House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Finance and Administration, Senator the Hon Nick Minchin)

Schedule 6 - Amendment of the Judges' Pensions Act 1968

7. This schedule amends the Judges' Pensions Act as a consequence of the closure of the Productivity Benefit Act from 1 July 2006 (see Schedule 3) to ensure a minimum level of superannuation for or in respect of a Judge.

Item 1

8. Item 1 inserts section 12A in the Judges' Pensions Act. Section 12A will replace provisions contained in the Superannuation (Productivity Benefit) (Qualified Employees and Alternative Arrangements) Declaration No.1 from 1 July 2006 for Judges who are not qualified employees under the Productivity Benefit Act. Section 12A ensures that benefits paid under the Judges' Pensions Act are at least equal to the minimum amount required by the SG Act to avoid a Superannuation Guarantee shortfall.

9. Subsection 12A(1) provides that section 12A applies in respect of a Judge who is not a qualified employee under the Productivity Benefit Act:

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where no pension is payable under the Judges' Pensions Act to a Judge who ceases to hold office on or after 1 July 2006;

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where a Judge or former Judge dies on or after 1 July 2006 leaving no surviving spouse or eligible child; or

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where a pension payable to a surviving spouse or spouses or an eligible child or eligible children ceases to be payable on or after 1 July 2006.

2. The amount of benefit payable under section 12A to the person or the personal representative of the deceased person is worked out in accordance with subsections 12A(2) and 12A(3), and is equal to:

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the amount that would have been required to be contributed on a monthly basis to a complying superannuation fund to avoid an individual Superannuation Guarantee shortfall under the SG Act if no other benefits were payable under the Judges' Pensions Act; plus

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the amount of interest in accordance with a method determined by the Minister to have accrued on those contributions; less

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the amount of any benefits paid under the Judges' Pensions Act to the person, any surviving spouse or eligible child.

2. Subsection 12A(4) provides that where a benefit is payable under subsection 12A(2) to the personal representative of a person, and no personal representative of the person can be found, the amount is to be paid to any individual or individuals whom the Minister determines.

3. Subsection 12A(5) appropriates money for the benefit payable under this section.

4. Subsections 12A(6) to (8) provide that a method for setting the interest to be applied to contributions under paragraph 12A(2)(b) must be set out in a determination by the Minister. The method may provide for the interest rate to vary over time and may apply to a period prior to the making of the determination.

5. Due to the requirement in paragraph 72(iii) of the Constitution that a Judge shall receive such remuneration as the Parliament may fix, the determination under subsection 12A(6) is subject to a number of specific requirements as set out in subsections 12A(9) to 12A(15) to ensure compliance with the Constitution. The determination:

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must be tabled in each House of the Parliament by the Minister within 15 sitting days of the determination being made;

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takes effect only after 15 sitting days have passed in both the House of Representatives and the Senate following tabling of the determination;

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is subject to disapproval by either House of the Parliament within 15 sitting days of being tabled in that House;

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may be varied but not be revoked. This is consistent with section 33(3) of the Acts Interpretation Act 1901 which allows for the revocation of an instrument unless a contrary intention, such as in subsection 12A(12), is included in the relevant Act. Subsection 12A(12) is not intended to apply to any other instruments under the Judges' Pensions Act;

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is not a legislative instrument for the purposes of the Legislative Instruments Act 2003 being subject to its own disallowance process as outlined above; and

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must be made in a manner consistent with paragraph 72(iii) of the Constitution.

2. Subsection 12A(16) contains definitions of the terms "complying superannuation fund or scheme" and "individual Superannuation Guarantee shortfall" which have the same meaning as in the SG Act.