EXPLANATORY STATEMENT

STATUTORY RULES 1988 NO 350

ISSUED BY. THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976 - SUPERANNUATION (SALARY) REGULATIONS (AMENDMENT)

Section 168 of the Superannuation Act 1976 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters which the Act requires or permits to be prescribed, or which are necessary or convenient to be prescribed, for carrying out or giving effect to the Act.

The Act makes provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth, and for certain other persons.

Under the Act, the rate of fortnightly contributions payable by an eligible employee (contributor) is expressed as a percentage of the fortnightly rate of his or her salary. In accordance with subsection 3(1) of the Act, “fortnightly rate of salary” in relation to a contributor means an amount equal to one-twenty-sixth of the amount of his or her annual rate of salary.

The rates of employer-financed invalidity, age and early retirement pensions payable under the Act are expressed as percentages of the former contributor’s final annual rate of salary. In accordance with subsection 3(1) of the Act, “final annual rate of salary” means, in the generality of cases, the person’s annual rate of salary on his or her last day of service.

Subsection 5(1) of the Act provides that “salary” means salary or wages and:

(a)        includes any allowance, or the value of any allowance, or any fee, that is an allowance or fee of a kind that, under the regulations, is to be treated as salary for the purposes of the Act; but

(b)        does not include any part of any salary or wages that, under the regulations, is not to be treated as salary for the purposes of the Act.

Subsection 5(2) provides that, subject to subsection 5(3), the “annual rate of salary” of a contributor on a particular day is an amount equal to the amount per annum of the salary for the purposes of the Act payable to the contributor on that day. Subsection 5(3) provides that the regulations may provide that, in a case specified in the regulations, the annual rate of salary of a contributor on a particular day shall, for the purposes of the Act or a provision of the Act specified in the regulations, be an amount equal to such amount per annum as is ascertained under the regulations.

Regulations for the purposes of section 5 are contained in the Superannuation (Salary) Regulations.

The Australian Telecommunications Commission (Telecom) has introduced new remuneration arrangements for its staff who are engaged in selling communications services and products or who are actively engaged in managing such staff. The relevant staff are to receive 75% of the annual amount of salary that would otherwise be payable in relation to the positions held plus commission payments, product sales and performance awards and bonus payments.

It is not appropriate that commission payments, product sales and performance awards and bonus payments be treated as salary for the purposes of the Act. It is therefore intended that, for Telecom staff who are subject to the new arrangements, annual rate of salary for the purposes of the Act be the annual rate of salary for the purposes of the Act that would have been payable in relation to the position held if the arrangement had not applied. The Superannuation (Salary) Regulations (Amendment) give effect to that intention.

The amending Regulations operate from the date of their gazettal.