Commonwealth Numbered Regulations - Explanatory Statements

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SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT) 1995 NO. 32

STATUTORY RULES 1995 No. 32

Issued by the authority of the Minister for Finance

Superannuation Act 1976

Superannuation (Salary) 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, including certain employees and office-holders of the Northern Territory. Members of the scheme are referred to in the Act as eligible employees.

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

Section 5 of the Act provides, among other things, that the regulations may prescribe an annual rate of salary for certain eligible employees. Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations (the Principal Regulations).

Some CSS members are employed under employment agreements including flexible remuneration arrangements which enable them to receive part of their remuneration as non-cash benefits and, potentially, vary the cash component of the benefit from time to time.

Part 2E of the Principal Regulations (regulations 8P to 8QA inclusive) provides for the annual rate of salary of certain eligible employees who are on flexible remuneration packages. Their annual rate of salary is described in Schedule 1 of the Principal Regulations as a prescribed percentage of the total value of the respective packages for those employees. Schedule 1 provides, among other things, for the annual rate of salary to be 70 per cent of the total value of the remuneration package for:

•       persons who are employees of the Northern Territory of Australia;

•       persons who are employees of an authority or body established by a law of the Northern

Territory; and

•       persons who are employees appointed or employed under a law of the Northern Territory.

The percentage of the value of the package (70 per cent) which is the annual rate of salary of the Northern Territory employee or office-holder is equivalent to the person's notional salary for the purposes of their employment agreement. Notional salary is used as the basis for a number of employee benefits provided for in the agreements.

The purpose of the Regulations is to reflect changes to the remuneration packages applying to Northern Territory employees and office-holders which have been redesigned to provide for a higher total value of the package and less non-monetary options. The notional salary in the redesigned packages is 65 per cent of the value of the package.

Eligible employees who are affected by the amendment will not be disadvantaged. The reduced percentage is applied to a higher total remuneration and therefore the notional salary under the revised design of the package is expected to be slightly more in dollar terms than the notional salary under the original design. In the unlikely event that the dollar amount is less in any case, the salary maintenance provisions of section 47 of the Act would ensure that any eligible employee in this position would not experience a reduction in their annual rate of salary unless they elected that the reduced rate apply.

The details of the Regulations are explained in the attachment.

The Regulations commenced on gazettal.

ATTACHMENT

SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)

The details of the Regulations are as follows:

Regulation 1

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

Regulation 2

This amends regulation 8Q which provides that, for those persons described in the regulation, their annual rate of salary is the percentage of the annual value of their remuneration package as set out in Schedule 1.

Subregulation 2.1 is a technical amendment and amends paragraph 8Q(1)(b) to clarify that the regulation applies, to an eligible employee who is appointed by or under, or employed under, a law mentioned in column 2 of an item in Part 2 of Schedule 1 under or in accordance with a relevant agreement which includes flexible remuneration arrangements..

Subregulation 2.2 inserts a new subregulation 8Q(3) to provide for the annual rate of salary of persons appointed or employed under an agreement including flexible remuneration arrangements by the Northern Territory or a Northern Territory authority or body or as the holder of a Northern Territory statutory office. That annual rate of salary is to be the notional salary for the purposes of the employment agreement under which the person is appointed or employed.

Until all existing employment agreements are renewed there will be some Northern Territory employees and office-holders appointed or employed under the new design of remuneration package while others will be appointed or employed under the original design of package. The definition of annual rate of salary by reference to the notional salary according to the agreement will ensure that the appropriate rate applies according to the nature of the agreement applying in each individual case.

Although this description does not immediately identify the annual rate of salary, the effect of the change will be clear to the persons who are the subject of the amendment. This is because notional salary has a clear and distinct meaning and is clearly defined in the terms and conditions of appointment or employment applying to the persons concerned. Those terms and conditions are an integral part of the agreements.

Regulation 3

This amends Schedule 1 of the Principal Regulations as a consequence of the insertion of subregulation 8Q(3) by subclause 2.2.

Subregulations 3.1 and 3.2 amends Schedule 1 by omitting the references to persons appointed or employed by the Northern Territory or a Northern Territory authority or body or appointed to a Northern Territory statutory office.