Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT) 1994 NO. 272

STATUTORY RULES 1994 No. 272

Issued by the authority of the Minister for Finance

Superannuation Act 1976

Superannuation (Eligible Employees) Regulations (Amendment)

The Superannuation Act 1976 (the Act) makes provision for and in relation to an occupational superannuation scheme (known as the CSS) for certain Commonwealth employees and other persons.

Section 168 of the Act provides that the Governor-General may make regulations for the purposes of the Act.

Members of the CSS are referred to in the Act as eligible employees. In accordance with paragraph (j) of the definition of eligible employee in subsection 3(1) of the Act, a class of persons may be excluded by regulation from becoming, or remaining, eligible employees. Persons included in a class of persons who are excluded from becoming, or remaining, eligible employees are prescribed in the Superannuation (Eligible Employees) Regulations (the Principal Regulations).

The membership arrangements provided for in the Principal Regulations generally exclude a person from membership of the CSS if the person is a member of another superannuation scheme to which the person's employer has agreed to make employer contributions.

Some CSS members are employed on flexible remuneration arrangements which enable them to receive part of their remuneration as non-cash benefits. Under such arrangements some members may sacrifice a portion of their cash salary in favour of employer superannuation contributions to an alternative superannuation scheme in addition to contributions already being made to the CSS. It is intended that, where a CSS member is entitled to such arrangements as part of his or her remuneration package, selection of this option should not exclude the person from membership of the CSS.

The Regulations amend the Principal Regulations to give effect to this intention. The Regulations also amend the Principal Regulations to clarify that a reference to membership of a superannuation scheme does not include a reference to the scheme under the Superannuation Act 1990 (known as the PSS) where the person's membership of that scheme relates to employment other than that in respect of which the person is a member of the CSS. The details of the Regulations are explained in the Attachment.

The Regulations commence on gazettal.

ATTACHMENT

SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)

The details of the amending Regulations are as follows

Clause 1

This provides that the Superannuation (Eligible Employees) Regulations (the Principal Regulations) are amended by these Regulations.

Clause 2

This amends regulation 3 which is the interpretation provision.

Subclauses 2.1 and 2.2 make technical drafting changes to the definition of "SMEC relevant day" and "superannuation scheme".

Subclause 2.3 amends the definition of "superannuation scheme" to clarify that the definition does not apply to the scheme under the Superannuation Act 1990 (known as the PSS) of which a person may be a member in respect of employment other than the employment in respect of which the person is a member of the CSS. This change is made as a consequence of amendments made to the Superannuation Act 1990 in 1992 to clarify that a person may have membership of both the CSS and the PSS but not in respect of the same employment. This recognises the changing nature of Commonwealth employment where a person may hold a number of jobs, usually on a part-time basis, at the same time.

Subclause 2.4 inserts a definition of "top-up arrangement" which provides that the term has the meaning given by subregulation 4(4) of the Principal Regulations (as inserted by subclause 3.4).

Clause 3

This amends regulation 4 of the Principal Regulations which lists those persons who are not included in the definition of "eligible employee" for the purposes of the Act.

Subclauses 3.1, 3.2 and 3.3 amend subparagraphs 4(1)(a)(ii), 4(1)(aa)(ii) and 4(1)(o)(ii) respectively. The effect of the amendments is to ensure that certain persons referred to in those provisions do not cease to be eligible employees if they are, or become, members of a superannuation scheme for top-up purposes.

Subclause 3.4 inserts new subregulations 4(2), (3), (4), (5) and (6).

Subregulation 4(2) explains that persons referred to in the amendments made by subclauses 3.1 to 3.3 inclusive are persons whose remuneration arrangements allow them to choose to take some of their remuneration in a non-cash form, including the choice to salary sacrifice some of their remuneration towards additional superannuation in a superannuation scheme other than the CSS. In most cases this will apply to persons employed on contracts with total employment cost flexible remuneration packages. However, these arrangements are to apply also to employees with other flexible remuneration arrangements.

Subregulation 4(3) explains what is meant in subparagraphs 4(1)(a)(ii), 4(1)(aa)(ii) and 4(1)(o)(ii) by a person being a member of a superannuation scheme for top-up purposes. For a person to be taken to be a member of a scheme for top-up purposes the person's membership of the scheme must be limited to membership for the following purposes:

(a) for a top-up arrangement only (this is explained in subregulation 4(4)); or

(b) for a top-up arrangement and one or more of the following:

(i)       because contributions are made to the scheme in respect of performance pay received by the person;

(ii)       the person is a member of the scheme for the purposes of receiving the minimum superannuation benefit envisaged in the Superannuation Guarantee arrangements.

Subregulation 4(4) defines a "top-up arrangement" as referred to subregulation 4(3). It is an arrangement between the person and the person who pays his or her remuneration for employer superannuation contributions to be paid in respect of the person to a superannuation scheme other than the CSS.

Subregulation (5) provides that an arrangement is not a top-up arrangement unless the employer superannuation contributions referred to in subregulation 4(4) are part of the person's overall remuneration and would not increase that remuneration. Also, the person must be a member of the CSS in respect of the employment to which the arrangement relates,

Subregulation 4(6) makes it clear that a superannuation scheme can be a scheme for top-up purposes even though it is not generally a superannuation scheme as defined for the purposes of the Regulations because it is a scheme providing the minimum superannuation envisaged in the Superannuation Guarantee arrangements.