Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT) 1995 NO. 200

STATUTORY RULES 1995 No. 200

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, the Commonwealth Superannuation Scheme (the CSS), for certain Commonwealth employees and other persons, including employees of approved authorities.

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

Persons eligible to contribute to the CSS (ie, CSS members) are referred to in the Act as eligible employees. In accordance with 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 Superannuation Industry (Supervision) Act 1993 and regulations under that Act (SIS) provide for a regulatory system for superannuation schemes which are regulated superannuation funds under that Act. The CSS will become a regulated superannuation fund for the purposes of SIS by 1 July 1995.

SIS provides for the compulsory cashing (that is, payment) of benefits as soon as practicable after a member of a regulated superannuation fund, who is not gainfully employed on a full-time basis, attains age 70. Generally, the Act does not allow for the payment of a benefit to a person before that person ceases to be a CSS member.

To ensure that the CSS will comply with this SIS requirement, the amending Regulations amend the Principal Regulations to provide that a person will cease to be a CSS member once SIS provides for the compulsory payment of any of the person's CSS benefits.

If contributions are required to be paid in respect of the person after that time as a result of an industrial award or agreement, and are permitted by SIS, they will be paid to a superannuation scheme other than the CSS.

The amending Regulations also clarify certain existing provisions of the Principal Regulations and remove one provision which has ceased to have application.

The amendments contained in the regulations are explained in the Attachment.

The amending Regulations commenced on 1 July 1995.

ATTACHMENT

SUPERANNUATION (ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)

The details of the amending Regulations are as follows:

Regulation 1

This provides that the amending Regulations commence on 1 July 1995.

Regulation 2

This provides that the Superannuation (Eligible Employees) Regulations (the Principal Regulations) are amended as set out in the amending Regulations.

Regulation 3

This omits regulation 1 of the Principal Regulations (Citation) and substitutes a new citation for the Principal Regulations. The new citation is Superannuation (CSS) Eligible Employees Regulations.

Regulation 4

This amends regulation 3 of the Principal Regulations which is the interpretation provision.

Subregulation 4.1 omits definitions which rehire to the Snowy Mountains Engineering Corporation Limited (SMEC) which are no longer necessary (see subregulation 5.4 below).

Subregulation, 4.2 omits the definition of "superannuation scheme" and substitutes a new definition to clarify the intention of the definition and make a technical change.

Generally, a person may not become, or remain, an eligible employee if the person's employer contributes in respect of them to a superannuation scheme other than the CSS. Both the omitted definition and the new definition broadly describe a superannuation scheme as a superannuation or retirement benefits scheme applying to a person's employment, with certain exceptions.

The exceptions which were included in the omitted definition are included in the new definition. However, the new definition clarifies the intention that the definition does not Include a scheme if membership of that scheme by a person is for the purpose of receiving a productivity benefit or other benefits which satisfy in whole or in part the employees obligations in respect of the person under the Superannuation Guarantee (Administration) Act 1992.

The omitted definition excluded the scheme provided for by deed under the Superannuation Act 1990 (the 1990 Act) (referred to as the "Superannuation Scheme") where a person is a member of that scheme in respect of other employment. The reference to that scheme in the new definition is changed to reflect the new name of the scheme, the Public Sector Superannuation Scheme, as provided for in amendments to the 1990 Act by the Superannuation Legislation Amendment Act (No. 1) 1995.

Regulation 5

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

Subregulation 6.1 amends paragraph 4(1)(aa) to ensure that persons who are on leave of absence without pay will not be excluded from membership of the CSS by this paragraph because of membership of another superannuation scheme during that leave.

Previously the exception from the class of persons described in the paragraph was limited to those persons on leave without pay who were not entitled to contribute to the CSS during the period of the leave. Persons who were contributing to the CSS during leave without pay to work in other employment generally were not permitted to be members of another superannuation scheme if they wished to continue contributing to the CSS during the leave.

Because of the obligations now placed on all employers to provide superannuation for their employees it is not necessarily equitable to provide that members on leave without pay may not contribute to the CSS if they must join the new employees scheme. This is particularly the case if that scheme provides lower benefits than the CSS. Therefore, the limitatation on CSS members continuing to contribute to the CSS while on leave without pay to work in employment where staff are required to join the employees scheme has been removed.

It is appropriate, therefore that membership of a separate scheme in these circumstances, which represent only a temporary break with the person's usual employer; should not exclude a person from continuing membership of the CSS.

Subregulation 5.2 amends subregulation 4(1) of the Principal Regulations by inserting a new paragraph, paragraph 4(1)(d), to include a new class of persons not to be included as "eligible employees". The new class includes persons whose CSS benefits become compulsorily payable under SIS.

Subregulation 5.3 amends paragraph 4(1)(o) to ensure that persons who are on leave of absence without pay will not be excluded from membership of the CSS by this paragraph because of membership of another superannuation scheme during that leave (See subregulation 5.1 above).

Subregulation 5.4 amends the Principal Regulations by omitting paragraph 4(1)(y) which included certain Snowy Mountains Engineering Corporation Limited (SMEC) employees in a class of persons not included in the definition of "eligible employee". This provision became redundant when SMEC was sold and CSS membership arrangements for SMEC employees ceased.

Subregulation 5.5 omits subparagraph 4(3)(b)(ii) of the Principal Regulations and substitutes a new subparagraph 4(3)(b)(ii).

Subregulation 4(3) defines the circumstances in which a person is taken to be a member of a superannuation scheme for top-up purposes. Although, as mentioned above, CSS membership generally is not available to a person who is a member of another superannuation scheme, this is not the case where membership of that scheme is for top-up purposes only. A person is a member of a scheme for top-up purposes if that membership results from a remuneration arrangement which allows employer superannuation contributions to be paid to another superannuation scheme (ie, a top-up arrangement) as wen as the CSS in respect of the person and for certain other reasons.

The new subparagraph 4(3)(b)(ii) clarifies the intention of the subregulation that membership of a scheme for top-up purposes may include, as well as membership as a result of a top-up arrangement, membership for the purpose of receiving one or more of the following:

-       a productivity benefit; or

-       other benefits which satisfy in whole or in part the employer's obligations in respect of the person under the Superannuation Guarantee (Administration) Act 1992;

-       a benefit based on contributions in relation to performance pay.

Subregulation 5.6 makes a technical amendment to subregulation 4(6) of the Principal Regulations as a consequence of the new definition of "superannuation scheme".