SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT) 1991 NO. 468

Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT) 1991 NO. 468

EXPLANATORY STATEMENT

STATUTORY RULES 1991 No. 468

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) 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 that 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 regulations may modify the 1976 Act in its application to the transferred contributors.

The special arrangements applicable to the transferred Provident Account contributors are provided by way of modifications to the 1976 Act contained in the Superannuation (Former Provident Account Contributors) Regulations (the Principal Regulations) made under section 183 of that Act.

The amending Regulations amend the Principal Regulations as a consequence of certain amendments made to the 1976 Act and other Regulations under that Act made since the Principal Regulations were made. The amending Regulations also make a number of technical drafting changes to the Principal Regulations.

The amendments contained in the amending Regulations are explained in the Attachment.

The Regulations operate from the date of Gazettal.

ATTACHMENT

DETAILS OF THE SUPERANNUATION (FORMER PROVIDENT ACCOUNT CONTRIBUTORS) REGULATIONS (AMENDMENT)

Regulation 1

This provides that, in these Regulations, the Principal Regulations are the Superannuation (Former Provident Account Contributors) Regulations.

Regulation 2

Subregulation 4(2) of the Principal Regulations provides for modifications to subsection 157(3) of the 1976 Act which provides for the cancellation of certain elections.

Amendments made to that subsection since the Principal Regulations were made have resulted in the extension of that provision to cover elections under sections 128 and 139A of the 1976 Act. As a consequence, regulation 2 amends the modification to subsection 157(3) of the 1976 Act to include references to those sections.

Regulation 3

This provides that the Schedule to the Principal Regulations is amended in accordance with the following paragraphs:

paragraph (a)

Subsection 62(2) of the 1976 Act as modified by the Principal Regulations provides for the lump sum benefit available to a person who elects, on involuntary retirement, to receive a lump sum benefit in lieu of pension.

Persons who had paid supplementary contributions were also entitled to receive a lump sum of their accumulated supplementary contributions in accordance with subsection 62(3) of the 1976 Act.

Since the Principal Regulations were made, subsection 62(3) of the 1976 Act has been omitted and subsection 62(2) has been amended to include a person's accumulated supplementary contributions in the lump sum provided for in that subsection.

To reflect the changes to section 62 of the 1976 Act, paragraph 3(a) amends the modification to subsection 62(2) of the 1976 Act included in the Principal Regulations to provide that a lump sum benefit payable under that subsection will include the amount of a person's accumulated supplementary contributions (if any).

paragraph (b)

Section 76A of the 1976 Act provides that certain persons may elect to renounce their invalidity pension in favour of age retirement pension benefits under the 1976 Act. This election can be made only where the person has not elected to receive a lump sum invalidity benefit pursuant to sections 69 or 72 of the 1976 Act. Section 76A was inserted in the 1976 Act after the Principal Regulations were made.

Sections 198 and 199, which were inserted into the 1976 Act by the Principal Regulations, also provide for the payment of a lump sum invalidity benefit in lieu of an invalidity pension.

Consequently, paragraph 3(b) inserts in the Schedule to the Principal Regulations a modification to section 76A of the 1976 Act which will ensure that an election to renounce an invalidity pension is not available to a person who has made an election under section 198 or 199 of the 1976 Act to receive a lump sum invalidity benefit.

paragraph (c)

The modifications included in the Principal Regulations modify subsection 110(10) of the 1976 Act to ensure that the subsection may apply in respect of benefits provided for in modifications made to the 1976 Act by the Principal Regulations.

Since the Principal Regulations were made, subsection 110(10) of the Principal Act has been revised. As the revised subsection 110(10) can apply effectively to persons to whom the Principal Regulations apply without the need for modification, paragraph 3(c) deletes that modification.

paragraph (d)

This paragraph makes a drafting amendment to subsection 197(1) of the 1976 Act, as inserted by the Principal Regulations, to ensure consistency of the provisions of the subsection in relation to the period during which an election may be made to receive a lump sum benefit in lieu of a pension.

paragraph (e)

Subsection 197(3) of the 1976 Act, as inserted by the Principal Regulations, provides that where a person elects to receive a lump sum benefit under that section the person is also entitled to receive payment from the Superannuation Fund of any accumulated supplementary contributions.

As a consequence of amendments made to the 1976 Act since the Principal Regulations were made, the accumulated supplementary contributions of a person referred to in section 197 are paid to the Consolidated Revenue Fund (CRF) when the person ceases to be a member of the scheme.

Consequently, paragraph 3(e) amends subsection 197(3) by deleting the reference to payment out of the Superannuation Fund. Payment of the lump sum is then automatically made from the CRF in accordance with general provisions included in the 1976 Act.

paragraph (f)

Amendments made by paragraph 3(h) of the amending Regulations to section 198 of the 1976 Act, as inserted by the Principal Regulations, provide for a person to elect to receive a lump sum benefit in lieu of invalidity pension under that section in the period 3 months before the person becomes entitled to the pension as well as 3 months after becoming entitled to that pension.

Paragraph 3(f) makes a drafting change to paragraph 198(1)(a) as a consequence of that amendment.

paragraph (g)

Subsection 198(1) of the 1976 Act, as inserted by the Principal Regulations, provides that a person may elect to receive a lump sum benefit in lieu of an invalidity pension, provided the person's period of prospective service is not less than 8 years.

The Superannuation (Approved Part-time Employees) Regulations modify the definition of "period of prospective service" in subsection 3(1) of the 1976 Act in relation to a person who is, or who has been, an approved part-time employee and insert a further definition of the term "period of prospective employment". Those Regulations also modify various provisions of the 1976 Act to provide that certain benefit entitlements will arise on the basis of the length of a person's period of prospective employment rather than his or her period of prospective service. This modification was made to avoid disadvantage to persons working part-time.

So that these arrangements may be extended to the special arrangements applied to former Provident Account contributors who have been part-time employees, paragraph 3(g) amends subsection 198(1) so that it will apply also to a person who is, or who has been, an approved part-time employee, where that person's period of prospective employment is not less than 8 years.

paragraph (h)

Subsection 198(1) of the 1976 Act, as inserted by the Principal Regulations, provides that certain persons may make an election to receive a lump sum benefit in lieu of pension no later than 3 months after becoming entitled to that pension.

Since the Principal Regulations were made, the general election periods provided for in the 1976 Act have been extended to allow elections in the period 3 months before a person becomes entitled to the benefit in respect of which the election is made. Consequently, paragraph 3(h) amends subsection 198(1) to provide that a person may make an election to receive a lump sum benefit in lieu of pension under that subsection up to 3 months before the person becomes entitled to invalidity pension as well as in the 3 month period following that time.

paragraph (j)

Amendments made by paragraph 3(m) of the amending Regulations to section 199 of the 1976 Act, as inserted by the Principal Regulations, provide for a person to elect to receive a lump sum benefit in lieu of invalidity pension under that section in the period 3 months before the person becomes entitled to the pension as well as 3 months after becoming entitled to that pension.

Paragraph 3(j) makes a drafting change to paragraph 199(1)(a) as a consequence of that amendment.

paragraph (k)

This contains a technical drafting amendment to paragraph 199(1)(a) of the 1976 Act as inserted by the Principal Regulations.

paragraph (l)

Paragraph 199(1)(c) of the 1976 Act, as inserted by the Principal Regulations, provides that a person may elect to receive a lump sum benefit in lieu of invalidity pension, provided the person's period of contributory service is not less than 15 years.

The Superannuation (Approved Part-time Employees) Regulations modify the definition of the term "period of contributory service" in subsection 3(1) of the 1976 Act in relation to a person who is, or who has been, an approved part-time employee and insert a further definition of the term "period of employment". Those Regulations also modify various provisions of the 1976 Act to provide that certain benefit entitlements will arise on the basis of the person's period of employment rather than his or her period of contributory service. This modification was made to avoid disadvantage to persons working part-time.

So that these arrangements may be extended to the special arrangements applied to former Provident Account contributors who have been part-time employees, paragraph 3(1) amends subsection 199(1) so that it will apply also to a person who is, or who has been, an approved part-time employee, where that person's period of employment is not less than 15 years.

paragraph (m)

Subsection 199(1) of the 1976 Act, as inserted by the Principal Regulations, provides that a person may make an election to receive a lump sum benefit in lieu of pension no later than 3 months after becoming entitled to make such an election.

As explained in relation to paragraph 3(h), since the Principal Regulations were made, the general election periods provided for in the 1976 Act have been extended. To reflect these changes, paragraph 3(m) amends subsection 199(1) to provide that a person may make an election to receive a lump sum benefit in lieu of pension under that subsection up to 3 months before the person becomes entitled to invalidity pension as well as in the 3 month period following that time.

Paragraph (n)

Subsection 200(2) of the 1976 Act, as inserted by the Principal Regulations, provides that where a person elects to receive a lump sum benefit under sections 198 or 199 the person is also entitled to receive payment from the Superannuation Fund of any accumulated supplementary contributions.

For the reasons outlined in relation to paragraph 3(e) above, such payments are now to be made from the Consolidated Revenue Fund.

Consequently, paragraph 3(n) amends subsection 200(2) by deleting the reference to payment out of the Superannuation Fund.

paragraph (o)

Subsection 201(3) of the 1976 Act, as inserted by the Principal Regulations, provides that, where a person to whom the subsection applies has paid supplementary contributions, he is entitled to payment out of the Superannuation Fund of an amount equal to his accumulated supplementary contributions.

For the reasons outlined in relation to paragraph 3(e) above, such payments are now to be made from the Consolidated Revenue Fund.

Consequently, paragraph 3(o) amends subsection 201(3) by deleting the reference to payment out of the Superannuation Fund.

paragraph (p)

Subsection 202(1) of the 1976 Act, as inserted by the Principal Regulations, provides that in certain circumstances a spouse of a deceased prescribed eligible employee who is entitled to receive a spouse's benefit under subsection 81(2) of the 1976 Act may elect instead to receive a lump sum benefit. This is to apply where the period of prospective service of the deceased prescribed eligible employee was not less than 8 years.

As explained in relation to paragraph 3(g) above, certain provisions of the 1976 Act have been modified by other regulations under that Act in relation to references to periods of prospective service as they apply to persons who have been approved part-time employees.

For reasons mentioned in paragraph 3(g), paragraph 3(p) amends subsection 202(1) of the 1976 Act so that it will apply also to a spouse of a deceased prescribed eligible employee who, at any time, was an approved part-time employee, where that employee's period of prospective employment was not less than 8 years.

paragraph (q)

Subsection 203(1) of the 1976 Act, as inserted by the Principal Regulations, provides that in certain circumstances a spouse of a deceased prescribed eligible employee who is entitled to receive a spouse's benefit under subsection 81(2) of the 1976 Act may elect instead to receive a lump sum benefit. This is to apply where the period of contributory service of the deceased prescribed eligible employee was not less than 15 years.

As explained in relation to paragraph 3(1) above, certain provisions of the 1976 Act have been modified by other regulations under that Act in relation to references to periods of contributory service as they apply to persons who have been approved part-time employees.

For reasons mentioned in paragraph 3(1), paragraph 3(q) amends subsection 203(1) of the 1976 Act so that it will apply also to a spouse of a deceased prescribed eligible employee who, at any time was an approved part-time employee, where that employee's period of employment was not less than 15 years.

paragraphs (r) and (s)

Subsections 204(2) and 205(3) of the 1976 Act, as inserted by the Principal Regulations, provide that where a spouse is entitled to receive a lump sum benefit of a deceased prescribed eligible employee's accumulated supplementary contributions that payment is to be made from the Superannuation Fund.

For reasons outlined in relation to paragraph 3(e) above, such payments are now to be made from the Consolidated Revenue Fund.

Consequently, paragraphs 3(r) and 3(s) amend subsections 204(2) and 205(3) respectively by deleting the reference to payment out of the Superannuation Fund.

paragraph (t)

Subsection 207(1) of the 1976 Act, as inserted by the Principal Regulations, provides for the payment of a lump sum benefit in lieu of orphan's pension payable under section 98 of the 1976 Act to the eligible child or eligible children of a deceased prescribed eligible employee.

Paragraph 207(1)(b) provides that the provisions of section 207 of the 1976 Act will apply where the deceased prescribed eligible employee's period of prospective service was not less than 8 years.

For reasons mentioned in paragraph 3(g), paragraph 3(t) amends subsection 207(1) of the 1976 Act so that it will apply also to a child of a deceased prescribed eligible employee who, at any time, was an approved part-time employee, where that employee's period of prospective employment was not less than 8 years.

paragraph (u)

Subsection 208(1) of the 1976 Act, as inserted by the Principal Regulations, provides for the payment of a lump sum benefit in lieu of orphan's pension payable under section 100 of the 1976 Act to the eligible child or eligible children of a deceased prescribed eligible employee.

Paragraph 208(1)(b) provides that the provisions of section 208 of the 1976 Act will apply where the deceased prescribed eligible employee's period of contributory service was not less than 8 years.

For reasons mentioned in paragraph 3(1), paragraph 3(u) amends subsection 208(1) of the 1976 Act so that it will apply also to a child of a deceased prescribed eligible employee who, at any time, was an approved part-time employee, where that employees period of employment was not less than 8 years.

Paragraph (v)

Subsection 209(2) of the 1976 Act, as inserted by the Principal Regulations, provides that where an orphan is entitled to receive a lump sum benefit equal to the accumulated supplementary contributions of a deceased prescribed eligible employee that payment is to be made from the Superannuation Fund.

For the reasons outlined in relation to paragraph 3(e) above, such payments are now to be made from the Consolidated Revenue Fund.

Consequently, paragraph 3(v) amends subsection 209(2) of the 1976 Act by deleting the reference to payment out of the Superannuation Fund.

paragraph (w)

Subsection 210(3) of the 1976 Act, as inserted by the Principal Regulations, provides that where a spouse or an eligible child or eligible children are entitled to receive a lump sum benefit equal to the accumulated supplementary contributions of the deceased prescribed eligible employee, that payment is to be made from the Superannuation Fund.

For the reasons outlined in relation to paragraph 3(e) above, such payments are now to be made from the Consolidated Revenue Fund.

Consequently, paragraph 3(w) amends subsection 210(3) of the 1976 Act by deleting the reference to payment out of the Superannuation Fund.

paragraph (x)

Section 211 of the 1976 Act, as inserted by the Principal Regulations, includes special provisions in relation to the calculation of the lump sum benefit to certain former Provident Account contributors who elect to receive a lump sum benefit in lieu of a pension. These provisions apply to or in respect of a person who, on becoming a Provident Account contributor, paid a transfer value to the Superannuation Board.

Section 211 provides that the calculation of the lump sum benefit shall not include the amount of the transfer value but payment will be made to the person of the amount of the transfer value plus interest at rates applicable under the Superannuation Act 1922 or provided for in the Superannuation (Interest) Regulations (the Interest Regulations) made under the 1976 Act.

Since the Principal Regulations were made, rates of interest have ceased to be provided for in the Interest Regulations. Instead, section 154A of the 1976 Act provides for interest rates to be determined by the Commonwealth Superannuation Board of Trustees No 2 (the Board).

As a consequence, paragraph 3(x) amends subparagraph 211(2)(b)(ii) to replace the reference to the Interest Regulations with a reference to a determination by the Board under subsection 154A(1) of the 1976 Act.