1999 Tasmanian Public Sector Superannuation Reforms

A Joint Select Committee (JSC) on Public Sector Superannuation in Tasmania was established in 1996 to consider Tasmania’s significant unfunded superannuation liability. Both Houses of Parliament and all political parties were represented on the JSC.

As a result of their inquiry, the JSC made a number of recommendations in the report that was tabled in the House of Assembly on 4 December 1997. The major recommendations made by the JSC were that:

• the Retirement Benefits Fund (RBF) defined benefit contributory scheme be closed to new employees;
• the employer superannuation support for new public sector employees be fully funded and provided through an accumulation scheme;
• the level of employer superannuation support be at the rate specified in the Commonwealth’s Superannuation Guarantee (Administration) Act 1992; and
• new employees be provided with unlimited fund choice as to which complying superannuation scheme their employer contributions are to be paid into.

In its deliberations on this issue, the JSC found that, provided a member of the proposed accumulation scheme contributed to that scheme at the rate of five per cent of salary (as required in the RBF defined benefit scheme), most members of the accumulation scheme would receive a greater after-tax benefit than under the defined benefit scheme (for an employee who commenced after 1 July 1994). This arises as investment returns generally outstrip wages growth over the long term.

The Labor Government considered the JSC report shortly after being elected to Government in August 1998. It accepted the vast majority of the JSC recommendations and these were implemented in the Public Sector Superannuation Reform Act 1999. Legislation was passed that closed the RBF defined scheme to new entrants as from 15 May 1999, with some limited exceptions relating to those employees who had legislative rights to join the scheme at some point in the future. The legislation also provided, in accordance with the JSC recommendations, that new public sector employees could elect to have their employer superannuation contributions paid to a complying superannuation scheme of their choice.

Provision was also made for the establishment of the Tasmanian Accumulation Scheme (TAS), which was established under the terms of a Trust Deed on 25 April 2000. This scheme also includes former RBF non-contributory scheme members who were employed as at the transfer date. The TAS is a fully funded, fully taxed scheme.

As a result of the Superannuation (Parliament, Judiciary and Statutory Legal Officers) Reform Act 1999, the parliamentary and judicial defined benefit schemes were closed to new entrants first elected or appointed on or after 1 July 1999.

Superannuation Industry (Supervision) Act 1993

The Commonwealth's Superannuation Industry (Supervision) Act 1993 (SIS Act) was a major initiative of the Keating Labor Government to regulate superannuation schemes throughout the country. The Commonwealth Government proposed, and all state and territory Governments supported, an exemption from the provisions of the Act for certain public sector superannuation schemes. This exemption recognises the special circumstances that apply to public sector schemes.

Part 2 of Schedule 1AA of the Superannuation Industry (Supervision) Regulations 1994 specifies those schemes that are Exempt Public Sector Superannuation Schemes (EPSSS) for the purposes of the SIS Act.

The Tasmanian schemes that are classified as an EPSSS are those established under the following legislation:

• Governor of Tasmania Act 1982;
• Judges' Contributory Pensions Act 1968;
• Solicitor-General Act 1983; and
• Retirement Benefits Act 1993.

Even though the above schemes are listed as EPSSSs, all State Governments have signed a Heads of Government Agreement to comply with the principles of the SIS Act.

Superannuation Guarantee (SG)

The Commonwealth Government's Superannuation Guarantee (Administration) Act 1992 (SG Act) requires employers to provide employees with a prescribed minimum level of employer superannuation support.

The Superannuation Guarantee (SG) contribution rate for large employers (ie those with a payroll in excess of $1 million per annum), such as the State Government, is outlined in Table 19. If an employer does not meet its SG obligations, the employer is required to pay a Superannuation Guarantee Charge (SGC) to the Australian Taxation Office.

Table 19 Superannuation Guarantee rates

• pay the SG amount to a complying superannuation fund at least quarterly (previously the contributions only had to be made annually);
• report details of the contributions to their employees, in writing, at least once each quarter;
• keep a record of all contributions made; and
• keep a record of when, what and how they have reported contributions to their employees.

• the amount of the contributions made;
• the name of the superannuation provider (fund) and, if possible, the superannuation provider’s contact phone number. The superannuation provider’s name on the report should be the same name as that which appears in the telephone directory; and
• the employee’s account or membership number (if known).

These requirements do not apply in respect of members of defined benefits schemes, as the employer contribution varies according to age, sex and entry to the scheme.

The cut off date for superannuation guarantee quarters, and the making of employer contributions, is as follows:

Table 20 Superannuation Guarantee payment timetable