explanatory statement

Issued by the authority of the Minister for Finance and Administration

Superannuation Act 1976

Orders under subsection 146MH(1)

The Superannuation Act 1976 (the Act) makes provision for and in relation to the Commonwealth Superannuation Scheme (CSS) for Australian Government employees and for certain other persons.

Part IXB of the Act makes specific provision for the splitting of a superannuation interest under the Act when the CSS Board is served with an agreement or order in relation to that interest as a result of actions taken under the Family Law Act 1975.  Part IXB allows for a separate interest to be created in the CSS for the former spouse of a CSS member who has been allocated a part of the member's interest in the CSS under such an agreement or order.

Subsection 146MH(1) of the Act provides that the Minister may make Orders prescribing matters required or permitted to be prescribed by Part IXB.  The Superannuation (Family Law – Superannuation Act 1976) Orders 2004 (the Principal Orders) prescribe the matters required or permitted by Part IXB of the Act to be prescribed.

Section 146MA of the Act defines a number of terms used in Part IXB, including the term scheme value.  The definition of scheme value refers to the amount determined under the Orders.  The Principal Orders provide methods and/or factors that are to be used to calculate the relevant amounts in relation to this definition. 

Scheme value is one of the items taken into account in the calculation of the separate interest for a former spouse and the reduction of the member's benefits as a result of the splitting of the member’s interest.

Amendments to the Principal Orders

The purpose of the Superannuation (Family Law – Superannuation Act 1976) Amendment Orders 2005 (No. 2) (the Amending Orders) is to amend the Principal Orders, to correct a factor used to determine the scheme value in relation to a CSS member who has deferred benefits under the CSS.

The original factor was based on actuarial advice. However, subsequent actuarial advice now indicates that the original factor provided was incorrect and needs to be replaced.

The Amending Orders will only apply to future splits of a CSS interest.

The details of the Amending Orders are explained in the Attachment.

Consultation and Commencement

Section 167AB of the Act provides that the Minister may make Orders under the Act without the consent of the CSS Board in certain circumstances. Subparagraph 167AB(b)(i) of the Act provides that Orders that relate to a payment by an employer-sponsor (within the meaning of the Superannuation Industry (Supervision) Act 1993) that will, after the making of the Orders, be required or permitted to be made under the Act do not require that consent.  The Amending Orders affect benefits that are payable under the Act and are paid by the Australian Government (the employer-sponsor) and therefore do not require the consent of the Board.

No consultation is required as the instrument is machinery in nature and does not substantially alter existing arrangements. 

The Amending Orders are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Amending Orders will commence on the day after they are registered on the Federal Register of Legislative Instruments.

ATTACHMENT

Superannuation (Family Law – Superannuation Act 1976) amendment Orders 2005 (No. 2)

Section 1 – Name of Orders

This section provides that the name of the Orders is the Superannuation (Family Law – Superannuation Act 1976) Amendment Orders 2005 (No. 2) (the Amending Orders).

Section 2 - Commencement

This section provides that the Amending Orders commence on the day after they are registered on the Federal Register of Legislative Instruments. 

Section 3 – Amendment of the Superannuation (Family Law – Superannuation Act 1976) Orders 2004

This section provides that Schedule 1 amends the Superannuation (Family Law – Superannuation Act 1976) Orders 2004.

Schedule 1 – amendments

Item 1 – Factor

Item 1 corrects a factor used in calculating scheme value for certain persons with an interest in the CSS on ceasing to be an eligible employee and where deferred benefits have yet to become payable to the person under subsection 138(2) of the Superannuation Act 1976.  The incorrect factor for deferred CSS members (male) aged 57 is “1.6741” and the Amending Orders substitute the factor “1.6471” in its place.