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Superannuation Circular No. 20054 - Superannuation Framework for by tmm85724

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									      Australian Government
      Department of Finance and Administration



Superannuation Circular
No. 2005/4
Superannuation Framework for New Australian Government
Employees from 1 July 2005
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Purpose
This circular contains high-level information about the recent changes to superannuation
arrangements for Australian Government employees and consolidates information previously
provided. This circular replaces Superannuation Circular No. 2004/1.

Target Audience
This circular is relevant to Corporate, Human Resource and Finance areas of agencies1 in
respect of Australian Government employees who are not eligible to resume or continue
membership of the Commonwealth Superannuation Scheme (CSS) or the Public Sector
Superannuation Scheme (PSS)2.

Key Points
1. The Public Sector Superannuation Accumulation Plan (PSSAP) commenced on
   1 July 2005.

2. In the period from 1 July 2005 until 30 June 2006:
                a) permanent (usually ongoing) employees who start employment in the period
                   must join the PSSAP;
                b) temporary (usually non-ongoing) employees who commence employment or a
                   new term of employment in the period can choose to join the PSSAP (temporary
                   employee membership restrictions in the PSS do not apply to the PSSAP);
                c) temporary employees who commence employment before 1 July 2006 who are
                   not PSSAP members (and persons engaged by Australian Government agencies
                   under a contract that is wholly or principally for their labour) must have
                   employer contributions paid for them under the Superannuation (Productivity
                   Benefit) Act 1988 (Productivity Benefit Act);


1
  This circular applies in respect of any employer of Australian Government employees or any approved authority, within the meaning of the
Superannuation Act 2005, permitted to offer PSSAP membership to new employees. Other employers should contact the Department of
Finance and Administration on (02) 6215 1666 to ascertain the specific arrangements that apply in their case.

2
  For example, this circular does not apply in respect of a CSS or PSS member who has transferred to another Australian Government
employer or, in some cases, a person who has an existing benefit in the CSS or PSS, such as a PSS preserved benefit. Employees should
contact the CSS Board or PSS Board as appropriate to determine their eligibility for membership of the respective scheme. The Government
will be giving consideration to the options that may be available for offering choice of fund to CSS and PSS members.
                  d) employers can choose to offer choice to any or all PSSAP members and meet
                     the choice of superannuation fund requirements in accordance with the
                     Superannuation Guarantee (Administration) Act 1992. (SG Act - see below for
                     details on the choice requirements). However, if an employer provides choice
                     prior to 1 July 2006, the employee exercising choice must become a PSSAP
                     member first; and
                  e) employers are directly responsible for ensuring that they comply with the
                     SG Act in respect of employees who are PSSAP members and those who have
                     left the PSSAP because of choice3.
3. The diagram in Attachment A illustrates the superannuation arrangements that can apply to
   a person who commences employment during the financial year ending 30 June 2006.
4. From 1 July 2006:
                  a) all new employees will be able to choose to join the PSSAP, but are not required
                     to become members;
                  b) employers must meet the choice requirements (see below) in respect of all new
                     employees and all PSSAP members;
                  c) the provisions of the Productivity Benefit Act will not be available to new
                     employees. This is one year later than originally announced – employees
                     covered by the Productivity Benefit Act (including eligible contractors and
                     consultants) at 30 June 2006 may remain covered past that date, if their
                     employment (or contractual) arrangements remain unchanged and they do not
                     choose to be PSSAP members; and
                  d) employers will be directly responsible for ensuring that they comply with the
                     SG Act, including the choice requirements, for all new employees and PSSAP
                     members3.

Choice Requirements
5. An employer will be able to comply with the choice requirements under the SG Act4 if they
   contribute to a complying superannuation fund5 or retirement savings account (RSA):
                  a) chosen by the employee provided this is a valid choice;
                  b) that is the employer (default) fund where an employee was offered choice and
                     did not make a valid choice (see below for more information on employer
                     funds); or
                  c) under or in accordance with a state industrial award or industrial agreement, or a
                     federal certified agreement or an Australian Workplace Agreement.
6. An employer also meets their choice requirements in respect of employees who continue to
   be covered by the Productivity Benefit Act. In addition, the choice requirements for an
   employer are met in respect of PSSAP members until 30 June 20066.

3
  Employers are obliged to contribute a minimum of 9% of an eligible employee’s earnings base to a complying superannuation fund or
retirement savings account at least every quarter.

4
 Further information about choice of fund for employees can be found at the Australian Taxation Office’s website on www.ato.gov.au/super.
This includes details of how choice should be offered and how employees can exercise choice.

5
    A complying fund is a superannuation fund that has elected to be regulated under the Superannuation Industry (Supervision) Act 1993.


                                                                                                                                            2
                                                                                                             Superannuation Circular 2005/4
                                                                                                    Department of Finance and Administration
7. Further information about choice can be obtained by visiting the Australian Taxation
   Office’s website at www.ato.gov.au/super.

The Employer (Default) Fund When Choice is Offered
8. From 1 July 2006, both permanent and temporary employees who are offered choice and do
   not choose a fund will have contributions paid into the employer fund. The PSSAP is the
   employer fund for persons employed under the Public Service Act 1999 and any other
   person declared by the Minister7.
9. Employers of other Australian Government employees who must be offered choice can
   select their own employer fund. This fund can be any complying superannuation fund
   which offers a prescribed minimum level of life insurance8 or RSA.

The Productivity Benefit Act
10. Temporary employees who commence employment or a new term of employment between
    1 July 2005 and 30 June 2006 who do not choose to join the PSSAP will have employer
    superannuation paid for them under the Productivity Benefit Act.
11. The Productivity Benefit Act allows employees (including eligible contractors and
    consultants) covered by that Act to choose one of a limited number of funds permitted
    under that Act. The Australian Government Employees Superannuation Trust (AGEST) is
    the default fund when an employee does not choose a fund. The choice requirements do
    not apply to employees to the extent they are covered by the Productivity Benefit Act.
12. Further information about the Productivity Benefit Act is available at
    www.finance.gov.au/super. Further information about AGEST is available from
    www.agest.com.au or by contacting 1300 724 378.

Providing Information to Employees
13. Employers should provide new employees with sufficient information to ensure that they
    understand the superannuation options available to them. Discussion with employees on
    superannuation should be limited to superannuation as it relates to employment conditions.
14. Employers should provide information to employees regarding the PSSAP only as
    permitted by the PSS Board (which is licensed by the Australian Securities and Investments
    Commission (ASIC) to give general financial product advice on that scheme). Information
    about the PSSAP can be obtained by visiting the PSS Board’s website at
    www.pssap.gov.au.
15. Employees who have the option to become PSSAP members or have superannuation
    provided for them under the Productivity Benefit Act should be informed that they have the
    option of either arrangement.
16. ASIC has issued guidance about the role of employers in providing information to
    employees about superannuation in the course of their duties. ASIC’s updated guidance to
    employers about superannuation choice advice (QFS 156) is available on ASIC’s website at

6
 Although not relevant to this circular, employers also meet the choice of fund requirements in respect of employees who are CSS or PSS
members.

7
    At this time no declarations have been made.

8
    Further information about the default fund can be found at the Australian Taxation Office’s website on www.ato.gov.au/super.


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                                                                                                              Superannuation Circular 2005/4
                                                                                                     Department of Finance and Administration
   www.asic.gov.au and on the Australian Taxation Office’s website at www.ato.gov.au/super.
   This guidance assists employers to ensure that the information they are providing does not
   constitute financial advice.

Contacts
17. Employers can receive further information on choice at:

      the Australian Taxation Office’s superannuation website at www.ato.gov.au/super or by
       phoning 13 10 20.

      the Australian Securities and Investments Commission’s website at www.asic.gov.au or
       by phoning 1300 300 630.

18. For further assistance regarding matters in this circular, or suggestions to improve the
    information provided, agencies may contact the Superannuation Policy Branch of this
    Department at AGsuperreview@finance.gov.au or the Department’s choice inquiry hotline
    number on (02) 6215 1666.




Sandra Wilson
Branch Manager
Superannuation Policy Branch
Superannuation and Governance Division
Financial Management Group
2 September 2005




                                                                                                       4
                                                                          Superannuation Circular 2005/4
                                                                 Department of Finance and Administration
   Australian Government                                                                                                                                                                Attachment A
   Department of Finance and
                  YES
   Administration

Superannuation arrangements during 2005 – 06 for Australian Government employees who commence employment in that financial year

                                                                                                                   Choice requirements under the Superannuation
                                                                                                                        Guarantee (Administration) Act 1992
                                                                        Prior to 1 July 2006, the
                                                                        employer may offer PSSAP               Does the employer contribute                         Does the employer
      Is the employee                 The employee must                                                        to the default fund?
      a permanent             YES     join the PSSAP.                   members choice of                                                                           contribute to a fund on
                                                                        superannuation fund.                   For employees employed                               behalf of an employee under
      (ongoing)                                                                                                under the Public Service Act
      employee?                                                                                                                                                     a state award or industrial
                                                                        Does the employer offer                1999, this will be the PSSAP.                        agreement or with a certified
                                                                                                               Other employers may select            NO
                                                                        PSSAP choice?                                                                               agreement or Australian
                                                                                                               their own default fund.                              Workplace Agreement?
            NO
                                                 YES


      Is the employee                     Does the employee elect                                   YES
      a temporary                         to join the PSSAP?                                                                         YES                                      YES
                              YES                                                   NO                                                                                                      NO
      (non-ongoing)                       (The employee can elect
      employee?                           at any time to join the
                                          PSSAP).
                                                                                                                                                                    Employer is
             NO                                                                                                                                                     complying with
                                                 NO
                                                                                                                                                                    choice.
                                                                           Employer is complying
                                                                           with choice of fund
    Is the employee a                      The employee will be            until 30 June 2006.
    contractor or consultant               covered by the                                                                  NO
    who is an employee                     Superannuation
    referred to under sub                  (Productivity Benefit) Act
    section 12(3) of the            YES    1988. Employees who do                                                   Does the employer
    Superannuation Guarantee               not chose a fund                Employer is complying                    contribute to an           YES
                                                                                                                    YES
    (Administration) Act 1992?             permitted under that Act        with choice of fund.                     employee’s chosen
                                           must have contributions                                                  fund?
    This means a person                    paid to the Australian
    engaged under a contract               Government Employees
    that is wholly or principally          Superannuation Trust
    for their labour.                      (AGEST).                                                                                                              Employer is complying with
                                                                                                                                                                 choice only in respect of PSSAP
                                                                                                                                                                 members until 30 June 2006.




          This diagram does not apply in respect of:
                         insufficient employer contributions on behalf of employees to a superannuation fund or retirement savings account to meet the requirements in the
                          Superannuation Guarantee (Administration) Act 1992;
                         any employee who is a Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) member or is eligible to resume
                          membership of either of those schemes (for example, if the person has a PSS preserved benefit);
                         any employment, or a term of employment, that commenced before 1 July 2005 or after 30 June 2006; and
                         statutory office holders.

								
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