EXPLANATORY STATEMENT

 

Select Legislative Instrument 2007 No. 348

Issued by the Authority of the Minister for Veterans’ Affairs

Defence Force Retirement and Death Benefits Act 1973

Defence Force Retirement and Death Benefits Amendment Regulations 2007 (No. 1)

Subsection 131(1) of the Defence Force Retirement and Death Benefits Act 1973 (the Act) provides, in part, that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters which, by the Act, are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The Superannuation Legislation Amendment Act 2007 (the Amendment Act) amends the Act to improve access to reversionary benefits in circumstances where the retirement pensioner commenced a marital relationship after age 60 (know as a post retirement marriage). The Amendment Act reduces the post retirement marital relationship test from five years to three years, meaning a spouse will only have to be in a marital relationship for three years before a pension is payable. The Amendment Act also made a provision for the payment of pro-rata reversionary pensions to genuine spouses who do not meet the three-year test.

Section 6BA is inserted into the Act by the Amendment Act and a separate instrument recommends that this and other parts of Schedule 6 to the Amendment Act be proclaimed to commence on 1 January 2008. Subsection 6BA (3) provides that if the resulting annual pension rate worked out under subsection 6BA(2) is less than or equal to the rate prescribed by the regulations for the purpose of this section, the spouse is instead entitled to a lump sum payment worked out in accordance with the regulations’.

The Regulations will provide the prescribed rate to be $1407.79 for the purpose of determining if a small resulting pension is to be converted to a lump sum. The prescribed rate will be increased each year in accordance with the formula set out in the regulations. The Regulations will also provide the method for calculating the small resulting pension to a lump sum payment.

Details of the Regulations are outlined in the Attachment

A regulation impact statement is not required; the Office of Best Practice Regulation has been consulted. The Defence Force Retirement and Death Benefits Authority, the Australian Government Actuary, ComSuper and the Department of Finance have been consulted in the making of the Regulations.

The Regulation is a legislative instrument for the purpose of the Legislative Instruments Act 2003.

 

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Attachment

Details of the Defence Force Retirement and Death Benefits Amendment Regulations 2007 (No. 1)

Regulation 1 identifies that the Regulations are the Defence Force Retirement and Death Benefits Amendment Regulations 2007 (No. 1).

Regulation 2 provides that the Regulations are to commence on 1 January 2008.

Regulation 3 provides that Schedule 1 amends the Defence Force Retirement and Death Benefits Regulations (the Regulations).

Schedule 1

Item [1] renames the Principal Regulations as the Defence Force Retirement and Death Benefits Regulations 1973 in line with current drafting practice.

Item [2] inserts new regulations 3A and 3B into the Principal Regulations the prescribed rate and the formula for calculating the lump sum payment for the purpose of subsection 6BA(3) of the Act.

Subregulation 3A (1) provides the prescribed rate as $1407.79 for the purpose of determining if a small resulting pension is to be converted to a lump sum.

Subregulations 3A (2) to (5) provides the method of indexing the prescribed rate each half year in line with the consumer price index published in the March and September quarters.

Subregulations 3B (1) to (3) provides the method for calculating the small resulting pension to a lump sum payment by using the spouses age factor provided by the Australian Government Actuary’s ‘methods and factors for valuing particular superannuation interests’.