From 1 July 2007, Commonwealth superannuation regulations allow superannuation funds to accept employer contributions made on behalf of eligible employees between the ages of 70 and 75.  Previously superannuation funds were prevented from accepting employer contributions if the employee was 70 years and over unless the contributions were required under an award.

The following arrangements apply to eligible employees instead of the superannuation salary loading detailed in Circular 1999-49 Payments in Lieu of Employer Superannuation Support for Employees and former Employees aged 65 Years and Over. 

Who is eligible?
The Commonwealth change applies to employees between the ages of 70 and 75 if they satisfy the work test.  This requires employees to have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days during the financial year in which the contributions are to be made.

Questions on whether employer contributions may be accepted on behalf of individual employees should be directed to the Australian Taxation Office on 13 10 20 or the employee's superannuation fund.  Further information on the Commonwealth changes is available at www.ato.gov.au or www.simplersuper.treasury.gov.au

Applying the new arrangements
From 1 July 2007, these employees should be treated in the same way as employees eligible for membership of First State Super.  Employer contributions should be made on their behalf to First State Super or another complying superannuation fund of the employee's choice.

Affected employees should be advised of the change.

Commonwealth regulations allow superannuation funds to accept superannuation contributions if they are received by the fund no later than 28 days after the month in which the employee turns 75.

Where the new arrangements do not apply
From 1 July 2007, superannuation funds cannot accept employer contributions made on behalf of the following employees unless they are required under an award:

• Employees between the ages of 70 and 75 who do not satisfy the work test; and,
• Employees over the age of 75.

Circular 1999-49 continues to apply for these employees.  Agencies should pay a superannuation salary loading to these employees as detailed in that circular.

NSW Government Policy
Advice received from the Crown Solicitor and the Anti-Discrimination Board indicates that employers in New South Wales may commit an unlawful act of age discrimination in the terms and conditions of employment offered to employees if they do not pay superannuation contributions or provide equivalent remuneration for employees age 70 years and over.

State Owned Corporations are also encouraged to comply with this policy to ensure there is no basis for any potential claims of age discrimination involving superannuation as a condition of employment.

(signed)

A S Smith
Acting Director General