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Act No. 87 of 2004 as made
An Act to amend the law relating to the superannuation and other entitlements of members of Parliament, and for related purposes
Administered by: Finance
Originating Bill: Parliamentary Superannuation and Other Entitlements Legislation Amendment Bill 2004
Date of Assent 25 Jun 2004

 

 

 

 

 

 

Parliamentary Superannuation and Other Entitlements Legislation Amendment Act 2004

 

No. 87, 2004

 

 

 

 

 

An Act to amend the law relating to the superannuation and other entitlements of members of Parliament, and for related purposes

  

  


Contents

1............ Short title............................................................................................ 1

2............ Commencement.................................................................................. 2

3............ Schedule(s).......................................................................................... 2

Schedule 1—Closing off the current parliamentary contributory superannuation scheme, and related matters                                                                                                                                           3

Parliamentary Contributory Superannuation Act 1948                                     3

Schedule 2—Salary sacrifice                                                                                          13

Parliamentary Contributory Superannuation Act 1948                                   13

Remuneration and Allowances Act 1990                                                              13

 


 

 

Parliamentary Superannuation and Other Entitlements Legislation Amendment Act 2004

No. 87, 2004

 

 

 

An Act to amend the law relating to the superannuation and other entitlements of members of Parliament, and for related purposes

[Assented to 25 June 2004]

The Parliament of Australia enacts:

1  Short title

                   This Act may be cited as the Parliamentary Superannuation and Other Entitlements Legislation Amendment Act 2004.

2  Commencement

                   This Act commences on the day after it receives the Royal Assent.

3  Schedule(s)

                   Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


 

Schedule 1Closing off the current parliamentary contributory superannuation scheme, and related matters

  

Parliamentary Contributory Superannuation Act 1948

1  Subsection 4(1) (at the end of the definition of surcharge debt account)

Add “and that related to the person’s surchargeable contributions”.

2  Paragraph 4E(1)(a)

After “benefits”, insert “under this Act”.

3  Paragraph 4E(2)(c)

After “likely to be payable to the person”, insert “under this Act”.

4  At the end of the Act

Add:

29  Closing off the scheme constituted by this Act, and related matters

                   The preceding provisions of this Act have effect subject to Schedule 1. That Schedule provides for closing off the scheme constituted by this Act, and related matters.

Schedule 1Closing off the scheme constituted by this Act, and related matters

Note:       See section 29.

Part 1Interpretation

  

1  Definitions

             (1)  In this Schedule:

new scheme contribution period, in relation to a person, has the same meaning as in the Parliamentary Superannuation Act 2004.

new scheme entry time, in relation to a person, has the same meaning as in the Parliamentary Superannuation Act 2004.

             (2)  In this Schedule, unless the contrary intention appears:

                     (a)  a reference to a clause or subclause is a reference to a clause or subclause of this Schedule; and

                     (b)  a reference to a section or subsection is a reference to a section or subsection of this Act.

Part 2Closing off contributions to the scheme

  

2  No section 13 contributions in respect of new scheme contribution periods

                   A person is not required or entitled to make contributions under section 13 in respect of any new scheme contribution period of the person.

Part 3Closing off entitlements to benefits under the scheme

Division 1The close‑off

3  No section 18 benefits at the end of new scheme contribution periods etc.

             (1)  A person is not entitled to any benefits under section 18 on ceasing to be entitled to a parliamentary allowance at the end of the first, or any later, new scheme contribution period of the person.

Note:          A person may, however, be entitled to an allowance under clause 4 or 5 at a preserved percentage.

             (2)  Any retiring allowance, or additional retiring allowance, to which the person was entitled under section 18 immediately before the start of the first new scheme contribution period of the person is cancelled by force of this clause (rather than subsection 20(3)) as from the start of that period.

Division 2Situations in which a person is entitled to a retiring allowance, or additional retiring allowance, at a preserved percentage

4  Entitlement to a retiring allowance at a preserved percentage

             (1)  This clause applies to a person if, immediately before the start of the first new scheme contribution period of the person, a retiring allowance (other than additional retiring allowance) was payable to the person under section 18.

Note:          The reference in this subclause to a retiring allowance being payable to the person is affected by subclause (6).

             (2)  The person is entitled, after the end of the first new scheme contribution period, to a retiring allowance (the preserved basic allowance) under this clause during his or her lifetime at the preserved basic percentage (see subclause (5)) of the rate of parliamentary allowance for the time being payable to a member.

Note 1:       The reference in this subclause to the rate of parliamentary allowance for the time being payable to a member is affected by section 22T.

Note 2:       Because of Division 3 of this Part, other provisions (for example, Part VA, subsection 20(3A) and sections 21 and 21B) may apply so that the preserved basic allowance is not payable to the person, or is payable at a reduced rate.

             (3)  For the purpose of the reference in subclause (2) to the rate of parliamentary allowance for the time being payable to a member, any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

             (4)  The person’s entitlement to the preserved basic allowance is suspended for the duration of any later new scheme contribution period of the person.

             (5)  The preserved basic percentage is, from the end of a new scheme contribution period of the person to the start of the next (if any) new scheme contribution period of the person, the percentage that was applied to the rate of parliamentary allowance in order to calculate the rate of retiring allowance (other than additional retiring allowance) payable to the person under section 18, or under this clause, immediately before the start of the first‑mentioned new scheme contribution period.

Note:          The reference in this subclause to the rate of retiring allowance payable to the person is affected by subclause (6).

             (6)  If, immediately before the start of a new scheme contribution period of the person, the person was not being paid a retiring allowance, or was being paid a reduced rate of retiring allowance, because of all or any of the following provisions:

                     (a)  Part VA;

                     (b)  subsection 20(3A);

                     (c)  section 21;

                     (d)  section 21B;

this clause applies to the person as if the person were, at that time, being paid the retiring allowance he or she would have been paid if those provisions had not applied.

5  Entitlement to an additional retiring allowance at a preserved percentage

             (1)  This clause applies to a person if, immediately before the start of the first new scheme contribution period of the person, additional retiring allowance was payable to the person under subsection 18(9) in respect of either or both of the following:

                     (a)  his or her service in an office or offices he or she held as a Minister of State;

                     (b)  his or her service in an office or offices by virtue of which he or she was an office holder.

In this clause, each office in respect of which the additional retiring allowance was payable is a relevant office.

Note:          The reference in this subclause to a retiring allowance being payable to the person is affected by subclause (5).

             (2)  The person is entitled, after the end of the first new scheme contribution period and in respect of each relevant office, to additional retiring allowance (the preserved additional allowance) under this clause during his or her lifetime at the preserved additional percentage for the office (see subclause (4)) of the rate, for the time being, of:

                     (a)  for an office referred to in paragraph (1)(a)—the salary payable to a Minister of State; or

                     (b)  for an office referred to in paragraph (1)(b)—the allowance by way of salary payable to an office holder in respect of that office.

Note 1:       The reference in this subclause to the rate of salary, or allowance by way of salary, for the time being payable in respect of an office is affected by sections 22T and 23.

Note 2:       Subclause (6) imposes a cap on the rate of the preserved additional allowance.

Note 3:       Because of Division 3 of this Part, other provisions (for example, Part VA, subsection 20(3A) and sections 21 and 21B) may apply so that the preserved additional allowance is not payable to the person, or is payable at a reduced rate.

             (3)  The person’s entitlement to the preserved additional allowance is suspended for the duration of any later new scheme contribution period of the person.

             (4)  The preserved additional percentage for a relevant office is, from the end of a new scheme contribution period of the person to the start of the next (if any) new scheme contribution period of the person, the percentage that was applied to:

                     (a)  for an office referred to in paragraph (1)(a)—the salary payable to a Minister of State; or

                     (b)  for an office referred to in paragraph (1)(b)—the allowance by way of salary payable to an office holder in respect of that office;

in order to calculate the rate of additional retiring allowance payable to the person in respect of the office under subsection 18(9), or under this clause, immediately before the start of the first‑mentioned new scheme contribution period.

Note:          The reference in this subclause to the rate of additional allowance payable to the person is affected by subclause (5).

             (5)  If, immediately before the start of a new scheme contribution period of the person, the person was not being paid additional retiring allowance, or was being paid a reduced rate of additional retiring allowance, because of all or any of the following provisions:

                     (a)  Part VA;

                     (b)  subsection 18(10B) or subclause (6) of this clause;

                     (c)  subsection 20(3A);

                     (d)  section 21;

                     (e)  section 21B;

this clause applies to the person as if the person were, at that time, being paid the additional retiring allowance he or she would have been paid if those provisions had not applied.

             (6)  Nothing in this clause entitles the person to additional retiring allowance at a rate that exceeds:

                     (a)  if the person is entitled to additional retiring allowance in respect of one relevant office only—75% of the rate, for the time being, at which salary or allowance by way of salary, as the case may be, is payable in respect of that office; or

                     (b)  if a person is entitled to additional retiring allowance in respect of 2 or more relevant offices—75% of the rate that is the highest rate, for the time being, at which salary or allowance by way of salary, as the case may be, is payable in respect of either or any of those offices.

Division 3How this Act applies in relation to a person after the new scheme entry time

6  Act applies subject to this Division in relation to a person after the new scheme entry time

             (1)  This Act applies in relation to a person after the new scheme entry time for the person subject to Division 1 and this Division, and to Part 2.

             (2)  Subject to Division 1 and this Division, this Act applies in relation to a retiring allowance (the preserved basic allowance) to which the person is entitled under clause 4 in the same way as it applies in relation to a retiring allowance under section 18.

             (3)  Subject to Division 1 and this Division, this Act applies in relation to additional retiring allowance (the preserved additional allowance) to which the person is entitled under clause 5 in the same way as it applies in relation to an additional retiring allowance under subsection 18(9).

7  Disapplying sections 15A, 15B and 15C

             (1)  Sections 15A and 15B do not apply in relation to the person ceasing to be a member as mentioned in section 15A, if the cessation occurs after the new scheme entry time for the person.

             (2)  The Trust cannot, under section 15C, review a person’s classification as a class 1 invalid or a class 2 invalid after the new scheme entry time for the person.

8  Modified application of section 16A

                   Section 16A applies after the new scheme entry time for a person as if the reference in subparagraph (1)(c)(i) to the person’s capacity as a member were a reference to the person’s capacity as a member before the new scheme entry time.

9  Provisions applying instead of subsection 18(8A)

             (1)  Subsection 18(8A) does not apply in relation to the preserved basic allowance. Instead, subclauses (2) and (3) of this clause apply.

             (2)  If the person’s surcharge debt account is in debit at the end of a new scheme contribution period (the most recent contribution period) of the person, then, until whichever (if any) of the following happens first:

                     (a)  another new scheme contribution period of the persons starts;

                     (b)  the person makes an election under subsection 18A(1);

clause 4 applies as if the reference in subclause 4(2) to the preserved basic percentage were instead a reference to the percentage worked out under subclause (3) of this clause.

             (3)  The percentage is worked out using the formula:

where:

basic rate means the rate at which, after the end of the most recent contribution period, the preserved basic allowance would have been payable to the person if subclause (2) did not apply to the person.

percentage means the preserved basic percentage determined in accordance with subclause 4(5).

surcharge adjustment means the person’s notional adjustment debit arising under subclause 10(2) at the end of the most recent contribution period.

10  Provision applying instead of subsection 18(8AA)

             (1)  Subsection 18(8AA) does not apply in relation to the preserved basic allowance. Instead, subclause (2) of this clause applies.

             (2)  If the person’s surcharge debt account is in debit at the end of a new scheme contribution period of the person, there is taken to have arisen, at the end of that period, a notional adjustment debit of the person equal to the amount worked out using the formula:

where:

conversion factor means the factor applicable to the person under the determination made by the Trust under section 22A.

surcharge deduction amount means the person’s surcharge deduction amount.

11  Provisions applying instead of subsection 18(8AC)

             (1)  Subsection 18(8AC) does not apply in relation to the preserved basic allowance. Instead, subclauses (2) and (3) of this clause apply.

             (2)  If the person makes an election under subsection 18A(1) on a particular day (the election day) after the end of a new scheme contribution period of the person (the most recent contribution period) then, from the election day until another (if any) new scheme contribution period of the person starts, clause 4 applies as if the reference in subclause 4(2) to the preserved basic percentage were instead a reference to the percentage worked out under subclause (3) of this clause.

             (3)  The percentage is worked out using the formula:

where:

basic rate means the rate at which, after the end of the most recent contribution period, the preserved basic allowance would have been payable to the person if subclause (2) of this clause and subclause 9(2) did not apply to the person.

percentage means the preserved basic percentage determined in accordance with subclause 4(5).

surcharge adjustment means the sum of the following:

                     (a)  the person’s notional adjustment debit (if any) arising under subclause 10(2) at the end of the most recent contribution period;

                     (b)  the person’s notional adjustment debit arising under subsection 18A(6) because of the making of the election.

12  Modified application of section 18A

                   Section 18A applies in relation to the preserved basic allowance as if:

                     (a)  paragraph 18A(1)(a) included a reference to the preserved basic allowance; and

                     (b)  the note under subsection 18A(4) included a reference to subclause 11(2).

13  Disapplying section 18B

                   Section 18B does not apply in relation to the preserved basic allowance or the preserved additional allowance.

14  Modified application of section 19

                   Section 19 applies in relation to the preserved basic allowance and the preserved additional allowance as if paragraph 19(3)(b) were omitted.

15  Modified application of section 20

             (1)  After the new scheme entry time for the person, the person cannot:

                     (a)  enter into a contract as mentioned in subsection 20(1AA); or

                     (b)  make an election as mentioned in subsection 20(2A) or (2B).

             (2)  Subsection 20(3) does not apply in relation to the preserved basic allowance or the preserved additional allowance.

16  Modified application of section 21AA

                   Section 21AA applies in relation to the preserved basic allowance and the preserved additional allowance as if paragraph 21AA(5)(c) were omitted.

17  Modified application of section 21B

                   Section 21B applies in relation to the preserved basic allowance and the preserved additional allowance as if paragraph 21B(4)(a) were omitted.

18  Modified application of Part VB

                   After the new scheme entry time for a person, the person cannot make an election under any of the provisions of Part VB.


 

Schedule 2Salary sacrifice

  

Parliamentary Contributory Superannuation Act 1948

1  At the end of section 18

Add:

           (12)  For the purpose of references in this section to the rate of parliamentary allowance for the time being payable to a member, any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

2  After subsection 21B(3A)

Insert:

          (3B)  For the purpose of the reference in the formula in subsection (3A) to the annual rate of parliamentary allowance, any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

3  After subsection 22T(1)

Insert:

          (1A)  For the purpose of paragraph (1)(a), any reductions of a particular member’s entitlement to parliamentary allowance under Division 2 of Part 1 of Schedule 3 to the Remuneration and Allowances Act 1990 (salary sacrifice) are to be disregarded.

Remuneration and Allowances Act 1990

4  Section 8

Omit “and allowances”, substitute “, allowances and contributions”.

5  Before clause 1 of Schedule 3

Insert:

Part 1Annual salary

Division 1Amount of annual salary

6  After clause 1 of Schedule 3

Insert:

Division 2Salary sacrifice

1A  Definitions

                   In this Division:

administering authority means:

                     (a)  in relation to a person who is or will be a senator—the Clerk of the Senate; and

                     (b)  in relation to a person who is a member of the House of Representatives—the Clerk of the House of Representatives.

allowance by way of salary has the same meaning as in the Parliamentary Superannuation Act 2004.

chosen basic contributions fund, in relation to a person, means the fund, scheme or account (if any) specified in a notice given by the person that is in force under Division 2 of Part 2 of the Parliamentary Superannuation Act 2004.

complying superannuation fund has the meaning given by clause 1B.

default basic contributions fund means the fund or scheme that is the default fund under Division 3 of Part 2 of the Parliamentary Superannuation Act 2004.

month means one of the 12 months of the year.

new scheme contribution period, in relation to a person, has the same meaning as in the Parliamentary Superannuation Act 2004.

office holder has the same meaning as in the Parliamentary Superannuation Act 2004.

parliamentary allowance means allowance payable under clause 1.

RSA has the same meaning as in the Retirement Savings Accounts Act 1997.

salary, in relation to a Minister of State, does not include any allowance.

self managed superannuation fund has the same meaning as in the Superannuation Industry (Supervision) Act 1993.

1B  Meaning of complying superannuation fund

             (1)  For the purposes of this Division, a fund or scheme is a complying superannuation fund at a particular time if, and only if:

                     (a)  the fund or scheme is a complying superannuation fund for the purposes of Part IX of the Income Tax Assessment Act 1936 in relation to the year of income in which the time occurs; and

                     (b)  the fund or scheme is a superannuation fund as defined by subsection 6(1) of the Income Tax Assessment Act 1936.

             (2)  In applying paragraph (1)(a) in relation to a fund or scheme and a particular time, the following are to be disregarded:

                     (a)  any notice that is given after that time under section 40 of the Superannuation Industry (Supervision) Act 1993 and that relates to the fund or scheme and the year of income in which the time occurs;

                     (b)  any revocation or setting aside, after that time, of a notice given before that time under section 40 of the Superannuation Industry (Supervision) Act 1993 and that relates to the fund or scheme and the year of income in which the time occurs or an earlier year of income.

1C  When may a person elect to salary sacrifice?

                   A person (the member) may make an election as described in clause 1D if, and only if:

                     (a)  the election is made during a new scheme contribution period of the person; or

                     (b)  the election is made before the start of a new scheme contribution period of the person and at a time when:

                              (i)  the person has been elected to the Senate, but his or her entitlement to parliamentary allowance as a senator has not yet commenced; or

                             (ii)  the person has been chosen or appointed to hold the place of a senator in accordance with section 15 of the Constitution, but his or her entitlement to parliamentary allowance as a senator has not yet commenced.

1D  The nature of the salary sacrifice election

             (1)  The member may elect to forgo a percentage or amount of the parliamentary allowance that he or she would otherwise expect to receive and instead have contributions (the additional contributions) made to a specified fund, scheme or account (the additional contributions fund).

Note:          An election can be varied or revoked (see clauses 1H and 1I).

             (2)  The specified fund, scheme or account must, at the time the election is made, be either:

                     (a)  a complying superannuation fund that is not a self managed superannuation fund; or

                     (b)  an RSA.

             (3)  There can only be one additional contributions fund at any particular time in relation to the member.

1E  How to make an election

             (1)  An election must be in writing and be signed by the member.

             (2)  The election must:

                     (a)  specify the percentage or amount (the specified salary sacrifice) of parliamentary allowance that is forgone; and

                     (b)  specify the name of, and contact details for, the additional contributions fund; and

                     (c)  specify the date (the start date) from which the election is to have effect, being a date:

                              (i)  that is the first day of the next month following the month in which the election is made, or the first day of a later month; and

                             (ii)  if the election is made before the start of a new scheme contribution period of the person as permitted by paragraph 1C(b)—that is not before the start of the new scheme contribution period; and

                     (d)  contain such other information (if any) as is required by the regulations.

             (3)  The specified salary sacrifice must be either:

                     (a)  a specified percentage of the monthly amount of parliamentary allowance; or

                     (b)  a specified amount per month.

Note:          In deciding what amount or percentage to specify, consideration should be given to the effect of subclause 1G(3).

             (4)  The election must be accompanied by evidence that the additional contributions fund will accept the additional contributions. However such evidence is not required if:

                     (a)  the additional contributions fund is the default basic contributions fund; or

                     (b)  the additional contributions fund is the chosen basic contributions fund of the member, and the evidence that accompanied the notice choosing that fund indicates that the fund will accept the additional contributions.

             (5)  The election must be given to the administering authority.

             (6)  For the purpose of subparagraph (2)(c)(i), the election is made when it is given to the administering authority.

1F  Duration of an election

                   An election comes into force on the start date for the election and remains in force until whichever of the following occurs first:

                     (a)  the contribution payable under this Division in respect of the month in which the member next ceases to be entitled to parliamentary allowance has been paid; or

                     (b)  a revocation of the election takes effect (see clause 1I).

1G  Effect of an election

             (1)  If the member makes an election in accordance with clauses 1C, 1D and 1E, then this clause has effect in relation to each month during the period when the election is in force.

             (2)  Subject to subclauses (3) and (5), the amount (the basic amount) of parliamentary allowance to which the member would otherwise be entitled in respect of a month is reduced (but not below zero) by whichever of the following amounts (the reduction amount) is applicable:

                     (a)  if the specified salary sacrifice is a percentage—the amount that is that percentage of the basic amount;

                     (b)  if the specified salary sacrifice is an amount—that amount.

             (3)  If the reduction amount for a month is greater than the amount (the maximum reduction) that is 50% of the sum of:

                     (a)  the basic amount; and

                     (b)  the amount (if any) of salary to which the member is entitled because he or she was a Minister of State for some or all of the month; and

                     (c)  the amount (if any) of allowance by way of salary to which the member is entitled because he or she was an office holder for some or all of the month;

the basic amount for the month is instead reduced by the maximum reduction.

             (4)  Subject to subclause (5), the Commonwealth must, in respect of each month, make a contribution to the additional contributions fund, in respect of the member, of an amount equal to the amount by which the basic amount for the month is reduced under subclause (2) or (3).

             (5)  If either:

                     (a)  the additional contributions fund:

                              (i)  ceases to exist; or

                             (ii)  ceases to accept the additional contributions; or

                            (iii)  ceases to be a complying superannuation fund or an RSA; or

                            (iv)  becomes a self managed superannuation fund; or

                     (b)  the member dies;

before the Commonwealth makes a contribution as required by subclause (4) in respect of a month, then:

                     (c)  no reduction under subclause (2) or (3) is to be made in respect of that month; and

                     (d)  no contribution under subclause (4) is to be made in respect of that month.

1H  Variation of an election

             (1)  The member may vary an election he or she has made by notice in writing signed by the member and given to the administering authority.

             (2)  The only variations that are permitted are:

                     (a)  to change the additional contributions fund to another fund or scheme that is, at the time notice is given:

                              (i)  a complying superannuation fund that is not a self managed superannuation fund; or

                             (ii)  an RSA; or

                     (b)  to change the specified salary sacrifice to another specified percentage or amount that complies with subclause 1E(3); or

                     (c)  to change the start date to a later date (but only if the start date has not already occurred).

             (3)  The notice of variation must specify a date (the variation date) from which the variation is to take effect, being a date that is the first day of the next month following the giving of the notice, or the first day of a later month.

             (4)  A notice of variation to change the additional contributions fund to another complying superannuation fund or RSA (the new fund) must:

                     (a)  specify the name of, and contact details for, the new fund; and

                     (b)  be accompanied by evidence that the new fund will accept the additional contributions.

             (5)  However, evidence referred to in paragraph (4)(b) is not required if:

                     (a)  the new fund is the default basic contributions fund; or

                     (b)  the new fund is the chosen basic contributions fund of the member, and the evidence that accompanied the notice choosing that fund indicates that the fund will accept the additional contributions.

             (6)  If the notice of variation complies with this clause, it varies the election accordingly (subject to any later variations) in relation to months starting on or after the variation date.

1I  Revocation of an election

             (1)  The member may revoke an election he or she has made by notice in writing signed by the member and given to the administering authority.

             (2)  The notice of revocation must specify a date from which the revocation is to take effect, being a date that is the first day of the next month following the giving of the notice, or the first day of a later month.

             (3)  If the notice of revocation complies with this clause, the revocation takes effect on the specified date.

Part 2Electorate and other allowances

 

 

 

[Minister’s second reading speech made in—

House of Representatives on 1 April 2004

Senate on 13 May 2004]

(49/04)