EXPLANATORY STATEMENT

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)

1987 No. 307

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

The Act provides a contributory superannuation scheme for employees of the Commonwealth and of bodies that are approved authorities for the purposes of the Act. Persons eligible to contribute under the Act are referred to in the Act as “eligible employees”.

Section 126A of the Act provides that the regulations may make provision for modifying the Act, or a provision of the Act specified in the regulations, in the application of the Act or that provision to and in relation to a person who has ceased, or is to cease, to be an eligible employee and who became, or will become, a member of a superannuation scheme other than the scheme constituted under the Act, or to and in relation to a class of such persons.

Regulations for the purposes of section 126A are contained in the Superannuation (Former Eligible Employees) Regulations (the Principal Regulations).

In accordance with section 80 of the Act, a person who ceases to be an eligible employee otherwise than by reason of death and who is not entitled to a benefit under Division 1, 2 or 4 of Part V or under Division 3 of Part IX of the Act, is entitled to a lump sum benefit of the amount of his or her contributions accumulated with interest. Instead of receiving the lump sum benefit, such a person may elect under section 137 of the Act that the preservation of superannuation rights provisions of Division 3 of Part IX of the Act apply to him or her.

Where the person makes an election under section 137 and becomes employed in public employment and a member of a superannuation scheme that is an eligible superannuation scheme for the purposes of the Act, a transfer value is payable to that scheme in respect of the person in accordance with section 138 of the Act. Where a transfer value is not payable, deferred benefits become applicable in respect of the person under section 139 of the Act

where the person becomes employed in public employment or where, at the time he or she ceased to be an eligible employee, the person had completed 5 years’ eligible employment for the purposes of the Act. The deferred benefits then become payable under section 139 when the person attains age 65 or on a date selected by the person between the dates when the person attains the age that would have been his or her minimum retiring age for the purposes of the Act and age 65 or on the person’s earlier death or invalidity.

Prior to 1 October 1986, persons employed by the Northern Territory, including members of the Northern Territory Police Force, were eligible employees for the purposes of the Act because the Northern Territory of Australia and other Northern Territory employing authorities are approved authorities for the purposes of the Act.

On 1 October 1986, the Northern Territory Government introduced a superannuation scheme for its employees, established by the Superannuation Act 1986 of the Northern Territory. Membership of the Northern Territory superannuation scheme was not made available to members of the Northern Territory Police Force.

Persons who were Northern Territory employees (other than members of the Northern Territory Police Force) or statutory office-holders and who were eligible employees for the purposes of the Act on 30 September 1986 had the option of:

(a)        remaining eligible employees for the purposes of the Act; or

(b)        ceasing to be eligible employees for the purposes of the Act and becoming members of the Northern Territory superannuation scheme.

Transfer values were not payable to the Northern Territory superannuation scheme in relation to those who elected to cease to be eligible employees and become members of the scheme and who made an election under section 137 of the Act, because they were not changing employment. Also, as section 139 of the Act stood, deferred benefits would have become applicable in respect of them only where they had completed 5 years eligible employment for the purposes of the Act at the time they ceased to be eligible employees.

As part of the arrangements for those who elected to become members of the Northern Territory scheme, deferred benefits were to become applicable to them where they had completed eligible employment of 1 year (rather than 5 years) for the purposes of the Act at the time they ceased to be eligible employees. It was also intended that the deferred benefits become payable to, or in respect of, the persons concerned in the same circumstances as presently provided in section 139 of the Act but subject to the persons having ceased Northern Territory employment.

The Schedule to the Principal Regulations modified the provisions of section 139 of the Act in relation to the persons concerned to give effect to the intended arrangements. It also modified the Act by omitting subsections 137(3) and (4) and sections 138 and 141 to enable the arrangements to operate effectively.

The modifications operated with effect from 1 October 1986.

The Northern Territory superannuation scheme is to become available to members of the Northern Territory Police Force with effect from 1 January 1988. Persons who are members of the Northern Territory Police Force and who are eligible employees on 31 December 1987 are to have the option of:

(a)        remaining eligible employees for the purposes of the Act; or

(b)        ceasing to be eligible employees for the purposes of the Act and becoming members of the Northern Territory superannuation scheme.

It is intended that the arrangements applicable to Northern Territory employees who elected to transfer to the Northern Territory scheme should also apply to those members of the Northern Territory Police Force who transfer to the Northern Territory scheme.

The Regulations amend the Principal Regulations to modify the provisions of the Act in their application to members of the Northern Territory Police Force who transfer to the Northern Territory superannuation scheme in the same way as the Principal Regulations already do in relation to those Northern Territory employees who earlier transferred to the Northern Territory superannuation scheme. The proposed Regulations come into operation on 1 January 1988.