Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004 (102 of 2004)

Schedule 1   Choice of superannuation funds

Superannuation Guarantee (Administration) Act 1992

15C   After section 19

Insert:

19A Limit on shortfall increases arising from failure to comply with choice of fund requirements

(1) Subject to subsections (2) and (3), if the total of the amounts worked out for an employee for a quarter under subsections 19(2A) and (2B) exceeds $500, the total is taken to be $500.

(2) If:

(a) the total (the previous amount ) of the amounts worked out for an employee under subsections 19(2A) and (2B) for previous quarters within an employer's notice period for an employee does not exceed $500; and

(b) the current quarter is within the same employer's notice period for the employee; and

(c) the total of the amounts worked out under subsections 19(2A) and (2B) for the employee for the current quarter and the previous quarters within the employer's notice period for the employee exceeds $500;

then, the total of the amounts worked out under subsections 19(2A) and (2B) for the employee for the current quarter is taken to be the amount by which $500 exceeds the previous amount.

(3) If a quarter (the later quarter ) in an employer's notice period for an employee follows a quarter within that notice period:

(a) to which subsection (1) applied; or

(b) to which paragraph (2)(c) applied;

in respect of the employee, the total of the amounts worked out for the employee under subsections 19(2A) and (2B) for the later quarter is taken to be nil.

(4) An employer's notice period for an employee:

(a) begins on:

(i) in the case of the first employer's notice period for the employee - the later of 1 July 2005 and the day on which the employee is first employed by the employer; or

(ii) in any other case - when the immediately preceding employer's notice period for the employee ends; and

(b) ends on the day the Commissioner gives the employer written notice that the employer's notice period for the employee has ended.

15D After proposed section 19A

Insert:

20 Scheme in surplus or member has accrued maximum benefit

(1) This section applies to an employer in respect of an employee in respect of a defined benefit superannuation scheme for a quarter if the employee is a defined benefit member of the scheme and either subsection (2) or (3) is satisfied.

Scheme in surplus

(2) This subsection is satisfied if:

(a) the employee was a defined benefit member of the fund immediately before 1 July 2005 and has not ceased to be such a member since that time and before the start of the quarter; and

(b) an actuary has provided a certificate in accordance with regulations under the Superannuation Industry (Supervision) Act 1993 stating that the employer is not required to make contributions for the quarter and there has been such a certificate covering all times since 1 July 2005; and

(c) an actuary has provided a certificate stating that, in the actuary's opinion, at all times from 1 July 2005 until the end of the quarter, the assets of the scheme are, and will be, equal to or greater than 110% of the greater of the scheme's liabilities in respect of vested benefits and the scheme's accrued actuarial liabilities.

The certificate under paragraph (c) must have been provided no earlier than 15 months before the end of the quarter.

Member has accrued maximum benefit

(3) This subsection is satisfied if, after the start of the quarter, the defined benefit that has accrued to the employee will not increase other than:

(a) as a result of increases in the employee's salary or remuneration; or

(b) by reference to accruals of investment earnings; or

(c) by reference to indexation based on, or calculated by reference to, a relevant price index or wages index; or

(d) in any other way prescribed for the purposes of this paragraph.

Meaning of scheme's accrued actuarial liabilities and scheme's liabilities in respect of vested benefits

(4) In this section:

scheme's accrued actuarial liabilities , at a particular time, means the total value, as certified by an actuary, of the future benefit entitlements of members of the scheme in respect of membership up to that time based on assumptions about future economic conditions and the future of matters affecting membership of the scheme, being assumptions made in accordance with applicable professional actuarial standards (if any).

scheme's liabilities in respect of vested benefits , at a particular time, means the total value of the benefits payable from the scheme to which the members of the scheme would be entitled if they all voluntarily terminated their service with their employers at that time.

15E Before section 22

Insert:

21 Guidelines for reducing an increase in an individual superannuation guarantee shortfall

(1) The Commissioner must develop written guidelines that he or she must have regard to when deciding whether or not to make a decision under subsection 19(2E).

Note: Subsection 19(2E) allows the Commissioner to reduce (including to nil) the amount of an increase in an individual superannuation guarantee shortfall under subsection 19(2A) or (2B).

(2) The guidelines are to be made available for inspection on the Internet.