[11])
Contributions by or on behalf of spouses
Under Commonwealth legislation contributions may be made on behalf of
spouses of contributors to superannuation funds. Amendments to the First
State Superannuation Act 1992 will permit contributions to be made by or on
behalf of spouses of employees who are eligible to be members of the First
State Superannuation Scheme or on behalf of spouses of members of the
Parliamentary Contributory Superannuation Scheme established by the
Parliamentary Contributory Superannuation Act 1971. Spouses on whose
behalf contributions are made are to be optional members of the scheme for
that purpose. Benefits may be paid and preserved in the First State
Superannuation Fund in the same way as they may be for members who are
employees. Consequential amendments are also made to the Act. (Schedule
1.1 [1], [2], [5]-[9], [11], [25], [28]-[30], [32], [47] and [48])
Benefits on hardship and compassionate grounds
Under the Commonwealth legislation, members or former members of
regulated superannuation funds are eligible for benefits under certain
circumstances on the grounds of severe financial hardship or on
Explanatory note page 4
compassionate grounds even though they are not otherwise eligible for any
benefit or to access any preserved benefit. Provision for these benefits is to be
inserted in some of the State public sector superannuation schemes in cases
where benefits have been preserved. In all cases, the amount of benefit that
can be paid is limited and benefits subsequently payable are to be adjusted to
take into account any such benefit previously paid. Specific provision is not
made for the benefit in the First State Superannuation Act 1992, the Public
Sector Executives Superannuation Act 1989 or the State Authorities
Non-contributory Superannuation Act 1987 as the benefits are available
under the general provision applying to benefits because they are benefits
payable in relation to a regulated superannuation fund under the relevant
Commonwealth legislation. The following Acts are amended:
(a) the First State Superannuation Act 1992 to confer certain powers to
determine matters where a benefit is applied for on compassionate
grounds and to limit the amount and kind of benefit that may be paid
on those grounds or on financial hardship grounds. (Schedule 1.1 [26])
(b) the Parliamentary Contributory Superannuation Act 1971 to enable
the benefits to be paid by the trustees in the form permitted for
regulated superannuation funds under the Commonwealth legislation.
A consequential amendment is also made to ensure that subsequent
benefits may be adjusted to take account of earlier payments on
hardship or compassionate grounds. (Schedule 1.2 [15])
(c) the Public Sector Executives Superannuation Act 1989 to confer
certain powers to determine matters where a benefit is applied for on
compassionate grounds and to limit the amount of benefit that may be
paid on those grounds or on financial hardship grounds. (Schedule 1.4
[ [14] and [15])
(d) the State Authorities Non-contributory Superannuation Act 1987 to
confer certain powers to determine matters where a benefit is applied
for on compassionate grounds and to limit the amount and kind of
benefit that may be paid on those grounds or on financial hardship
grounds. (Schedule 1.5 [l] and [2])
(e) the State Authorities Superannuation Act 1987 to enable the benefits to
be paid by the trustee (the SAS Trustee Corporation) in the form
permitted for regulated superannuation funds under the
Commonwealth legislation. Consequential amendments are also made
to ensure that subsequent benefits may be adjusted to take account of
earlier payments on hardship or compassionate grounds. (Schedule 1.6
[12]-[14])
Explanatory note page 5
Contributions and membership while on leave
Under the Commonwealth requirements for regulated superannuation funds,
a person who has been on leave for child raising purposes for up to 7 years
may continue to be a member and to contribute to the superannuation fund
and accrue benefits. The amendments will amend various public sector
superannuation schemes to enable such persons to retain their membership of
the schemes and amend some schemes to enable contributions to be made.
The following Acts are amended:
(a)
the Police Regulation (Superannuation) Act I906 to enable members
on leave without pay for the purposes of raising children to retain
membership of the superannuation scheme for up to 7 years even
though no contributions are being made to the Police Superannuation
Fund. Adjustments will be made to the period of service for the
purpose of calculating benefits. (Schedule 1.3 [5])
(b)
the Public Sector Executives Superannuation Act 1989 to enable
members on leave without pay for the purposes of raising children to
retain membership of the superannuation scheme for up to 7 years and
to contribute while on leave. (Schedule 1.4 [l 13)
(c)
the State Authorities Superannuation Act 1987 to enable members on
leave without pay for the purposes of raising children to retain
membership of the superannuation scheme for up to 7 years even
though no contributions are being made to the State Authorities
Superannuation Fund. Adjustments will be made to the period of
service for the purpose of calculating benefits. (Schedule 1.6 [6])
(d)
the Superannuation Act 1916 to enable members on leave without pay
for the purposes of raising children to retain membership of the
superannuation scheme for up to 7 years even though no contributions
are being made to the State Superannuation Fund. Adjustments will be
made to take into account the period during which contributions are
not paid for the purpose of calculating benefits. (Schedule 1.7 [5])
Payment for superannuation contributions surcharge
Under the Superannuation Contributions Tax Imposition Act 1997, and
associated legislation, of the Commonwealth, a surcharge is payable in
respect of employer contributions to superannuation. The tax is collected and
assessed differently, depending on whether the superannuation scheme
concerned is an accumulation type scheme (where members receive as a
benefit the contributions made to the relevant fund by them or on their
Explanatory note page 6
behalf) or a defined benefits type scheme (where members receive a benefit
calculated using a formula based on factors such as salary or length of service
irrespective of the contributions or earning rates of a fund). In the case of a
defined benefits scheme the surcharge is imposed as a debt payable by the
fund manager when the benefit is paid to the fund member. The amendments
to the various public sector superannuation schemes will enable benefits to be
reduced to take account of the particular surcharge debt (including any debt
related to the basic benefit under the State Authorities Non-contributory
Superannuation Scheme) and to enable fund members to make contributions
towards the debt. Any excess payments are to be refunded to members with
interest at a rate determined by the relevant trustee. The following Acts are
amended:
(a)
the Parliamentary Contributory Superannuation Act 1971 to enable
the trustees of the Parliamentary Contributory Superannuation Fund to
reduce benefits payable to a member or former member where a debt is
owed in respect of the member or former member for the
superannuation contributions surcharge and to enable members or
former members to make single or periodic payments in advance to
reduce the liability for the surcharge. Any excess payments made must
be repaid with interest to the member or former member.
Consequential amendments are also made. (Schedule 1.2 [2]-[8],
[ [10]-[12] and [16])
(b)
the Police Regulation (Superannuation) Act 1906 to enable the SAS
Trustee Corporation to reduce benefits payable to a contributor or
former contributor where a debt is owed in respect of the contributor or
former contributor for the superannuation contributions surcharge and
to enable contributors or former contributors to make single or periodic
payments in advance to reduce the liability for the surcharge. Any
excess payments made must be repaid with interest to the contributor
or former contributor. Consequential amendments are also made.
(Schedule 1.3 [1]-[3], [7], [8] and [13])
(c)
the Public Sector Executives Superannuation Act 1989 to enable the
FSS Trustee Corporation to deduct liabilities for superannuation
contributions surcharge from members' accounts. (Schedule 1.4
[1]-[6])
(d)
the State Authorities Superannuation Act 1987 to enable the SAS
Trustee Corporation to reduce benefits payable to a contributor or
former contributor where a debt is owed in respect of the contributor or
former contributor for the superannuation contributions surcharge and
to enable contributors or former contributors to make single or periodic
Explanatory note page 7
payments in advance to reduce the liability for the surcharge. Any
excess payments made must be repaid with interest to the contributor
or former contributor. Consequential amendments are also made.
(Schedule 1.6 [1]-[3], [15], [16] and [19])
(e)
the Superannuation Act 1916 to enable the SAS Trustee Corporation to
reduce benefits payable to a contributor or former contributor where a
debt is owed in respect of the contributor or former contributor for the
superannuation contributions surcharge and to enable Contributors or
former contributors to make single or periodic payments in advance to
reduce the liability for the surcharge. Any excess payments made must
be repaid with interest to the contributor or former contributor.
Consequential amendments are also made. (Schedule 1.7 [1]-[3], [12],
[13] and [15])
Removal of employers from schemes
The amendments enable the Governor-in-Council to make orders removing
employers from the operation of the State Authorities Superannuation
Scheme under the State Authorities Superannuation Act 1987 and the State
Superannuation Scheme under the Superannuation Act 1916 when employers
no longer employ any employees who are contributors to the scheme
concerned. This may occur where alternative superannuation schemes are
provided for employees by employers or where all contributing employees
are transferred to other organisations. An order may also be made inserting
limitations on existing employers but such an order may not operate to the
prejudice of an existing contributor. (Schedule 1.6 [17] and [18] and 1.7 [16]
and [17])
Additional amendments to the First State Superannuation
Scheme
The First State Superannuation Act 1992 is also amended for the following
purposes:
(a)
to make it clear that employees who are eligible to be members of
schemes established by trust deed under the Superannuation
Administration Act 1996 are not automatically members of the First
State Superannuation Scheme but must make an election to become
members. If no election is made, they will remain members of the
relevant trust deed scheme. Consequential amendments are also made.
(Schedule 1.1 [3], [46] and [47])
Explanatory note page 8
(b)
to enable employees to make pre-tax employer contributions to the
First State Superannuation Fund. (Schedule 1.1 [4])
(c)
to provide for a new temporary incapacity benefit for persons who are
members under the First State Superannuation Scheme. Premiums will
be paid and cover provided in the same way as for the additional death
or disability benefit. Consequential amendments are also made.
(Schedule 1.1 [10], [12]-[24], [27], [31], [33], [35]-[37], [39],
[41]-[43] and [48])
(d)
to enable the FSS Trustee Corporation to adjust accounts and reserves
in the First State Superannuation Fund to correct mistakes and to
reflect changes in circumstances and in the law and to deduct amounts
of superannuation contributions surcharge. (Schedule 1.1 [34], [38]
and [40])
Other amendments
Amendments are made to the Police (Regulation) Superannuation Act 1906
to enable the commutation of part of a pension as a way of paying to the SAS
Trustee Corporation an amount due in respect of the reduction of a benefit by
the Corporation under the Act because of tax or other liabilities.
Commutation is to be on a basis determined by the Corporation. (Schedule
1.3 [9]) Amendments to the same effect are made to enable the Corporation
to commute part of a pension under the Superannuation Act 1916 (Schedule
1.7 [ 14]) and the Parliamentary Contributory Superannuation Act 1971
(Schedule 1.2 [15]).
Amendments are made to the State Authorities Superannuation Act 1987
(Schedule 1.6 [20]) and the Superannuation Act 1916 (Schedule 1.7 [6]) to
enable employees whose employers make additional contributions on a
pre-tax basis to other superannuation schemes on their behalf to remain in the
statutory schemes.
Amendments to repeal unnecessary provisions, and to remove a reference to
a repealed provision, are also made to the Parliamentary Contributory
Superannuation Act 1971 (Schedule 1.2 [1] and [13]).
Savings and transitional provisions
Provision is made for savings and transitional regulations to be made as a
consequence of the proposed Act. Savings and transitional provisions are
made with respect to the application of amendments to persons currently on
leave without pay and adjustments of accounts in the First State
Superannuation Scheme are validated. (Schedule 1.1 [44] and [45], 1.2 [ 17]
and [18], 1.3 [14] and [15], 1.4 [17] and [18], 1.5 [5], 1.6 [21] and [22] and
1.7 [18] and [19])
Explanatory note page 9