Senate

Revised Explanatory Memorandum

(Circulated by the authority of the Minister for Finance and Administration Senator the Hon Nick Minchin)

General outline and financial implications

General outline

This Bill proposes amendments to six Acts. The Acts to be amended are the Superannuation Act 1976, the Superannuation Act 1990, the Superannuation Legislation Amendment Act (No. 1) 1995, the Administrative Appeals Tribunal Act 1975, the Law Officers Act 1964 and the Workplace Relations Act 1996.

The Superannuation Act 1976 (the 1976 Act), the Superannuation Act 1990 (the 1990 Act) and the Superannuation Legislation Amendment Act (No. 1) 1995 (the 1995 Amendment Act) provide for the superannuation arrangements for Commonwealth civilian employees. The 1976 Act and the 1990 Act provide the rules for the Commonwealth Superannuation Scheme (the CSS) and the Public Sector Superannuation Scheme (the PSS) respectively. The Administrative Appeals Tribunal Act 1975 (the AAT Act), the Law Officers Act 1964 (the Law Officers Act) and the Workplace Relations Act 1996 (the Workplace Relations Act) provide, among other things, for the terms and conditions of employment for certain persons under those Acts.

The Bill proposes to amend the 1976 Act to improve access to superannuation spouse benefits in certain circumstances where the retirement pensioner commenced a marital relationship after age 60 years. Generally, a spouse's pension under that Act is not payable if the pensioner who commences a marital relationship after age 60 dies within 5 years of the relationship commencing. The Bill removes the restrictions on the payment of benefits following such post-retirement relationships. However, a pro-rata rate of spouse's pension will be payable where the relationship existed for less than 3 years immediately before the pensioner's death. Where the resulting rate of pension is small it may be commuted to a lump sum in some cases.

The Bill proposes to amend the 1976 Act to provide an option for age and early age retirees entitled to pensions under that Act to reduce their pension entitlements and increase reversionary benefits payable to their spouse or to any children after the death of the retiree. Age or early age retirees will be able to elect when their benefit first becomes payable to reduce their pension entitlement to 93 percent of their original entitlement. The resulting reversionary benefits will increase from 67 percent of the retiree's pension to 85 percent of the pension being paid at the time of the retiree's death. Corresponding increases would apply in relation to pensions paid in respect of any children.

The Bill proposes to amend the 1976 Act to allow for certain payments payable from other superannuation funds or superannuation schemes to be paid into the CSS Fund. This will enable CSS members who have superannuation amounts held in other funds to transfer those amounts into the CSS Fund.

The Bill proposes to amend the 1976 Act and the PSS Trust Deed within the meaning of the 1990 Act in relation to the benefit options of scheme members who cease membership on the sale of an asset or the transfer or outsourcing of a function. The amendments will remove restrictions on the options available on involuntary retirement where a person is made redundant in those circumstances. The amendments also provide for an additional option for other CSS and PSS members who cease to be members of the schemes in these circumstances but are not made redundant. These amendments will take effect from the date of announcement of these changes, ie 27 June 1997.

The Bill also proposes to amend the 1976 Act and the 1990 Act to simplify the rules of the CSS and the PSS and to allow for simplified administration. Rules relating to membership of both schemes and, in relation to the CSS:

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salary for superannuation purposes;

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the treatment of leave without pay;

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the payment of amounts requiring preservation; and

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the payment of superannuation amounts to the Fund;

are being changed to allow for simplified administration without having adverse effects on existing entitlements. It is proposed that related changes to the PSS Rules will be made by Ministerial amendment to the Trust Deed under the 1990 Act.

Some powers that currently are exercised by the Minister or the Minister in conjunction with the CSS or PSS Board should more appropriately be exercised by those Boards and are to be transferred to the Boards. The CSS and PSS Boards' powers of delegation are to be extended to enable the Boards to carry out the task of administering the schemes more efficiently.

The Bill proposes to amend provisions in the AAT Act, the Law Officers Act and the Workplace Relations Act, in relation to people who leave the CSS or the PSS to join the Judges' Pension Scheme, to ensure that those schemes continue to comply with the Superannuation Guarantee legislation.

Financial implications

Although the Bill includes provisions that provide for new benefit options there is no financial impact as these benefits are being paid under other arrangements, for example, under act of grace arrangements, and therefore provided for in the Budget.