EXPLANATORY
STATEMENT
FAMILY LAW
(SUPERANNUATION) (METHODS AND FACTORS FOR VALUING PARTICULAR SUPERANNUATION
INTERESTS) AMENDMENT APPROVAL 2005 (No.4)
ISSUED BY THE
AUTHORITY OF THE ATTORNEY-GENERAL
In this instrument a method and
additional factors are approved, for the purpose of the provisions of the Family
Law Act 1975 that allow for superannuation to be split on marriage
breakdown, for determining the gross value of an interest within additional
categories of interests in the Public Sector Superannuation Scheme (the PSS
Scheme).
The instrument also makes other
revisions to several methods approved in May 2004 for valuing interests in the
Military Superannuation and Benefits Scheme (the MSB Scheme) and the
Defence Force Retirement and Death Benefits Scheme (the DFRDB Scheme).
The gross value is one element in
the determination of an amount which is taken to be the value of a
superannuation interest in property settlement proceedings under the Family Law
Act.
The method and additional factors
approved under the instrument for interests in the PSS Scheme are for
additional categories of interests in the Scheme providing for a non-member
spouse (NMS) entitlement when a splitting order or agreement under Part VIIIB
of the Family Law Act 1975 has been received by the Scheme.
These entitlements replace the
entitlement under the order or agreement that the NMS, the person for whose
benefit the order or agreement has been made, has to receive a split of future
payments when they are made to the member of the Scheme.
The method that has been approved
applies when the NMS is entitled to associate preserved benefit under the
Scheme.
An NMS is entitled to associate
preserved benefit when his or her former spouse was a contributing member of
the Scheme at the time the splitting order or agreement was received by the
Scheme.
At or after age 55, or on becoming
terminally ill, physically incapacitated or departing Australia permanently, a
lump sum benefit is payable.
The method values the NMS’s
interest by reference to the value that the lump sum benefit has, at the time
of valuation, under the rules for the administration of the Scheme.
The additional factors that have
been approved apply when the NMS is entitled to associate preserved pension or
associate standard pension under the Scheme.
Part or all of the lump sum
benefit payable to an NMS entitled to associate preserved benefit may be drawn
as a pension, termed an associate preserved pension.
An NMS is entitled to associate
standard pension when his or her former spouse was a pensioner member of the
Scheme at the time the splitting order or agreement was received by the
Scheme.
The revisions made to the methods
approved for interests in the MSB and DFRDB Schemes:
- re-draw the one method approved
in May 2004 for interests held by pensioner members in the MSB Scheme into
two methods, one for former defence force pensioner members and the other
for surviving and former spouse pensioner members;
- amend the definition of a factor
used in the formula for one of the methods approved in May 2004 for
interests held by pensioner members in the DFRDB
Scheme to correct an oversight (it was overlooked in May 2004 that
non-indexed retirement pay and invalidity pay,
like indexed retirement pay and invalidity pay, can be suspended);
- include footnotes at the end of
two tables of factors used for that method to clarify that particular
factors, appearing in secondary formulas for the method, are, in a
particular circumstance, zero;
- change references to the terms
‘retirement pension’, ‘invalidity benefits’ and ‘invalidity pension’, used
in relation to the methods and factors approved for interests in the DFRDB
Scheme, to ‘retirement pay’ and ‘invalidity pay’; and
- correct a typographical error in
the subscript of a factor used in a method approved in May 2004 for a
category of interests in the MSB Scheme.
The instrument incorporates by
reference the Rules for the administration of the Public Sector Superannuation
Scheme (the PSS Rules) and the Military Superannuation and Benefits Rules (the
MSB Rules). The instrument also refers to the Defence Force Retirement and
Death Benefits Act 1973.
The PSS Rules make provision in
relation to the membership of the PSS Scheme and other matters, including the
contribution rates for, and the benefits payable to, members of the Scheme.
The Rules can be viewed at the following website:
http://www.pss.gov.au/pss/rules/pssrules_19th.pdf
The MSB Rules provide for the
administration of the Military Superannuation and Benefits Scheme, including
the contribution rates for members of the Scheme and the benefits payable to
them. The Rules can be viewed at the following website:
http://www.militarysuper.gov.au/legislation/MSBS_rules.pdf
Copies of the PSS Rules and the
MSB Rules may be obtained from Commonwealth Superannuation Administration
(ComSuper), Unit 4, Cameron Offices, Chandler Street, Belconnen, ACT
(telephone: 13 23 66).
The Defence Force Retirement
and Death Benefits Act 1973 makes provision in relation to the retirement
and death benefits for certain members of the Defence Force. The Act can be
viewed at the following website:
http://www.comlaw.gov.au/comlaw/Legislation/ActCompilation1.nsf/0/5F4015C8BF6DC210CA256F71004CE8C2/$file/DefForRetDeathBen1973.pdf
A copy of the Act may be purchased
from CanPrint Information Services, PO Box 7456, Canberra MC ACT 2610
(telephone: 1300 656 863).
Consultation on the content of the
instrument was undertaken under section 17 of the Legislative Instruments
Act 2003 with the Australian Government Actuary, the Department of Finance
and Administration, the Department of Defence and Commonwealth
Superannuation Administration (ComSuper) by way of exchange of
correspondence and discussions.