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FACT SHEET
Public Sector Superannuation Reform Bill 2016
The purpose of the Public Sector Superannuation Reform Bill 2016 is to formalise the new
administration arrangements for the provision of public sector superannuation in
Tasmania. These new arrangements provide for the transfer all current Retirement
Benefits Fund accumulation members and associated investments to a new default
superannuation fund, with the defined benefits schemes to be managed under new
governance arrangements within the Government.
The Bill establishes the Superannuation Commission. The Commission is to consist of up
to three persons to be appointed by the Treasurer. A member of the Commission is to
be appointed for a term of up to five years and may be reappointed. The Bill facilitates a
move to a single member Commission, if considered necessary.
A member of the Commission may be a State Service employee, however, that person
is not entitled to remuneration or allowances under the Act without approval of the
Premier.
The Bill prescribes arrangements for appointing a person to act as member of the
Commission and for removal of a member of the Commission. If a person is appointed
as an acting member for the chairperson, that person is not appointed as chairperson.
The Bill also prescribes the processes to be followed at meetings of the Commission.
The Commission is responsible for administration of the Fund, which will comprise all of
the assets, including investments, accounts and sub funds, of the Retirement Benefits
Fund following the transfer of the Tasmanian Accumulation Scheme to the new default
fund.
Under the Bill, the Commission may engage any person or organisation to provide
administration and advice in connection with the functions, duties and powers of the
Commission under the Act. This facilitates the Government’s intention to publicly
tender the defined benefit schemes member administration, which would include
member services, relationship management, brand identity and any additional services
specified in the contract, as well as investment management services.
The Bill provides that the Treasurer may issue guidelines to the Commission in relation
to investments. The Bill requires the Commission to have regard to the guidelines when
developing an investment strategy and the Commission must inform the Minister of any
proposed strategy. However, the Commission is not subject to a direction of any kind in
relation to the investment strategy of the Commission or any investment of the Fund.
As an exempt public sector superannuation fund, the trustee, in this case the
Commission, must not be subject to Ministerial direction.
An indemnity is provided to the Commission for loss suffered by a person as a result of
an investment choice exercised by that person, investment decisions in respect of the
assets of the fund made by or on behalf of the Commission or any other election made
by a person, including an election made by a person to become a member of a
complying superannuation scheme.
The Bill prescribes the transitional arrangements that will apply in the period following
the appointment of the chairperson of the Superannuation Commission and the transfer
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of the accumulation accounts and investments. These arrangements provide that:
o the existing Retirement Benefits Board will continue in its current form, with the
addition of the chairperson of the Commission;
o the Minister may direct the Retirement Benefits Board to take any action that is
necessary to give effect to the transfer of the Tasmanian Accumulation Scheme
in accordance with the Bill; and
o the Crown indemnifies the Board, including the chairperson of the Commission,
against any liability incurred as a result of the Board acting upon a direction given
by the Minister, provided that the action was taken in good faith and was
necessary to implement the direction.
The Bill provides for the nomination of default funds by the Minister by publication of a
notice in the Government Gazette. The Minister must seek the approval of Unions
Tasmania before a default fund, other than the initial default fund, can be nominated.
The first default fund nominated under the Bill is the initial default fund, which is the
fund that will be the recipient of the transfer assets of the Tasmanian Accumulation
Scheme, if the fund satisfies the successor fund transfer test. To be a successor fund,
within the meaning of the Superannuation Industry (Supervision) Regulations 1994, prior to
the transfer the two boards must agree that the successor fund provides equivalent
rights in respect of the benefits to members that the members had under the
Retirements Benefits Fund.
In addition, prior to the transfer, both boards must agree that the transfer is in the best
interests of the members of both funds.
The Minister may nominate more than one default fund, and it is only the initial default
fund that is subject to the successor fund transfer process. Only a fund regulated under
the Superannuation Industry (Supervision) Act can be nominated as a default fund and
there can be more than one default fund at any time.
The Bill allows the Minister to enter into a contractual agreement with a superannuation
fund to be a default fund.
Following the transfer date, the Bill provides for employer superannuation contributions
to be paid to the default fund for relevant employees, including transferring members
and employees appointed or employed after the transfer date, where fund choice has
not been exercised by the employee. The Bill also provides for the payment of
employer superannuation contributions for employees that have chosen a fund. 'Chosen
fund' is defined in the Superannuation Guarantee (Administration) Act 1992 and includes
RSAs.
The Bill does not exclude the possibility of an employee electing the initial default fund
to be the employee's chosen fund.
Contributions are to be calculated by reference to the employee’s salary, as defined in
the Bill, and the relevant charge percentage specified in the Superannuation Guarantee
(Administration) Act of the Australian Government. The charge percentage is currently
set at 9.5 per cent of salary. Tasmania has a more generous definition of salary than that
prescribed in the Superannuation Guarantee (Administration) Act as it includes
overtime hours and payments and termination payments in respect of unused annual
leave.
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The Bill provides for the Minister to direct the Board to transfer, to the initial default
fund, the transfer assets. The Actuary must determine those assets that represent the
transfer assets of the Tasmanian Accumulation Scheme, which are to include the
benefits of the transferring members and the relevant proportion of reserves.
The Bill requires the Actuary to determine the value of the assets to be transferred to
Tasplan, and the value of those assets that will remain in the Retirement Benefits Fund
for the defined benefits schemes. The composition of these assets will be agreed
between the Board of Tasplan, the Retirement Benefits Fund Board and the
Government.
Once the Board has been provided with a direction from the Minister to transfer the
transfer assets, it must transfer, to the initial default fund, all transferring members and
the transfer assets. The transfer takes effect from the transfer date, which is the date
specified in the notice published in the Gazette by the Minister that nominates a
superannuation fund to be the initial default fund.
All members of the Tasmanian Accumulation Scheme, immediately before the transfer
date, will transfer to the initial default fund, with the exception of Investment 12
Account members. Investment 12 Account members are accounts in the Tasmanian
Accumulation Scheme of persons who were members of the contributory scheme prior
to 30 June 1994 and who were made redundant and elected to preserve their
redundancy benefit in accordance with scheme rules to retain access to the protected
conversion factor of 12 upon reaching preservation age.
Members of the Tasmanian Accumulation Scheme who are currently receiving a pension
from the Retirement Benefits Fund, such as RBF Account Based Pensions, will in future
be paid by the initial default fund. The governing rules of the initial default fund will
provide for the replication of pension benefits as part of the successor fund transfer
arrangements.
From the transfer date, the Bill provides that:
o any contract, agreement, arrangement, document or undertaking that refers to
the Retirement Benefits Board is taken to be a reference to the Commission,
including a reference to the Board in a document pertaining to the transfer;
o any legal or other proceedings that relate to the Tasmanian Accumulation
Scheme and which have commenced, or could have commenced, before the
transfer date are taken to be proceedings against the Commission;
o any judgment or order of a court that is, before the transfer date, obtained by or
against the Board may be enforced against the Commission; and
o any document, relating to legal proceedings that has been served on the Board
prior to the transfer is taken to have been served on the Commission.
Members that are transferred to the initial default fund, as well as all new State Service
employees, retain their right to choose to become a member of an RSA or other
complying superannuation scheme.
From the transfer date, the Commission becomes responsible for the management and
administration of the contributory scheme and becomes the legal custodian of the fund
assets, which includes the Tasmanian Ambulance Service Superannuation Scheme, State
Fire Commission Superannuation Scheme and parliamentary superannuation schemes.
The Commission also becomes a party to any legal, or other, proceedings that relate to
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the contributory scheme, the Tasmanian Ambulance Service Superannuation Scheme
and the State Fire Commission Superannuation Scheme.
The Retirements Benefits Act 1993 and the Public Sector Superannuation Reform Act 1999
are repealed from the transfer date and the Retirement Benefits Fund Board will be
wound up. The Tasmanian Ambulance Service Superannuation Scheme and the State
Fire Commission Superannuation Scheme will continue to be governed by trust deeds
as they are now.
Following the wind up of the Retirement Benefits Fund Board, it is envisaged that some
of its employees will become State Service Employees within the office of the
Superannuation Commission. The Bill provides that, for these persons, long service leave
accrued with the Retirement Benefits Fund Board will be recognised in their
employment under the State Service Act 2000. For long service leave to be recognised,
the period between the employee ceasing to be an employee of the Retirement
Benefits Fund and commencing employment with the Commission must be no longer
than three months. Similarly, the Bill provides for the preservation of superannuation
entitlements of a Retirement Benefits Fund employee who takes up a position with the
Commission within three months of the employee ceasing to be an employee of the
Retirement Benefits Fund.
The Bill maintains the closure of the contributory scheme and does not apply to an
employee engaged or appointed on or after 15 May 1999. This was first given effect by
the Public Sector Superannuation Reform Act. The existing arrangements that applied in
respect of members of boards and where a person is employed in two or more
positions continue to apply.
The Bill requires the Actuary to undertake triennial reviews as to the state and
sufficiency of the fund and will be required to assess, and report on, the financial
position of the fund and the Government contribution rates that are needed to ensure
that the defined benefits can continue to be met. The regulations prescribe the
arrangements under which the review is to be undertaken and what the review must
cover.
The Bill provides regulation making provisions, as well as savings and transitional
provisions that are necessary following the repeal of the Retirement Benefits Act and
the Public Sector Superannuation Reform Act.
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