Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C2000-05
Status:
Archived

C2000-05 Superannuation Amendments

Description

The purpose of this Circular is to advise you of recent amendments to the Superannuation legislation and other arrangements arising from the passage of the Superannuation Legislation Further Amendment Act 1999, which was assented to on 3 December 1999.

Detailed Outline

The purpose of this Circular is to advise you of recent amendments to the Superannuation legislation and other arrangements arising from the passage of the Superannuation Legislation Further Amendment Act 1999, which was assented to on 3 December 1999.

The Circular briefly covers:

Closure of the Public Sector Executives Superannuation Scheme (PSESS) and transfer of members to First State Super.

Amendments to the First State Superannuation Scheme (FSSS) -

to correct provisions for "superannuable salary" for chief executive and senior executive officers who have voluntarily transferred to the FSSS ​from PSESS; and
to cease contributions for members when they reach maximum Commonwealth benefit limits.

Amendments to the Police Superannuation Scheme (PSS), which also applies to certain employees of the NSW Police Association -

to correct potential mis-interpretation of provisions for interest on a termination benefit payment; and
to remove provisions requiring the taking of accrued leave prior to the commencement of an invalidity pension.

Amendments to the State Superannuation Scheme (SSS) -

to restore provisions enabling persons on part-time LWOP or on extended leave on half pay to contribute for and accrue a full benefit, and to give a new right to elect for a reduced entitlement;
to change provisions charging administration fees in the scheme so that these are paid from employers’ reserves instead of from the contributors’ reserve;
to make it clear that new provisions for interest on a withdrawal benefit (guaranteed benefit) put in place in the scheme in 1998 are capped at the equivalent of a benefit that would be paid if a person took early or normal retirement and commuted pension to a lump sum; and
to remove provisions requiring the taking of accrued leave prior to the commencement of an invalidity pension.

Amendments in the PSS, SSS, State Authorities Non-contributory Superannuation Scheme (SANCS), and the State Authorities Superannuation Scheme (SASS) -

to require the periodical actuarial investigation of the scheme to be completed in 6 months instead of 12 months as at present; and
to require the scheme trustee to submit the report to the Minister within 1 month after receiving it instead of 2 months as at present.

Closure of Public Sector Executives Superannuation Scheme (PSESS)
With effect from 1 March 2000
, PSESS will be closed and all of its members and assets will be transferred to the First State Super Scheme (FSSS). The schemes have a common Trustee, the FSS Trustee Corporation, and both schemes have very similar structures.

The major reason for closing PSESS is to enable the Trustee to pass on to PSESS members the benefits of scale available to the more than 350,000 members of the FSSS. There are fewer than 600 members of PSESS. The present separately managed scheme generates unacceptably high administration costs, which have to be borne by the members.

Transferred members from PSESS will be full members of FSSS, and, if FSSS should prove unsuitable to their needs, they will have the option of transferring to an external "complying" superannuation scheme of their choice.

Transferred former CEO, SES and Police executive members of PSESS will have the continued right to determine through their remuneration packages what level of cover they wish to fund. Their account balances in PSESS will be transferred to new accounts in FSSS, and the amendments ensure the superannuation conditions of executive appointees are not eroded.

Amendments to the First State Superannuation Scheme
Correction of definition of salary for transferring CES and SES officers
 With effect from 1 July 1999, members of PSESS were given a voluntary right to transfer to FSSS. However, their right to determine level of cover was not fully recognised in FSSS. To correct this, amendments have been made to the definition of "superannuation salary" for executive officers in FSSS to fully carry over their rights. This change is made retrospective to date of transfer.

Enabling contributions to cease where member reaches maximum benefit limit Under Commonwealth Tax law maximum superannuation benefit limits are set, for which taxation concessions apply. These limits are known as the "Reasonable Benefit Limits" or RBLs. Compulsory levels of employer contribution must be continued even though the RBL has been exceeded, unless the scheme member elects for contributions to cease. Such an election is irrevocable under Commonwealth law.

The FSSS legislation has been amended to allow the member to make an irrevocable election to cease contributions in these circumstances. This change commenced on assent to the new amendments.

Amendments to the Police Superannuation Scheme
Clarification of provisions for interest on termination payments
 For some years there has been doubt about what rate of interest applies to a refund of contributions in the scheme where a police officer is dismissed. The amendments confirm that no interest applies before 1 July 1990. But, from that date interest based on the fund-earning rate in the State Authorities Superannuation Scheme applies. Mirror provisions apply to certain former police officers who transferred to the employ of the NSW Police Association.

Removal of provisions requiring taking of leave accruals before invalidity pension is paid. This change mirrors a similar change being made in the SSS, to remove requirements that all accrued leave must be taken before an invalidity pension can commence. The amendment repeals the provision so that the pension can commence immediately on cessation of service. The amendment commences on assent and applies to any pension currently suspended at that time pending expiry of leave.

Amendments to the State Superannuation Scheme
Corrective amendments to Part-time leave without pay provisions
 From 1 April 1999, contributors in SSS working under any type of part-time arrangement were put on the same footing so that their contributions and benefit accruals would be reduced. Previously, contributors who took part-time leave without pay or extended leave on half pay, contributed for, and qualified for, full benefits.

Many contributors objected to this inadvertent removal of their rights.

Changes made in the recent amending legislation reversed the earlier amendments so that any person affected by the change from 1 April 1999 would have their contribution and benefit position restored. In addition the amendments will allow members taking part-time LWOP and part-time extended (or other) leave (including persons affected by the earlier change) to elect to pay reduced contributions and take a reduction in their entitlements. If no election is made they will continue to pay full contributions, and their benefit entitlements in the scheme will be unaffected.

Charging of administration fees currently charged to the Contributors’ Reserve With effect from 1 July 1999 a corrective measure is being made in SSS so that the whole of future administration charges will be debited to the relevant employer accounts or Reserves. Previously, part of these charges were paid from the contributors’ Reserve. But the Contributors’ Reserve is now fully expended in meeting benefits in the scheme.

Clarification of provisions for calculation of a cap on the withdrawal benefit In 1998, improvements were made to the withdrawal benefit in the scheme by recognising interest based on fund earning rate. However, the withdrawal benefit was capped as the equivalent of a lump sum payment that would be payable on commutation of an early or normal retirement pension so that the change would not provide a greater benefit on withdrawal than for retirement.

Provisions for the cap were ambiguous and resulted in doubt in the calculation. The proposed amendments make the intention of the legislation clear.The correction is effective on and from 30 November 1999.

Removal of provisions requiring taking of leave accruals before invalidity pension is paid, The amending legislation removes a requirement that all accrued leave must be taken before an invalidity pension can commence. The change enables the pension to commence immediately on cessation of service. The amendment commences on assent and applies to any pension currently suspended at that time pending expiry of leave.

Transitional provisions were made to enable the Trustee to commence any pension subject to suspension on or after 1 July 1999 pending expiry of accrued leave entitlements.

Time allowed for completion and submission of Actuarial Investigation Reports Various schemes have a requirement for periodic valuation and report by the scheme actuary on the state of the superannuation fund. These are the PSS, SSS, the SANCS and SASS.

Time lags for reporting by the actuary and lodgement of the actuary’s report have been found too long to enable the Government to take decisive action if this is needed. The time for completion of the report is being reduced from 12 months to 6 months, and the time for lodgement of the report with the Minister by the Trustee is being reduced from 2 months to one month by the amending legislation. These changes commence on assent to the amending legislation.

Enquires concerning any of the above changes may be directed to the FSS Trustee Corporation, or the SAS Trustee Corporation on telephone (02) 9238-5555, or to the Public Sector Management Office Superannuation Unit on (02) 9228-5555.

C Gellatly
Director General

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Jan 1, 2000
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