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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
AUSTRALIAN DEFENCE FORCE SUPERANNUATION BILL
2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Assistant Minister for Defence, the Hon Stuart
Robert MP)
GENERAL OUTLINE
AUSTRALIAN DEFENCE FORCE SUPERANNUATION BILL
2015
The Australian Defence Force Superannuation Bill 2015 (the Bill) gives effect to the
Government's announcement to introduce new modern superannuation arrangements
for people joining the Australian Defence Force (ADF) on and after 1 July 2016. A
new superannuation scheme, to be known as the Australian Defence Force
Superannuation Scheme or ADF Super, is being established to come into effect from
this date. This scheme will be an accumulation (or defined contribution) scheme.
Membership arrangements
Persons engaged on or after 1 July 2016 as permanent members of the ADF or as
members of the Reserves on continuous full-time service after this date will be
eligible to become members. Further, members of the Military Superannuation and
Benefits Scheme (MSBS) who are serving at 1 July 2016 can elect to become
members of ADF Super at any time in their career on or after this date if they so wish
(they do not have to make this election; they can stay as MSBS members). The
MSBS will be closed to new members from 1 July 2016.
ADF Super membership is not available to contributing members of the Defence
Force Retirement and Death Benefits (DFRDB) scheme, the defined benefit
superannuation arrangements under the Defence Force Retirement and Death Benefits
Act 1973 (DFRDB Act). Returning DFRDB or MSBS benefit recipients will become
ADF Super members, but will continue to receive the benefits they are being paid
from those other schemes.
Members of the Reserves who are not on continuous full-time service cannot be
members of ADF Super. Under the Superannuation Guarantee (Administration) Act
1992 (SG Act), Defence is not required to make contributions for members of the
Reserves who are not on continuous full-time service (because the pay and allowances
of Reserves not on continuous full-time service is not subject to income tax).
A person continues to be an ADF Super member until their benefit is paid. A person
will be able to continue membership even when they are no longer eligible to become
a member, although superannuation contributions will not be accepted in respect of
the member during such times.
Contributions
Employer Contributions
Under the new arrangement, Defence's employer contribution (members of the ADF
are deemed to be employees for the purpose of the SG Act) will be 16.4 per cent of
ordinary time earnings paid by Defence (which includes salary and the various
allowances that are paid in recognition of the unique nature of military service).
Member Contributions
There will be no requirement under the new arrangement for ADF Super members to
make personal contributions to ADF Super. However, there is nothing precluding
them from making contributions from after tax income or from salary sacrificing
amounts from their Defence pay into ADF Super.
Choice
The new arrangements will allow ADF members to choose which superannuation
fund they belong to and, for the first time, give ADF Super members the ability to
transfer their accumulated ADF Super benefits to a fund of their choice when they
leave the ADF.
Default Fund
Under the SG Act, an employer is required to pay contributions for an employee who
has no chosen fund into a fund that offers a MySuper product. ADF Super will offer a
MySuper product and will be the default fund into which Defence will pay employer
contributions for ADF members who do not choose another fund.
Death and invalidity arrangements
The SG Act provides that, in order for employer superannuation contributions to
satisfy the choice of fund requirements, the relevant fund to which the contributions
are paid must comply with various prescribed requirements, one of which applies to
insurance in respect of death.
In addition, the core and ancillary purposes of the sole purpose test in the
Superannuation Industry (Supervision) Act 1993 (SIS Act) permit superannuation
funds to offer a range of benefits to members, including insured benefits for particular
risks, including for death and the total and permanent incapacity of a member. The
SIS Act allows operating standards to be prescribed in relation to the kinds of benefits
that must not be provided other than by taking out insurance, or insurance of a
particular kind.
Until recent times, funds could self-insure, but recent changes now require any
insurance arrangements provided by the trustees of funds be supported by an
insurance policy provided by an insurer. However, there is an exemption to this
requirement for the trustees of any fund where the insured benefits are provided by, or
their provision is guaranteed by, the Commonwealth Government or the government
of a State or Territory.
A military specific statutory death and invalidity scheme, provided by the
Commonwealth, to be known as ADF Cover, is also being established. From 1 July
2016, ADF Super members will be covered under this statutory scheme as will
members who could have been ADF Super members but for choosing another fund
into which Defence's employer contributions are to be paid. The reason for this is
that it is difficult for ADF members to obtain death and invalidity cover at a
reasonable cost under group insurance arrangements.
There will be no contributions required for ADF Cover (either from Defence or ADF
members) as the benefits will be paid from the Consolidated Revenue under a specific
appropriation. ADF Cover has been designed to be consistent with the death and
invalidity benefits provided under the current Military Superannuation and Benefits
Scheme (MSBS).
Administration
ADF Super will be administered by the Commonwealth Superannuation Corporation
(CSC), which is currently the trustee for the major Commonwealth superannuation
schemes, including current and past military superannuation schemes.
The Bill
The Bill is part of a package of three Bills to establish the Australian Defence Force
Superannuation Scheme (ADF Super). The other two Bills in the package are:
the Australian Defence Force Cover Bill 2015 which provides for standalone
statutory death and invalidity cover (ADF Cover) for members of ADF Super and
those ADF personnel who would have been members of ADF Super but for
choosing another fund to which Defence is to contribute.
the Defence Legislation Amendment (Superannuation and ADF Cover) Bill 2015
which contains the consequential and transitional arrangements necessary to set up
the new ADF Super arrangement. This Bill will also assist with the introduction
of the ADF's future workforce model by providing flexible service arrangements
for permanent members of the ADF.
Also included in the package are exposure drafts of both the Australian Defence Force
Superannuation Trust Deed and the Military Superannuation and Benefits
Amendment (Trust Deed - ADF Super Consequential) Instrument 2015 which effects
consequential changes to the MSBS Trust Deed and Rules. This is to facilitate the
measure and to make some administrative changes to reduce red tape.
Financial Impact Statement
The establishment of ADF Super is a 2014/15 Budget Measure.
NOTES ON CLAUSES
PART 1 - PRELIMINARY
Clause 1: Short title
1. Clause 1 provides for the short title of the Act to be the Australian Defence Force
Superannuation Act 2015 (the Act).
Clause 2: Commencement
2. Clause 2 is the commencement provision for the Bill which will be on the day the
Act receives the Royal Assent.
Clause 3: Simplified Outline
3. Clause 3 gives a simplified outline of the Bill. The simplified outline is included
to assist readers to understand the substantive provisions of the Bill, but is not
intended to be comprehensive. Readers should rely on the substantive provisions.
Clause 4: Definitions
4. Clause 4 defines several terms which are used in the Bill. Of particular
importance is the definition of continuous full-time Reservist.
5. Defence is not required to make employer superannuation contributions for a
member of the Reserves whose income as a Reservist is not subject to income tax.
The income of a Reservist on continuous full-time service is subject to income tax and
as a consequence, Defence is required to make employer superannuation contributions
for those members.
6. A continuous full-time Reservist for the purposes of ADF Super is a member of
the Reserves whose undertaking to serve for a specified period has been accepted and
the person is rendering that service in accordance with the undertaking.
Clause 5: Application of Act
7. Clause 5 enables the Act to apply both within and outside Australia.
PART 2 - THE TRUST DEED
Clause 6: Simplified outline of this Part.
8. Clause 6 provides a simplified outline of this Part. The simplified outline is
included to assist readers to understand the substantive provisions of the Part, but is
not intended to be comprehensive. Readers should rely on the substantive provisions.
Clause 7: Trust Deed to establish the Australian Defence Force Superannuation
Scheme
9. Subclause 7(1) provides that the Minister, on behalf of the Commonwealth, must
execute a Trust Deed before 1 July 2016 that establishes ADF Super for the benefit of
its members.
10. The Trust Deed is also to establish a fund for ADF Super that is vested in CSC
and to set out the functions and powers of CSC in relation to ADF Super and the ADF
Super Fund. The Trust Deed will also make rules for the administration of ADF
Super by CSC.
11. Subclause 7(2) provides that the first trust deed (that forms part of this package),
although a legislative instrument for the purposes of the Legislative Instruments Act
2003, is not a disallowable instrument within the meaning of section 42 of that Act.
The reason for this is that if the first trust deed was disallowed, ADF Super would be
inoperable.
12. Part 6 of the Legislative Instruments Act 2003 provides that an instrument relating
to superannuation, such as the Trust Deed established under this clause is not subject
to sunsetting.
Clause 8: Amendment of the Trust Deed
13. Clause 8 enables the Minister to amend the Trust Deed referred to in clause 10 by
instrument (subclause 8(1)). Generally, CSC must consent to any amendment of the
Trust Deed (paragraph 8(2)(a)).
14. However, the Minister may amend the Trust Deed without CSC's consent if:
i. the amendment relates to a payment by Defence (the employer-sponsor) that
will be required or permitted to be made under the Act after the amendment;
ii. the amendment terminates the ADF Super Fund; or if
iii. the following three basic preconditions are met:
- after the amendment is made, ADF Super would not become
technically insolvent; and
- members' rights to accrued benefits are not adversely affected by
the amendment; and
- the amendment is of a prescribed kind (for example, the
amendment relates solely to non-mandated employer contributions
or benefits related to those contributions or to the admission of new
members) (paragraph 8(2)(b)).
15. A note to subclause 8(2) stipulates that the limitations on amending the Trust
Deed set out in the subsection do not apply if the amendment is made for the purposes
of attributing the costs of the administration of the Act and the Trust Deed.
16. An amendment to the Trust Deed is invalid if it has the effect that ADF Super
would no longer be a regulated superannuation fund within the meaning of the SIS
Act or would no longer comply with that Act (subclause 8(3)).
17. An instrument that amends the Trust Deed is a legislative instrument for the
purposes of the Legislative Instruments Act 2003 (subclause 8(4)).
18. Subclause 8(5) specifically provides that an instrument to amend the Trust Deed
is subject to disallowance by the Parliament under section 42 of the Legislative
Instruments Act 2003 and as a consequence, Item 39 of the table in section 44 of the
Legislative Instruments Act 2003, which exempts superannuation legislative
instruments (other than regulations) from the disallowance process does not apply.
Part 6 of that Act provides that a declaration under this clause is not subject to
sunsetting.
Clause 9: Family law interest splitting
19. Clause 9 exists for the purposes of splitting arrangements under the Family Law
Act 1975. It enables the Trust Deed to include provisions in relation to the splitting of
a superannuation interest in ADF Super between a member and a non-member spouse
upon CSC receiving a splitting agreement or splitting order in respect of those persons
following a marriage breakdown (paragraph 9(1)(a)).
20. Paragraph 9(1)(b) enables the Rules to the Trust Deed made in accordance with
clauses 7 or 8 to address issues such as the splitting arrangements where both parties
to the marriage are already members of ADF Super .
21. Subclause 9(2) defines specific terms associated with family law interest splitting.
PART 3 - MEMBERS OF THE AUSTRALIAN DEFENCE FORCE
SUPERANNUATION SCHEME (ADF SUPER)
22. Part 3 of the Bill deals with the circumstances in which a person is eligible to be,
becomes or remains a member of ADF Super on and after 1 July 2016.
23. A person is eligible to become an ADF Super member if they are a member of the
Permanent Forces or a member of the Reserves who is rendering continuous full-time
service under an undertaking to serve for a specified period (continuous full-time
Reservist). Certain persons are excluded from eligibility, such as contributing
members of DFRDB. A MSBS member cannot hold a concurrent ADF Super
membership.
24. An eligible person may choose to join ADF Super or another fund to which
Defence will make employer contributions, but if the person does not make a choice,
then ADF Super is that person's mandated fund. ADF Super is also the default fund
to which Defence will make employer contributions if the eligible person has not
chosen another fund to which Defence is to contribute.
25. Recipient members of DFRDB who later rejoin the ADF on continuous full time
service will automatically become ADF Super members for that period and any later
period of service. They will continue to receive their DFRDB pensions while serving
(amendments to the DFRDB Act as part of this package will ensure this outcome).
26. A DFRDB recipient member whose period of further service spans 1 July 2016
will be subject to the current DFRDB arrangements for recipient members who return
for further service. However, they will become ADF Super members on the day that
service is extended if it is extended (effectively, the person would be giving another
undertaking to serve for the extended period).
27. MSBS members who have separated from the ADF and have been paid their
MSBS employer benefit as either a lump sum, a pension or a combination of lump
sum and pension who later rejoin the ADF will automatically become ADF Super
members for the period of further (and any later) service.
28. As indicated above, ADF Super will be the default fund for members who do not
choose an alternate superannuation fund into which Defence can make employer
contributions. ADF Super is the sole eligible choice fund for Defence in
circumstances where there is no other fund to which Defence can contribute for new
ADF members on and after 1 July 2016.
29. A person continues to be an ADF Super member until:
i. the whole of a person's benefit is paid to or in respect of them; or
ii. the person has died.
Clause 10: Simplified outline of this Part
30. Clause 10 provides a simplified outline of this Part. The simplified outline is
included to assist readers to understand the substantive provisions of the Part, but is
not intended to be comprehensive. Readers should rely on the substantive provisions.
Clause 11: Eligibility for membership of ADF Super
31. Subclause 11(1) sets out the circumstances where a person is eligible to become a
member of ADF Super subject to subclauses 11(2) and 11(3).
32. Paragraph 11(1)(a) provides that a person is eligible to become a member of
ADF Super if they are a member of the Permanent Force or a continuous full-time
Reservist.
33. Paragraph 11(1)(b) provides that a person is also eligible to become a member if
they are:
i. a former member of the MSBS who wishes to roll-over a lump sum payment
from MSBS; or
ii. a former contributing member of DFRDB who wishes to roll-over a lump
sum commutation amount or a lump sum superannuation productivity
benefit.
This is for the purposes of establishing an account based pension to be paid by CSC
from pension accounts established under the ADF Super Trust Deed.
34. Subclause 11(2) precludes a DFRDB contributing member from becoming an
ADF Super member. The reason for this is that DFRDB benefits are pension benefits
and are not preserved (and every current contributing DFRDB member has served
long enough to be able to draw on their pension benefit). A contributing DFRDB
member would have to resign from the ADF and then rejoin the Permanent Force or
undertake to serve a period of continuous full-time service as a Reservist to become
an ADF Super member.
35. Subclause 11(3) provides that a person is not eligible to become a member of
ADF Super before 1 July 2016 as the scheme will not have commenced before that
date.
Clause 12: Becoming an ADF Super member
36. Subclause 12(1) explains that there are two situations in which a person can
become a member of ADF Super. The first is where the person chooses to become a
member (subclauses 12(2) and (3)) and the second is where ADF Super membership
is compulsory for that person (subclause 12(4)).
37. A person who is eligible to be an ADF Super member becomes an ADF Super
member when the person makes a written choice in a manner approved by CSC
(subclauses 12(2) and 12(3)).
38. A note to subclause 12(3) makes it clear that a MSBS member who chooses to
become an ADF Super member cannot again become an MSBS member at a later
time (that is, the choice to become an ADF Super member is final).
39. Subclause 12(4) provides that, except for persons with a preserved MSBS
employer benefit, a person is required to become an ADF Super member if:
i. the person becomes a member of the Permanent Force or commences as a
continuous full-time Reservist on or after 1 July 2016; and
ii. there is no chosen fund for the person within the meaning of the SG Act.
40. In these circumstances, ADF Super fund is the mandatory superannuation fund for
the person. This ensures that even if the Department is unaware of an ADF Super
member's choice of fund or the Department cannot make contributions to the chosen
fund, there will always be a superannuation fund for the Department into which it can
pay superannuation contributions.
41. Note 1 to the subsection refers the reader to clause 15 which makes ADF Super
the sole eligible choice fund for the Department in circumstances where a person does
not choose another fund or if the Department cannot contribute to the chosen fund.
42. Note 2 refers the reader to clause 13 that deals with the specific circumstances of a
DFRDB recipient member whose period of further service spans 30 June 2016.
Clause 13: Continous full-time Reservists whose undertakings span 30 June 2016
43. Clause 13 clarifies the circumstances provided for in paragraph 12(4)(a) in
relation to a DFRDB recipient member whose service obligation is extended by virtue
of the fact the recipient member gives another undertaking for a further period of
service.
44. Clause 13 works in conjunction with proposed new section 5B of the DFRDB Act
(see item 13 of the Defence Legislation Amendment (Superannuation and ADF
Cover) Bill 2015) and addresses the situation where a DFRDB recipient member's
undertaking to serve for a specified period is accepted prior to 1 July 2016 and that
specified period of service is completed after 1 July 2016. The arrangements in the
DFRDB Act that apply to recipient members undertaking a further period of service
prior to 1 July 2016 will continue to apply for that specified period of service that
ends after 1 July 2016.
45. If that specified period of service that ends after 1 July 2016 is subsequently
extended for whatever reason, the recipient member effectively gives another
undertaking to serve for another specified period of time. If that further undertaking
is accepted, the recipient member is bound to serve for that further period.
46. In light of the fact that there is a new undertaking for the further period of service,
clause 13 stipulates that the extension day (that is, the day after the day the previous
undertaking is completed) is the day the recipient member is taken to have
commenced a new period of continuous full time service. This applies even if there is
no effective break between the completion of the earlier undertaking and the start of
the new undertaking.
47. The operation of clause 12 means that the extension day is the day that ADF
Super becomes the mandated fund for that DFRDB recipient member.
Clause 14: Duration of membership of ADF Super
48. Subclause 14(1) provides that membership in ADF Super continues until the last
of the occasions on which a benefit is paid to or in respect of a member in accordance
with the Trust Deed. The occasion can be one payment or the last of a series of
benefit payments.
49. The subclause also provides that ADF Super membership will cease on the death
of the person, even if the death occurs before all of a benefit is paid to or in respect of
the person. This provision clarifies that, even though a person logically ceases to be
an ADF Super member at this point, the ADF Super Trust Deed and Rules would still
need to apply in order to provide for a payment of any residual benefit in respect of
the person that was not paid before the person's death.
50. Subclause 14(2) provides that membership does not cease because a person
ceases to be eligible under clause 13 to become a member.
51. Subclause 14(3) provides that if a person ceases to be a member of ADF Super,
that person would not be prevented from again becoming an ADF Super member (for
example, if the person undertakes to serve for a further period of service)..
Clause 15: ADF Super is the sole eligible choice fund in relation to certain
members
52. Clause 15 provides that ADF Super is the sole eligible choice fund for the
purposes of subsection 32C(2) of the SG Act for a person who is eligible to become
an ADF Super member (or would be eligible if the person was not already a member).
Subsection 32C(2) of the SG Act provides that an employer will meet the choice of
fund requirements where they provide superannuation support or make contributions
to a fund chosen by the employee in accordance with the provisions of that Act.
53. Where an employee does not choose a fund or the employer cannot contribute to
the chosen fund, the employer will comply with the choice of fund requirements by
contributing to any eligible choice fund. ADF Super is the sole eligible choice fund
for the Department. The Department will not be permitted or required to nominate a
fund other than ADF Super in respect of an eligible member who does not have a
chosen fund.
54. This clause is not intended to prevent a member of the Permanent Forces or a
continuous full-time Reservist having superannuation employer contributions paid on
their behalf to another superannuation fund or retirement savings account in
accordance with the choice of fund requirements (for example, where the employee
has chosen a fund other than ADF Super that will accept contributions from the
Department).
Clause 16: Contributions to ADF Super by the Department
55. Subclause 16(1) provides that the Department must pay to CSC, as the trustee of
ADF Super, employer superannuation contributions, which would include salary
sacrifice contributions, that are payable by the Department. The proposed new
section 52A of the Defence Act 1903 (see item 2 of the Defence Legislation
Amendment (Superannuation and ADF Cover) Bill 2015) sets out the employer
contributions payable by the Department.
56. A note to the subclause refers readers to clause 21 which allows CSC to impose
interest on any overdue payment and to recover any outstanding amount in a court of
competent jurisdiction.
57. Subclause 16(2) provides that the payments must be made in accordance with this
Bill, the Trust Deed, and the Defence Act 1903.
PART 4 - ADMINISTRATION
Division 1 - Simplified outlined of the Part
Clause 17: Simplified outline of this Part
58. Clause 17 gives a simplified outline of the Part. The simplified outline is
included to assist readers to understand the substantive provisions of the Part, but is
not intended to be comprehensive. Readers should rely on the substantive provisions.
Division 2 - Functions and powers of CSC
Clause 18: Functions and powers of CSC
59. Subclause 18(1) provides that the functions and powers that CSC has in relation
to ADF Super and the ADF Super Fund are those set out in the Trust Deed.
60. Subclause 18(2) provides that CSC is responsible for the general administration
of the ADF Super Act. A note to the clause points readers to section 8 of the
Governance of Australian Government Superannuation Schemes Act 2011 for other
functions of CSC.
Division 3 - Costs of Administration
Clause 19: Costs of administration of Act etc.
61. Subclause 19(1) provides that the costs of the administration of the Act and the
Trust Deed, including the costs of management and investment of the ADF Super
Fund, incurred by CSC are to be paid out of the ADF Super Fund as provided for in
the Trust Deed. The ADF Super Trust Deed provides for the costs paid out of the
ADF Super Fund to be passed on to members, which is consistent with arrangements
for the payment of costs by superannuation scheme members in the private sector.
62. Subclause 19(2) provides that the limitations on amending the Trust Deed in
subclause 8(2) do not apply to an amendment to the Trust Deed for the purposes of
attributing costs for the administration of the Act and Trust Deed.
Clause 20: Payment of fees
63. Subclauses 20(1) to (3) enable rules to be made to allow CSC to charge a fee to
a person who seeks reconsideration of a CSC decision. This will permit CSC to
recover any costs associated with the reconsideration of a decision from a member
who has requested a review of a decision CSC has made under the Act or the Trust
Deed.
64. The clause also provides for the rules to make provision to refund any fees
charged (for example, if a fee is charged by CSC to review a decision it has made that
adversely impacts a member and the decision is overturned on review, the rules may
provide for a refund of any fee charged).
65. If no rules are made under clause 20, CSC may not charge a fee to a person for
reconsideration of a CSC decision. The power to prescribe fees is not intended to
impose a tax within the meaning of section 55 of the Constitution.
Division 4 - Other administrative matters
Clause 21: Amounts payable to the CSC
66. Subclause 21(1) provides that CSC may recover an amount owing to it
(including an amount of contributions) in a court of competent jurisdiction as a debt.
67. Subclause 21(2) enables CSC to charge interest on any amount that is payable
to CSC and remains outstanding after the day the amount was required to be paid.
The amount of interest is to be determined in writing by CSC.
68. Subclause 21(3) confirms that any determination of interest by CSC is a
legislative instrument for the purpose of the Legislative Instruments Act 2003 but
disallowance under section 42 of that Act does not apply (because the determination
would relate to the administration of ADF Super).
Clause 22: Recovery of overpayments
69. Subclause 22(a) provides for CSC to recover in a court of competent
jurisdiction any amount of benefit that CSC has paid (for any reason), if it is
subsequently established that benefit should not have been paid.
70. Subclause 22(b) provides for the offset of the amount of the benefit that should
not have been paid against the amount of any other benefit that may be payable to the
person to whom the original amount was paid. This allows CSC to administratively
recover the debt without having to resort to legal action.
Clause 23: CSC may rely on information supplied by the Department
71. Clause 23 provides that CSC may presume that information provided by the
Department is correct for the purposes of the Trust Deed (basically information about
member's pay and employer/member superannuation contributions that would be
transmitted fortnightly together with the amount of the contributions). A tribunal,
authority or person empowered to review a decision of CSC is not bound by any such
presumption made by CSC.
72. This clause is designed to reduce administrative burdens and red tape. It ensures
that CSC is not required to verify information provided to it by the Department. The
clause is not intended to prevent CSC from verifying any information provided to it, if
it wishes to do so.
Clause 24: CSC may require the Department to distribute information etc. to
members of ADF Super
73. Subclauses 24(1) and 24(2) allows CSC to send any document or written
information CSC is required to send to ADF Super members and to request that the
Department distribute those documents/information to ADF Super members, on
behalf of CSC. This is a cost saving/red tape reduction measure as the Department
would generally be in a better position to be able to disseminate those
documents/information to ADF personnel more expeditiously than would CSC.
74. The Department is required to distribute the documents/information if doing so
would not contravene chapter 7 (financial services and markets provisions) of the
Corporation Act 2001.
75. Subclause 24(3) provides that CSC must ensure the confidentiality of any
member information sent to the Department under subclauses 24(1) and 24(2).
PART 5 - MISCELLANEOUS
Clause 25: Simplified outline of this Part
76. Clause 25 gives a simplified outline of this Part. The simplified outline is
included to assist readers to understand the substantive provisions of the Part, but is
not intended to be comprehensive. Readers should rely on the substantive provisions.
Clause 26: Persons subject to the Trust Deed
77. Clause 26 provides a list of persons who are subject to the Trust Deed. The
persons who are subject to the Trust Deed are present and past ADF Super members,
persons who are or were persons to whom a benefit is/was payable, the Department
and CSC.
Clause 27: Termination and variation of rights by later legislation
78. Clause 27 provides that a right granted under the Act or Trust Deed may be
cancelled, revoked, terminated or varied by or under later legislation. No
compensation will be payable if the right is cancelled, revoked, terminated or varied.
The purpose of this clause is to ensure that if a right granted by the Act or Trust Deed
is cancelled, revoked, terminated or varied it does not amount to an acquisition of
property on other than just terms.
Clause 28: Rules
79. Subclause 28(1) provides that the Minister may make rules for the purposes of
the ADF Super Act.
80. Subclause 28(2) limits the Minister's power to make rules unless CSC consents.
The reason for this is that CSC is the trustee of ADF Super and as such, is bound to
act in the best interests of members of ADF Super. However, the Minister may make
rules without CSC's consent if the rule:
i. relates to a payment by Defence (the employer-sponsor) that will be
required or permitted to be made under the Act after the amendment;
ii. terminates the ADF Super Fund; or if
iii. the following three basic preconditions are met:
- after the amendment is made, ADF Super would not become
technically insolvent; and
- members' rights to accrued benefits are not adversely affected by
the amendment; and
- the amendment is of a prescribed kind (for example, the
amendment relates solely to non-mandated employer contributions
or benefits related to those contributions or to the admission of new
members) (paragraph 8(2)(b)).
81. Subclause 28(3) provides that, to avoid doubt, the rules may not do any of the
things listed in that subclause.
Clause 29: Rules relating to the operation of the Superannuation Industry
(Supervision) Act 1993 and certain other laws
82. Subclause 29(1) provides that regulations may make any provision that is
necessary to enable ADF Super to satisfy any condition or requirements of the
following laws:
i. the Corporations Act 2001;
ii. the Family Law Act 1975;
iii. the Financial Institutions Supervisory Levies Collection Act 1998;
iv. the Income Tax Assessment Act 1936 or the Income Tax Assessment Act
1997;
v. the Superannuation Industry (Supervision) Act 1993;
vi. the Superannuation (Resolution of Complaint) Act 1993; and
vii. the Superannuation (Unclaimed Money and Lost Members) Act 1999.
83. Subclause 29(2) provides that if rules are inconsistent with a provision of the
Act, the rules prevail and the provision, to the extent of the inconsistency, is of no
effect.
This provision is necessary because the conditions or requirements of the above laws
are usually promulgated by regulations or other instruments made under those laws.
Allowing rules to be made under this Bill would allow those conditions or
requirements to be met more quickly than if Act amendments were required. It is
intended that should it be necessary to make rules under this section, legislation would
be introduced as soon as possible to give effect to the relevant provisions.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Australian Defence Force Superannuation Bill 2015
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Australian Defence Force Superannuation Bill 2015 gives effect to the
Government's announcement to introduce new modern superannuation arrangements
for people joining the Australian Defence Force (ADF) on or after 1 July 2016. A
new superannuation scheme, to be known as the Australian Defence Force
Superannuation Scheme or ADF Super, is being established to come into effect from
this date. This scheme will be an accumulation (or defined contribution) scheme.
The membership of ADF Super will be comprised of persons who join the ADF on or
after 1 July 2016, either as permanent members of the ADF or reservists on
continuous full-time service.
The Department contribution rate for ADF super will be 16.4% of ordinary time
earnings.
Unlike the current Military Superannuation and Benefits scheme (MSBS), members
will not be required to make their own contributions to ADF Super, although they
may still choose to do so.
ADF Super will allow ADF members to choose which superannuation fund they
belong to and, for the first time, give those members the ability to transfer their
accumulated ADF Super benefits to a fund of their choice when they leave the ADF.
In conjunction with the Australian Defence Force Superannuation Bill 2015, a
military specific statutory death and invalidity scheme, provided by the
Commonwealth, to be known as ADF Cover, is also being established.
From 1 July 2016, ADF Super members will be covered under this statutory scheme
as will members who could have been ADF Super members but for choosing another
fund into which the Department's employer contributions are to be paid. The reason
for this is that it is difficult for ADF members to obtain death and invalidity cover at a
reasonable cost under group insurance arrangements.
There will be no contributions required for ADF Cover (either from the Department
or ADF members) as the benefits will be paid from Consolidated Revenue under a
special appropriation. ADF Cover benefits are designed to be consistent with the
death and invalidity benefits provided under the current MSBS arrangements.
Human Rights Implications
The Bill promotes the following rights:
Article 7, International Covenant on Economic, Social and Cultural Rights
(ICESCR), the right to just and favourable conditions of work;
Article 9, ICESCR, the right to social security;
Article 11, ICESCR, the right to an adequate standard of living;
Article 2(2), ICESCR, the right to equality and non-discrimination.
Article 26, International Covenant on Civil and Political Rights; and (ICCPR),
the right to equality and non-discrimination.
This Bill proposes to introduce new and modern superannuation arrangements which
provide just and favourable conditions of work for ADF members. The employer
contributions will exceed the minimum requirement under the Superannuation
Guarantee (Administration) Act 1992 and there is no compulsion for the ADF
member to make additional contributions. However, they can elect to do so to
improve their circumstances. This will provide an enhanced standard of living and
social security environment.
The Bill also proposes to provide a military specific statutory death and invalidity
scheme and all ADF Superannuation members will have access to this insurance
without any employee contributions. These premiums will be contributed from a
specific Government consolidated appropriation. These measures promote the right to
social security and an enhanced living standard.
The Bill further proposes to introduce flexible service arrangements which provide
just and favourable conditions of work for ADF members. The flexible service
arrangements will allow ADF members to better balance their military careers and
their personal lives. Members on flexible service arrangements will have consistent
comparative benefits to other ADF members, including access to death and invalidity
and superannuation benefits. This promotes the right to equality and non-
discrimination. The introduction of flexible service arrangements in legislation is
consistent with the Review into the Treatment of Women in the Australian Defence
Force conducted by Elizabeth Broderick, in her role as the Sex Discrimination
Commissioner. This measure promotes the right to equality and non-discrimination.
The Bill may infringe the following human right:
Articles 17, ICCPR, the right to privacy.
Article 17 of the ICCPR prohibits State Parties from arbitrary or unlawful interference
with privacy.
The Bill provides that the Department give the Commonwealth Superannuation
Corporation (CSC) information on individual ADF members where that information
is relevant to the determining of a benefit for that member. Although this may appear
to impact the right to privacy, the transfer of an ADF member's information between
Commonwealth entities is not arbitrary or unlawful.
The information is transferred only to ensure expediency in the calculation of a
benefit and is limited to only information that is relevant to that calculation. This
limitation is reinforced by the requirement in the Bill that CSC only use personal
information for the purposes of administering the military superannuation schemes.
CSC is responsible for the privacy, confidentiality and security of personal
information it holds in accordance with the Privacy Act 1988 and the Australian
Privacy Principles under that Act. Accordingly, the Bill does not impact the right to
privacy.
Conclusion:
The Australian Defence Force Superannuation Bill is compatible with human rights. It
advances the protection of human rights.