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Superannuation Legislation
Amendment Bill 2019
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill will amend the Emergency Services Superannuation Act 1986
to--
provide that where a member of the Emergency Services
Defined Benefit Scheme (ES DB Scheme) has reached
their maximum benefit multiple, the employer shall pay
contributions to an accumulation account in respect of the
employee at 3% in 2019-20 rising to 12% by 2026-27;
provide that a member's superable salary is maintained
following a salary reduction unless otherwise advised by
the member;
provide that contributions payable for the financial year will
be fixed and based upon the superable salary at the start of
the financial year;
allow members to take a transition to retirement pension;
allow members on unpaid parental and carer's leave to choose
their level of contribution (and therefore benefit accrual);
provide members with the opportunity to make higher
"catch up" contributions; and
change the method of calculating death benefits in respect of
police recruits who do not have dependants.
591039 1 BILL LA INTRODUCTION 4/6/2019
In addition to the above, the Bill will--
amend the Emergency Services Superannuation Act 1986,
the State Superannuation Act 1988, the Transport
Superannuation Act 1988 and the State Employees
Retirement Benefits Act 1979 to provide that the late
payment of interest provisions apply from the date a member
becomes entitled to a benefit.
Clause Notes
Part 1--Preliminary
Clause 1 states that the purpose of the proposed Act is to amend the
Emergency Services Superannuation Act 1986, the State
Employees Retirement Benefits Act 1979, the State
Superannuation Act 1988 and the Transport Superannuation
Act 1988 to improve the operation of the superannuation
schemes under those Acts.
Clause 2 provides that the Act comes into operation on the day after the
day it receives the Royal Assent.
Part 2--Amendment of the Emergency Services
Superannuation Act 1986
Clause 3 amends section 4(1E)(d) of the Emergency Services
Superannuation Act 1986 to allow a contributor to maintain
their superable salary at the level it was immediately before any
salary reduction, unless they advise the Board, in writing,
otherwise.
Clause 4 subclauses 4(1) to (3) introduce a mechanism into section 20A
of the Emergency Services Superannuation Act 1986 to allow
contributors to contribute at a rate of 9% or 10% of their salary.
A contributor will only be permitted to contribute at a rate of 9%
or 10% of salary if they are an operational staff member whose
average contribution rate is less than 7% of salary over their
whole period of membership.
Subclause 4(4) amends section 20A(8) of the Emergency
Services Superannuation Act 1986 as a consequence of the
introduction of the mechanism to allow contributors to take
out a transition to retirement pension under new section 20T.
2
Subclause 4(5) amends section 20A of the Emergency Services
Superannuation Act 1986 to introduce a mechanism to fix the
salary that a contributor's contributions are based upon for a
financial year. The mechanism has the following features--
The salary upon which contributions are to be paid is
fixed at the start of each financial year.
Employers have 2 months from the start of each
financial year to notify the Board of a change in
salary for contribution purposes.
A change in salary notified between 1 July and
31 August in any year, or if there is no change the
most recent salary notified, applies, for contribution
purposes, from 1 September that year until 31 August
in the following year.
The mechanism does not apply if the contributor changes their
time fraction or their contribution rate.
Clause 5 inserts new section 20AA into the Emergency Services
Superannuation Act 1986 to provide a mechanism for
employers to pay contributors who have reached their
maximum multiple additional contributions as a percentage
of salary--In 2019-20 and 2020-21--3%; in 2021-22
and 2022-23--6%; in 2023-24--8%; in 2024-25--9%;
in 2025-26--11%; and in 2026-27--12%.
The salary for the purposes of this section is the contributor's
actual current salary.
Clause 6 amends section 20B(4)(d) of the Emergency Services
Superannuation Act 1986 to provide that if a contributor takes
out a transition to retirement pension under new section 20T, it
cannot be repaid to the Scheme.
Clause 7 subclauses 7(1) to (3) amend section 20C of the Emergency
Services Superannuation Act 1986 to provide for the benefits
the contributor will accrue as a consequence of the amendments
in clause 4. Specifically, the accrual rate for a contributor for
each year of membership will be 32 for a taxed benefit (or 36
for an untaxed benefit) if their contribution rate is 9%; and the
accrual rate for a contributor for each year of membership will
be 35*5 for a taxed benefit (or 40 for an untaxed benefit) if their
contribution rate is 10%.
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Subclauses 7(4) and (5) amend section 20C(2AE) of the
Emergency Services Superannuation Act 1986 as a
consequence of the introduction of the mechanism to allow
contributors to take out a transition to retirement pension
under new section 20T.
Clause 8 subclause 8(1) amends section 20E(4)(b) of the Emergency
Services Superannuation Act 1986 as a consequence of the
introduction of the mechanism to allow contributors to take
out a transition to retirement pension under new section 20T.
Subclause 8(2) amends section 20E(6) of the Emergency
Services Superannuation Act 1986 to provide that where a
police recruit dies without dependants, the death benefit paid is
the same quantum as if they had died with dependants. In this
instance the death benefit, like that for contributors, should be
paid to their nominees.
Clause 9 inserts a new section, 20MA, into the Emergency Services
Superannuation Act 1986 to provide a mechanism to allow
contributors on unpaid sick leave or unpaid parental leave to
choose their level of contribution, (and therefore benefit accrual).
The unpaid contributions and interest during the period of leave
are recovered either--
by the contributor making higher member contributions
at a rate and for a period determined by the Board; or
by the Board reducing the accrued benefit of the
contributor by an amount determined by an actuary
appointed by the Board.
Clause 10 inserts new section 20T into the Emergency Services
Superannuation Act 1986 to provide a mechanism for
contributors to take out a transition to retirement pension
(TTRP). The features of the TTRP are as follows--
a contributor, of preservation age, may apply to the
Board, on completing a form approved by the Board,
to convert part of their accrued benefit to a TTRP
(subsection 20T(1));
the contributor may convert a minimum of 20% of their
accrued benefit and a maximum of 50% of their accrued
benefit (subsection 20T(2));
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if the application is approved by the Board, the Board
must establish a TTRP in the ESSPLAN Scheme for the
contributor (subsection 20T(3)).
Note: The ESSPLAN Scheme, and therefore, the
TTRP, are not underwritten by the State Government
of Victoria.
if the application is approved by the Board, the
contributor's accrued benefit multiple must be reduced
by an amount calculated using a methodology approved
by the Minister, on the advice of an actuary appointed
by the Board (subsection 20T(3));
a contributor's maximum multiple (untaxed) must be
reduced by the Board by the same reduction as the
accrued benefit multiple under subsection 3(b)
(subsection 20T(4)).
Note: Clause 7(4) amends the Emergency Services
Superannuation Act 1986 to require the Board to
reduce the contributor's taxed maximum multiple.
Clause 11 inserts new subsection 21A(2)(ad) into the Emergency Services
Superannuation Act 1986 to require the additional contribution
paid by employers by virtue of new section 20AA to be paid into
ESSPLAN.
Clause 12 amends section 27A of the Emergency Services
Superannuation Act 1986 to require the late payment of
interest provisions to apply from the date a contributor
becomes entitled to a benefit.
Part 3--Amendment of other Superannuation Acts
Clause 13 amends section 74D of the State Employees Retirement
Benefits Act 1979 to require the late payment of interest
provisions to apply from the date a member becomes entitled to a
benefit.
Clause 14 amends section 89A of the State Superannuation Act 1988 to
require the late payment of interest provisions to apply from the
date a member becomes entitled to a benefit.
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Clause 15 amends section 50A of the Transport Superannuation
Act 1988 to require the late payment of interest provisions to
apply from the date the member becomes entitled to a benefit.
Part 4--Repeal of this Act
Clause 16 provides that this Act is repealed on the first anniversary of the
day on which it receives the Royal Assent.
Note
The repeal of this Act does not affect the continuing operation
of the amendments made by it (see section 15(1) of the
Interpretation of Legislation Act 1984).
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