EXPLANATORY STATEMENT

STATUTORY RULES 1990 NO. 177

ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE

SUPERANNUATION ACT 1976

SUPERANNUATION (FORMER ELIGIBLE EMPLOYEES) REGULATIONS (AMENDMENT)

The Superannuation Act 1976 (the Act) provides for a contributory superannuation scheme for Commonwealth employees and for certain other persons. Persons eligible to contribute under the Act are referred to in the Act as eligible employees.

Section 168 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters that the Act requires or permits to be prescribed, for carrying out or giving effect to the Act.

Section 126A of the Act provides that the regulations may modify the Act in its application to or in respect of a person who ceases to be an eligible employee and becomes, immediately after ceasing to be an eligible employee, a member of another superannuation scheme. Regulations for the purposes of section 126A are contained in the Superannuation (Former Eligible Employees) Regulations (the Principal Regulations).

Certain staff of the Northern Territory University are eligible employees for the purposes of the Act. The University also has staff who are members of the Superannuation Scheme for Australian Universities (SSAU). Those University staff members who are eligible employees are to have the option, to be exercised before 31 December 1990, of remaining eligible employees for the purposes of the Act or ceasing to be eligible employees and becoming members of the SSAU.

Those who transfer to the SSAU scheme will then have the option of:

(a)        receiving an immediate payment of a lump sum benefit of the amount of their contributions accumulated with interest; or

(b)        electing under section 137 of the Act to preserve their superannuation rights.

Under current arrangements a transfer value is only payable in respect of a person to an eligible superannuation scheme of which he or she has become a member following the termination of employment. The SSAU is an eligible superannuation scheme. The Act does not however provide for the payment of transfer values to the SSAU in respect of the transferees as they are joining the scheme without changing their employment.

To ensure that the transferees are treated equitably when compared with other former eligible employees who join the SSAU, it is intended that the Act be modified to provide that transfer values may become payable in respect of those University employees transferring to the SSAU on or after 1 July 1990 but before 1 January 1991, who make an election under section 137 to preserve their superannuation rights.

The Regulations insert Schedule 6 in the Principal Regulations which modifies section 138 of the Act to give effect to this intention.

The Regulations commence on the date of their gazettal.