On 1 October 1999 a new system of mobility of superannuation entitlements came into effect for employees who have transferred or will transfer employment between the NSW State public sector, local government sector, and electricity distribution sector.

Employer and employee associations in the local government and electricity distribution sectors established by Trust Deed the Local Government Superannuation Scheme (LGSS) and Energy Industries Superannuation Scheme (EISS) respectively in mid 1997. To date, employees who were transferred from the public sector superannuation schemes to LGSS or EISS in the period from 1 July 1997 have not been able to recommence their membership entitlements in the State public sector defined benefit superannuation schemes (SSS, SASS, SANCS) upon securing new employment with a public sector employer.

Such employees have only had the option of deferring accrued benefits in LGSS or EISS, and entering the First State Superannuation Scheme or another accumulation-style scheme as applicable schemes for new employees in the public sector.

By contrast, the new arrangements that took effect on 1 October 1999 will allow for mobility of accrued benefits and contributory rights between LGSS, EISS and the State public sector schemes for any employees who have or will transfer employment directly between the three employment sectors. An information paper is attached outlining the changes in more detail.

For further information or to make an application to exercise a transfer option, the following contacts are available:

• Staff transferring employment into the public sector should call the State Superannuation Corporation's Advisory Service on Freecall 1300 130 095 for (SASS members) or Freecall 1300 130 096 (for SSS members).
• Staff transferring employment into the local government or electricity distribution sectors should call Future-Plus Member Services on Freecall 1300 369 901.

Please bring this matter to the attention of appropriate agencies and staff in your administration.

C. Gellatly
Director-General

INFORMATION PAPER

Mobility of superannuation for employees transferring employment between the NSW public sector, local government sector and electricity distribution sector 

Statutory and trust deed superannuation scheme changes which have occurred

On 1 October 1999 a new system of mobility of accrued benefits in Local Government Superannuation Scheme, the Energy Industries Superannuation Scheme, and the State public sector defined benefit superannuation schemes (SSS, SASS and SANCS) came into effect for employees who have transferred or will transfer employment between the NSW public sector, NSW local government sector, and/or the NSW electricity distribution sector.

The new arrangements are provided for under:

• the Superannuation Administration (Electricity Superannuation Scheme Transitional Provisions) Amendment Regulation 1999,
• the Superannuation Administration (Local Government Superannuation Scheme Transitional Provisions) Amendment Regulation 1999, and
• associated amendments to the Trust Deeds of the Local Government Superannuation Scheme (LGSS) and the Energy Industries Superannuation Scheme (EISS), which have been approved by the Trustees of those Schemes and consented to by the Treasurer.

How mobility will operate for employees transferring into the State public sector 

Local government and electricity distribution sector employees who were members of SSS, SASS or SANCS up to 1 July 1997, and who have been transferred by instruments under the Superannuation Administration Act 1996 to LGSS or EISS on or after that date, will have some form of accrued benefits in the equivalent divisions of LGSS or EISS.

• Employees who remain employed in these sectors will have ongoing entitlements to accrue benefits in LGSS or EISS, as specified by the Trust Deeds for those schemes.
• On taking up new employment in the NSW public sector, these employees are able to transfer their accrued benefit and contributory entitlements to the equivalent membership in SSS, SASS, or SANCS (the transferee scheme).
• The process of mobility may be initiated by the employee by making an application to exercise a transfer option. The application must be made in an approved manner to the trustee of the transferee scheme (in this case the SAS Trustee Corporation as trustee of SSS, SASS and SANCS) when the employee takes up their new public sector position.
• Such an application to exercise a transfer option is required to be made within 3 months of the person's transfer of employment to the public sector (i.e. within 3 months of commencing in their new position in the State public sector). This requirement is consistent with the normal defined benefit scheme membership continuity rules applying to employees who move between positions in the public sector.

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Please note that hard copies of this Circular which have been distributed to public employers on 1 October 1999 contained an error: the correct requirement, as stated here, is for employees who are eligible to transfer to make their application within 3 months of commencing their new employment in the State public sector, NOT within 3 months of ceasing their previous employment in the local government or electricity sector as was erroneously stated in the hard copies distributed to public employers.
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• Upon receipt of the application, the trustee of the transferor scheme will be required to determine the employee's accrued benefit in the transferor scheme (in this case the relevant division of LGSS or EISS) based on an actuarial assessment of that employee's rights under the rules of the transferor scheme. Cash equivalent to the value of the employee's accrued benefit in the transferor scheme will then be transferred to the trustee of the transferee scheme.
• Upon transfer of the cash amount, the trustee of the transferee scheme must establish the employee as a member of the transferee scheme (in this case SSS, SASS or SANCS), and determine their contributory and accrual rights in accordance with actuarial advice on their entitlements under the rules of the transferee scheme with the assumption, inter alia, that no break in service in relation to that scheme has occurred.

Subsequent transfers of employment between the three sectors

• A subsequent transfer of employment in the reverse direction will be treated in the same manner (i.e. from a State public sector employer to a local government employer or electricity distribution sector employer) as an earlier transfer into the public sector.
• In this case SSS, SASS or SANCS will be treated as the transferor scheme, and LGSS or EISS will be treated as the transferee scheme, as appropriate.
• Reciprocal arrangements between the Trust Deeds of LGSS and EISS will similarly allow transfers of scheme entitlements directly between LGSS and EISS when employees transfer employment directly between the local government and electricity distribution sectors, or vice versa.
• Employees who have been employed in any combination of the State public sector, local government sector, or electricity distribution sector will be able to transfer their accrued benefits and contributory entitlements with each transfer of employment between the sectors. Provided there is no break in employment in any of the three sectors greater than the maximum periods provided for under the rules of the relevant superannuation schemes, the transfer of employee superannuation entitlements will be possible irrespective of the order of employment with each employer in these sectors.

Treatment of employees who have transferred employment prior to 1 October 1999

A number of employees have already transferred their employment from the local government or electricity distribution sectors to the State public sector prior to these new arrangements taking effect. Such employees will have similar rights to re-establish their membership in the public sector defined benefit superannuation schemes.

• Such employees will have deferred their accrued benefits in LGSS or EISS upon terminating their employment in those sectors, and will currently be members of the First State Superannuation Scheme or another accumulation scheme where their new State public sector employer will be contributing at the SGC rate (along with any employee contributions made into that account).
• Such members may make an application to the trustee of the transferee scheme to exercise a transfer option (in this case SAS Trustee Corporation as trustee of SSS, SASS and SANCS) effecting their transfer from Divisions B, C or D of LGSS or EISS directly into the equivalent public sector scheme.
• The application in this case is required to be made within 12 months from 1 October 1999 if the employee wishes to take advantage of these new mobility arrangements.
• As with employees who may exercise transfer options with changes of employment to occur in the future, employees who have already transferred employment prior to 1 October will be established by SAS Trustee Corporation in the transferee scheme according to actuarial advice, with entitlements and contribution options based on the assumption, inter alia, that no break in service has occurred in relation to that scheme.
• The employee may also be permitted to pay cash amounts into and/or transfer into the defined benefit scheme any voluntary employee contributions which they have made into an accumulation-style scheme in respect of their employment by a public sector employer during the interim period to the date of their election to transfer. These employee payments will be credited as employee contributions in the particular defined benefit scheme. Such transfers of assets will only be possible to the extent permitted under existing legislation and Trust Deed provisions for the respective defined benefit schemes.
• The trustee of the transferee scheme has discretion to extend the period allowed for exercise of a transfer option for a further 12 months beyond the expiry of the initial period of 12 months from 1 October 1999. It is envisaged that such extension may be considered by the trustee in specific cases where it is evident that the member has not been provided with adequate notice of their transfer options or of the fixed exercise period for those options which they are entitled to under these arrangements.
• Upon the SAS Trustee Corporation establishing the employee as a member in a public sector defined benefit scheme, and the payment of any employee contributions into that scheme, the new employer will be required to pay into the scheme the appropriate employer contribution, if any. Where appropriate, SGC payments made by the employer into an accumulation-style scheme in regard to the interim period where that employee was not re-established in the public sector defined benefit schemes can be transferred and credited into the defined benefit scheme employer account for that employee for the purpose of making compulsory employer contributions.
• The normal superannuation benefit funding requirements for Budget sector and non-Budget sector public agencies participating in SSS, SASS and SANCS, as determined in the regular actuarial reviews by the Treasury, will apply to public sector employers involved in these transfers of member entitlements.

For further information or to make an application to exercise a transfer option: 

Staff transferring employment into the NSW State public sector should call the State Superannuation Corporation's Advisory Service on Freecall 1300 130 095 (for SASS members) or Freecall 1300 130 096 (for SSS members).

Staff transferring employment into the local government or electricity distribution sectors should call Future-Plus Member Services on Freecall 1300 369 901.