Senate

Supplementary Explanatory Memorandum

(Circulated by the authority of the Treasurer the Hon Ralph Willis, M.P.)

Chapter 4 Amendment Superannuation Guarantee amendments Seafarers' Retirement Fund

Explanation of proposed amendments

Purpose of the amendment

4.1 The amendment will ensure that all employers in the maritime industry who contribute to the Seafarers' Retirement Fund are able to use the Benchmark Rate specified in the Fund's trust deed as a notional earnings base [Amendment 9] .

Background to the legislation

4.2 The earnings base is the level of earnings of an employee which is used to measure an employer's minimum superannuation contribution required to satisfy his or her Superannuation Guarantee obligations. In certain circumstances an employer is able to use a notional earnings base specified in an award, under a law or in a superannuation scheme's trust deed as the earnings base. Alternatively, the earnings base is the ordinary time earnings of an employee.

4.3 Clauses 78 and 79 of the Bill proposed to amend the definition of industrial award in subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 to allow the Benchmark Rate specified in the trust deed for the Seafarers' Retirement Fund to be used as an acceptable notional earnings base for employers in the maritime industry. Representatives of the maritime industry have expressed concern that the proposed amendment is not broad enough to ensure that all employers in the maritime industry who contribute to the Seafarers' Retirement Fund can use the Benchmark Rate as an acceptable notional earnings base.

Explanation of the Amendment

4.4 The Seafarers' Retirement Fund is a defined benefit fund which qualifies as a superannuation scheme as defined in subsection 6(1). Therefore, if an employer was contributing for the benefit of an employee to the Fund before 21 August 1991, he or she can use the reference earnings as a standard notional earnings base.

4.5 The definition of reference earnings in subsection 13(5) will be amended so that an employer in the maritime industry who is contributing for the benefit of an employee in relation to a contribution period to the Seafarers' Retirement Fund can use the Benchmark Rate specified in the trust deed of the Fund as a notional earnings base. [New Clause 79; New paragraph 13(5)(aa)]

4.6 New section 13A provides that an employer in the maritime industry who is contributing for the benefit of an employee in relation to a contribution period to the Seafarers' Retirement Fund can use the notional earnings base specified in section 13 even if they were not contributing to the Fund before 21 August 1991. [Clause 79A; New section 13A]

4.7 The amendments will ensure that all employers in the maritime industry who contribute to the Seafarers' Retirement Fund are able to use the Benchmark Rate specified in the Fund's trust deed as a notional earnings base.