Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (FORMER CONTRIBUTORS FOR UNITS OF PENSION) REGULATIONS (AMENDMENT) 1991 NO. 191

EXPLANATORY STATEMENT

STATUTORY RULES 1991 No. 191

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (FORMER CONTRIBUTORS FOR UNITS OF PENSION) 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 the 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 Pension Scheme contributors are provided by way of modifications to the 1976 Act contained in the Superannuation (Former Contributors for Units of Pension) Regulations (the Principal Regulations) made under section 183 of that Act.

The Regulations will amend the Principal Regulations as a consequence of certain amendments to the 1976 Act by the Superannuation Legislation Amendment Act 1990. The amendments contained in the Regulations are explained in the Attachment.

In accordance with subsection 168(9) of the 1976 Act, the Regulations will operate with effect from and including 1 July 1990, the date of commencement of the amendments to the 1976 Act.

ATTACHMENT

SUPERANNUATION (FORMER CONTRIBUTORS FOR UNITS OF PENSION) REGULATIONS (AMENDMENT)

REGULATION 1

This provides for the Superannuation (Former Contributors for Units of Pension) Regulations (Amendment) (the Amending Regulations) to operate with effect from and including 1 July 1990.

REGULATION 2

This provides that the Superannuation (Former Contributors for Units of Pension) Regulation (the Principal Regulations) are amended as set out in the Amending Regulations.

REGULATION 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

The Schedule to the Principal Regulations modified subsection 3(1) of the 1976 Act by inserting a definition of the term "Board" relating to the Superannuation Board established by the Superannuation Act 1922 (the 1922 Act). However, paragraph 8(1)(k) of the Superannuation Legislation Amendment Act 1990 (the Amending Act) also inserted in subsection 3(1) of the 1976 Act a definition of the term "Board" but relating to the Commonwealth Superannuation Board established by section 27A of the 1976 Act.

Subregulation 3.2 of the Amending Regulations overcomes this duplication in terms by amending the Schedule to the Principal Regulations to use the term "Superannuation Board" in relation to the Board established by the 1922 Act.

SUBREGULATION 3.3

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.

Regulation 3.3 makes technical drafting changes to subsection 55(1) as modified by the Schedule to the Principal Regulations as a consequence of amendments to the subsection by section 42 of the Amending Act.

SUBREGULATIONS 3.4 AND 3.5

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 to the special pension accrual rate applicable to former 1922 Act Pension Scheme contributors.

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. Subregulations 3.4 and 3.5 amend the modified section 56 to extend the years and days arrangement to persons covered by the Principal Regulations.

SUBREGULATIONS 3.6 AND 3.7

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 for the optional lump sum benefit to be calculated differently for certain former 1922 Act Pension scheme contributors.

Consequent upon the amendment to subsection 3(1) by subregulation 3.2, subregulation 3.6 amends the substituted paragraph 62(2)(b) to replace the references to "Board" with references to "Superannuation Board".

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 3.7 amends the modified subsection 62(2) to have regard to this change.

SUBREGULATIONS 3.8 TO 3.13

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 Pension Scheme 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 3.8 to 3.13 amend the modified sections 67 and 68 to extend the years and days arrangments to persons covered by the Principal Regulations.

SUBREGULATIONS 3.14 AND 3.15

Section 69 of the 1976 Act enables certain invalidity retirees to elect for a lump sum benefit calculated in accordance with subsection 69(2) instead of the benefits otherwise payable. The Schedule to the Principal Regulations modified 69(2) to provide for the optional lump sum benefit to be calculated differently for certain former 1922 Act Pension Scheme contributors.

Consequent upon the amendment to subsection 3(1) by subregulation 3.2, subregulation 3.14 amends the substituted paragraph 69(2)(a) to replace the reference to "Board" with a reference to "Superannuation Board".

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 3.15 amends the modified subsection 69(2) to have regard to this change.

SUBREGULATIONS 3.16 AND 3.17

Sections 70 and 71 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 70 and 71 to have regard to the special pension accrual rate applicable to former 1922 Act Pension Scheme contributors.

Sections 52 and 53 of the Amending Act respectively amended sections 70 and 71 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. Subregulatiohs 3.16 and 3.17 respectively amend the modified sections 70 and 71 to extend the years and days arrangements to persons covered by the Principal Regulations.

SUBREGULATION 3.18 TO 3.21

Section 72 of the 1976 Act enables certain invalidity retirees to elect for a lump sum benefit calculated in accordance with subsection 72(2) instead of the benefits otherwise payable. Section 73 provides a lump sum benefit calculated in accordance with subsection 73(2) for certain other invalidity retirees. The Schedule to the Principal Regulations modified subsections 72(2) and 73(2) to provide for the lump sums to be calculated differently for certain former 1922 Act Pension Scheme contributors.

Consequent upon the amendment of subsection 3(1) by subregulation 3.2, subregulations 3.18 and 3.20 respectively amend the substituted paragraphs 72(2)(a), 73(2)(a) to replace the references to "Board" with references to "Superannuation Board".

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 3.19 and 3.21 respectively amend the modified subsections 72(2) and 73(2) to have regard to this change.

SUBREGULATION 3.22

Section 57 of the Amending Act inserted section 96A in the 1976 Act to provide for the indemnification of a bank or similar financial institution in relation to the overpayment of a former member's pension after his or her death where the amount has been paid to the former member's spouse and for the amount of the overpayment to be offset against the pension payable to the spouse under subsection 94(3), 95(2) or 96(3) as inserted in the 1976 Act by sections 54, 55 and 56 respectively of the Amending Act. Consequent upon the insertion of subsection 215(5A) by subregulation 3.27, subregulation 3.22 modifies paragraphs 96A(a), (b) and (e) to include a reference to subsection 215(5A).

Section 58 of the Amending Act inserted in the 1976 Act section 96B in relation to a spouse's benefit attributable to partially dependent children. Section 96B makes reference to the various provisions of the 1976 Act in accordance with which spouse's pension is payable. Subregulation 3.22 also modifies section 96B to include appropriate references to section 215 as inserted in the 1976 Act by the Schedule to the Principal Regulations. Section 215 also provides for the payment of spouse's pension.

SUBREGULATION 3.23

Section 111 of the 1976 Act provides for a benefit to be paid to a former member or, if dead, to the former member's estate where, because of the former member's death or otherwise, no further benefits are payable to or in respect of the former member under the 1976 Act and where the amount of the former member's accumulated contributions exceeds the total amount of benefit paid. The amount of the benefit is subject to certain adjustments provided for in the section. The Schedule to the Principal Regulations modified section 111 to provide for further adjustments to the amount of the benefit in relation to certain former 1922 Act Pension Scheme contributors.

Section 65 of the Amending Act inserted subsection 111(8) to provide that, for the purposes of section 111, references to a former member's accumulated contributions include a reference to his or her accumulated employer contributions as defined in section 110Q. Subregulation 3.23 modifies section 111(8) by changing a reference to have regard to the existing modifications to section 111.

SUBREGULATIONS 3.24 AND 3.25

Consequent upon the amendment to subsection 3(1) by subregulation 3.27, subregulation 3.24 and 3.25 respectively amend the added section 130B and 213 to replace the references to "Board" with references to "Superannuation Board".

SUBREGULATION 3.26

Section 214, which was inserted in the 1976 Act by the Schedule to the Principal Regulations, reduces the rate of pension payable to a former 1922 Act Pension Scheme contributor where he or she had opted not to contribute for his or her full pension entitlement under the 1922 Act. The reduction abates with each complete year of contributory service after 1 July 1976 and is extinguished after 30 years of such service.

Consistent with the amendment of various provisions of the 1976 Act by the Amending Act to provide for pensions payable to be calculated on the basis of complete years and part years, instead of complete years only, of contributory or prospective service, subregulation 3.26 amends section 214 to provide for the abatement of the reduction in pension to have regard to completed and part years of contributory service after 1 July 1976.

SUBREGULATIONS 3.27 AND 3.28

Section 215, which was inserted in the 1976 Act by the Schedule to the Principal Regulations, relates to the rate of spouse's pension payable in respect of a former 1922 Act Pension Scheme contributor who, as at 30 June 1976, was contributing under the 1922 Act for a spouse's pension of 50%, instead of 62.5%, of the former member's own pension entitlement. Section 215 provides for the rate of spouse's pension under the 1976 Act in relation to the former member to increase gradually from 54% to 67% of the former member's own pension entitlement with each complete year of contributory service after 1 July 1976. The percentage increases to 67% after 30 years such service.

Also, sections 54 and 56 of the Amending Act respectively inserted subsections 94(3) and 96(3) in the 1976 Act to provide for the spouse's pensions under sections 94 and 96 to be payable for a period after the death of the former member at the rate at which the pension was payable to the former member instead of at the rate provided by section 94 or section 96. The spouse's pensions under subsections 215(4) and 215(5) are payable instead of those under section 94 and section 96 respectively. Subregulation 3.27 therefore amends section 215 to provide for the spouse's pensions under sections 215(4) and 215(5) to be at the rate payable to the former member for a period after his or her death.

Consistent with the amendment of various provisions of the 1976 Act by the Amending Act to provide for pensions payable to be calculated on the basis of complete years and part years, instead of complete years only, of contributory or prospective service, subregulation 3.28 amends section 215 to provide for the increase in the rate of spouse's pension to have regard to completed and part years of contributory service after 1 July 1976.

SUBREGULATIONS 3.29 TO 3.31

The Schedule to the Principal Regulations inserted in the 1976 Act sections 217 and 218 to provide an increased rate of pension for certain former 1922 Act Pension Scheme contributors. The increased rate is, in part, calculated in accordance with the formulae in paragraphs 217(1)(b) and 218 (1)(b).

It is intended that "E" in the formulae reflect the whole of the person's period of membership. Generally, this equates with the person's period of contributory service. However, the definition of "period of contributory service" in subsection 3(1) of the 1976 Act that operated from the commencement of that Act excluded from the scope of the term periods of leave without pay in respect of which subsection 51(1) of the 1976 Act applied. In accordance with subsections 217(2) and 218(2), "E" in the formulae therefore has regard to the person's period of contributory service and any periods of leave without pay in relation to the person in respect of which subsection 51(1) of the 1976 Act applies.

Following amendments to the 1976 Act by the Superannuation Amendment Act 1978 and the Amending Act, the definition of "period of contributory service" now excludes from the scope of the term the following periods:

(a)       any period of leave without pay in respect of which subsection 51(1) of the 1976 Act applies;

(b)       any period of unpaid maternity leave in respect of which subsection 51A(1) as in force before 1 July 1990 applies; or

(c)       any period of unpaid maternity or parental leave that is taken, under subsection 51A(5) of the 1976 Act as in force on and after 1 July 1990, to be a non-contributory period of service for the particular person.

Subregulations 3.29 and 3.30 amend subsections 217(2) and 218(2), and subregulation 3.31 inserts a new section 218A, so that all of these periods will be taken into account in "E" in the formulae in subsections 217(1) and 218(1).


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