The purpose of this Circular is to advise you of recent amendments to NSW public sector superannuation legislation and other arrangements arising from the passage of the Superannuation Legislation Amendment Act 2002 and the Superannuation Legislation Further Amendment Act 2002, which were assented to on 29 November 2002. The new provisions became effective at that date, except for Item 1, which commences on 28 December 2002.

The Circular briefly covers amendments affecting members of the following schemes; First State Super (FSS), Police Superannuation Scheme (PSS), State Superannuation Scheme (SSS), State Authorities Non-contributory Superannuation Scheme (SANCS) and State Authorities Superannuation Scheme (SASS).

1. Amendments affecting members of First State Super (FSS)
Amendments facilitate the implementation of new Commonwealth rules for the division of superannuation on the breakdown of a marriage. The amendments allow a separate interest to be created in the FSS for the spouse of an FSS member where the member's marriage fails. This can only occur once the Court has made an Order, or the parties have agreed, on the division of superannuation. (Amendments to the closed NSW public sector schemes will be dealt with separately).

2. Amendments affecting members of the State Authorities Non-contributory Superannuation Scheme (SANCS)
The deferred benefits of SANCS members who do not have benefits in one of the closed NSW public sector schemes will be transferred to the FSS. The transfer applies to SANCS benefits that have become deferred since an earlier transfer of deferred SANCS benefits in 2001, and will enable SANCS benefits to be transferred if they become deferred in the future. Deferred SANCS benefits receive investment earnings, and this will continue in the FSS. The former SANCS members will be able to choose from five FSS investment options.

3. Amendments affecting members of the Police Superannuation Scheme (PSS)
Amendments have been made to the eligibility criteria for disengagement benefits in the PSS. Members who may be eligible for the benefit are those between 45 and 55 years of age and who have at least 20 years of full-time service.

4. Amendments affecting members of the State Superannuation Scheme (SSS), State Authorities Superannuation Scheme (SASS), and the PSS

Superannuation surcharge
Amendments have been made to the superannuation surcharge provisions in the SSS, SASS, and PSS. The maximum amount of surcharge tax deducted from a benefit when it is paid is currently 15% of the employer-financed benefit that accrued since the surcharge was introduced. This amount is known as the surcharge "cap". The amendments will allow the "cap" amount to be adjusted to reflect proposed Commonwealth Government reductions in the rate of surcharge tax. The amendments will also enable the scheme trustees to consider a surcharge assessment issued to a member after they have exited the scheme against the member's surcharge "cap" amount.

Spouse pensions
The amendments extend the circumstances in which benefits can be paid to a member's spouse. Previously, benefits were paid to the spouse of a deceased member if the relationship existed when the member retired. The amendments enable spouse benefits to also be paid where the relationship commenced after the member's retirement, existed for at least three years prior to the member's death, and there is or has been a dependent child of the relationship. If the relationship has existed for less than three years at the time of the member's death, the benefit payable will be reduced on a pro rata basis.

5. Amendments affecting firefighters employed by the NSW FireBrigades
Over the next few months, the Government expects to implement new death and incapacity arrangements for firefighters through an Industrial Award. New death and incapacity benefits will become available for permanent and retained firefighters who are employed by NSW FireBrigades, their spouses and children. The new benefits will apply to all firefighters who are members of the FSS or SASS, and are therefore not entitled to pension benefits from the old State Superannuation Scheme if they are killed or incapacitated. Amendments made in the 2002 superannuation legislation will ensure that the Award can be implemented.

6. Amendments affecting members of SASS
Amendments allow the Trustee to implement investment choice in SASS. The Trustee is currently developing a "cash-plus" option, which will offer members greater levels of capital security and less volatility in investment returns in respect of benefits that are affected by investment returns. These benefits are member-financed benefits (member contributions plus investment earnings) and deferred benefits. Once implemented, members will be allowed to invest all or part of their benefits in the new option, and to switch between the "cash plus" option and the investment mix that applies to the scheme as a whole.

7. Amendments affecting members of SASS and SANCS
The deferred benefits of SASS members who have reached the scheme's retirement age, and who therefore have no other benefit entitlements, will be transferred to the FSS, together with the associated SANCS benefits. Members' deferred benefits will continue to receive investment earnings, and members will have the option to select from five FSS investment strategies.

C. Gellatly
Director-General