Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C1999-01
Status:
Archived

C1999-01 Superannuation Amendments

Description

The purpose of this Circular is to advise you of recent amendments to the Superannuation legislation and other arrangements.

Detailed Outline

The purpose of this Circular is to advise you of recent amendments to the Superannuation legislation and other arrangements.

The Circular briefly covers:

  1. Transfer Option to First State Super for members of the State Superannuation Scheme and Police Superannuation Scheme.
  2. Transfer Option to First State Super for members of the Public Sector Executives Superannuation Scheme.
  3. Transfer of First State Superannuation to a Trust Deed
  4. Preservation of Superannuation Benefits in line with new Commonwealth Standards.
  5. Various amendments to the Superannuation Schemes following negotiations with the Labor council and public sector unions.
  6. Mobility Provisions for Local Government and Electricity Employees.
  7. Dispute Settlement Provisions for transferred Local Government and Electricity Industry Employees.

 

1. Transfer Option to First State Super for members of the State Superannuation Scheme and Police Superannuation Scheme.
An option is to be made available to State Superannuation Scheme and Police Superannuation Scheme members to transfer to the First State Super Scheme. The option is expected to be available from mid-February 1999 for a period of 4.5 months.

Those members who elect to take-up the option will be able to transfer a lump sum, calculated by reference to a retrenchment benefit in the State Superannuation Scheme (SSS) or a disengagement benefit in the Police Superannuation Scheme (PSS), to a new fully vested employee account in FSSS.

The option to transfer to FSSS is designed to offer scheme members more flexible superannuation arrangements. Such an election will cease their membership of the closed defined benefit scheme covering them and also the State Authorities Non-contributory Superannuation Scheme (SANCS).

In order to enable scheme members to make a reasoned and informed decision whether or not to take up the transfer option, individual financial consultation by external providers will be made available, and will be subsidised by Treasury. A bonus $5,000 additional deposit to FSSS will be available to early-bird acceptances (those who accept the offer by mid-May 1999).

 

2. Transfer Option to First State Super for members of the Public Sector Executives Superannuation Scheme.
From 1 July 1999 members of the Public Sector Executives Superannuation Scheme (PSESS) will be given the option to voluntarily elect to transfer to the First State Superannuation Scheme. Transferring members will have the option to transfer their accumulated account balances from PSESS to FSSS. Transitional provisions will protect PSESS members' rights to nominate a level of salary to be superannuated.

 

3. Transfer of First State Superannuation to a Trust Deed
It is anticipated that from 1 February 1999 the main provisions governing benefits and administration of the First State Superannuation Scheme will be transferred to a Trust Deed. The change will enable more flexible and responsive administration by the First State Superannuation Trustee Corporation.

 

4. Preservation of Superannuation Benefits in line with new Commonwealth Standards.
From 1 July 1999 the NSW public sector employee superannuation schemes are to apply the new Commonwealth Rules for the preservation of superannuation benefits (ie that part of the benefit that is required to remain within the superannuation system until retirement on or after your preservation age). The standards preserve all of the new benefit accrual on and after 1 July 1999.

Members' unrestricted access to benefits will be in accordance with existing Rules for release on:

  • reaching the retirement age of 60, or
  • reaching the age of 55 and the member permanently ceases work, or
  • death, or on total and permanent invalidity, or
  • termination where the amount is less than $200.

Members will have restricted access to benefits, as at present, in the following circumstances:

  • on termination before 55, or on partial or temporary incapacity, or in circumstances of compassionate need, or severe financial hardship.

The effect of the new Rules will be gradual, as the old Rules, which require particular components, only, of the benefit to be preserved, are grandparented under the new Rules up to 30 June 1999. This means that a cashable amount will still be available to persons who were scheme members at 30 June 1999. For a new employee commencing on or after 1 July 1999, the whole benefit accrual will be subject to the new Rules.

These arrangements do not apply to the Police scheme.

 

5. Various amendments to the Superannuation Schemes following negotiations with the Labor council and public sector unions.

Withdrawal Benefit set as the Minimum SSS Benefit
It is anticipated that from 1 July 1999 the withdrawal benefit payable to a member will be the minimum SSS Benefit.

In circumstances of death of a member or pensioner in the absence of spouse or child beneficiaries, the withdrawal benefit, less any pension or lump sum paid, will be payable to the member's estate.

The guarantee will apply to pensions in payment, as well as pensions arising after that date.

Amending the SSS Commutation Age for Invalidity Pensions
It is anticipated that from 1 March 1999 new commutation arrangements will apply to invalidity pensioners.

At present the breakdown pension paid under SSS may only be commuted to a lump sum when the pensioner reaches 60 years of age.

For former women contributors contributing for retirement at age 55, who retired due to invalidity, amendments carried in the Budget Session 1998 accorded them a right to commute at age 55.

The current changes will enable all invalidity pensioners to commute their pension from the age of 55 years as if they had voluntarily exited employment at that date. Transitional provisions will apply to pensions in payment, enabling pensioners over 55 but less than 60 to access the benefit of the change.

Rationalisation of Provisions for Leave Without Pay in SSS
It is anticipated that from 1 April 1999, the treatment of part time work and part time leave without pay will be the same in SSS.

At present SSS members who work part-time and those who take part-time leave without pay are treated differently. Those working part-time have a reduction factor applied to their unit entitlement. Those treated as being on part-time LWOP have no reduction factor applied as long as single periods of leave without pay would not exceed 3 months. Contribution rates remain at the full-time rate.

The amendments apply a reduction factor to all SSS members who work part-time or who are on part time LWOP. This will operate by application to their unit entitlement, which will reduce both contributions and benefits.

The amendments do not apply to existing continuing periods of part-time LWOP unless a person elects to have them apply. The amendments will apply to any new period of part-time LWOP commencing on or after a date of commencement of these arrangements.

Access to Early Retirement Benefits for SSS Members over 50 who are Retrenched
It is anticipated that from 1 July 1999, with the agreement of the employer it will be possible for members over 50 who take voluntary redundancy, to defer the redundancy benefit to age 55 and qualify for a full early retirement pension. Employer agreement is necessary because of the added employer contribution cost burden involved.

To qualify, members will need to pay up front their own contributions to age 55. The employer will be required to continue funding for benefit for the retrenched employees until they attain age 55 and qualify for the early retirement benefit. In the interim period between redundancy and age 55 the member would receive no superannuation benefit.

This change will assist the voluntary redundancy programs of some employers.

Shift Work and Salary for SSS, SASS, and SANCS
From 1 March 1999 new arrangements will be in place to protect members of the State Superannuation Scheme, State Authorities Superannuation Scheme and State Authorities Non-Contributory Superannuation Scheme from the effect of changes in shift lengths eg 8, 10 and 12 hours.

Under the schemes members are entitled to recognition as superable salary a loading on their base salary if they work more than a set number of shifts over a 12 month period and are paid a shift allowance for shifts worked.

Members have been be disadvantaged if they continue to work the same number of shift hours but the shift loading on their base salary reduces because the number of shifts they work has been reduced as the length of those shifts has increased.

The changes will protect the level of loading based on hours worked taken back to when shift loading first applied in each case since 18 December 1987.

Transfer of Funds to Employer Reserves in State Superannuation Scheme
By 30 June 1999, the unallocated amount standing in the Contributors' Reserve in the Fund is to be transferred to the Employers' Reserves.

 

6. Mobility Provisions for Local Government and Electricity Employees.
New Regulations to be in place by March 1999 will facilitate movement between the NSW public sector, Local Government and Electricity Industry superannuation schemes. The arrangements will apply to movements that have taken place since 1 July 1997.

 

7. Dispute Settlement Provisions for transferred Local Government and Electricity Industry Employees.
It is anticipated that from 1 February 1999 an amendment to the Superannuation Administration Act 1996 will enable the determination and settlement of disputes by the new scheme Trustees concerning transferred benefit recipients now under the Local Government and Electricity Industry sector schemes.

 
Peter L. D. Loxton
Acting Director General

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Jan 13, 1999
Review Date
Dec 31, 2014
Replaces
Replaced By

Contacts

Contact
Contact us
Phone
02 9228 5555
Publishing Entity
Department of Premier and Cabinet
Issuing Entity
Department of Premier and Cabinet