David Coleman (Banks, Liberal Party, Assistant Minister for Finance) Share this | Hansard source

I would like to thank all members who have contributed to the debate on the Public Sector Superannuation Legislation Amendment Bill 2018. The bill includes four key changes relating to the superannuation arrangements for parliamentarians, judges and civilian employees of the Commonwealth.

The first key change concerns a measure announced in the 2012-13 budget relating to a reduction in the tax concessions on superannuation contributions of very-high-income earners, which is known as the division 293 tax. In 2013, the legislation for several Commonwealth superannuation schemes was amended to allow a person to request that they be paid a lump-sum amount from their scheme to meet their division 293 tax liability. This is done using a division 293 tax release authority. The Judges' Pensions Act 1968 was not amended, as judges are exempt from the division 293 tax for constitutional reasons. However, there are a small number of nonjudges that have been granted the same status as judges for the purpose of membership of the Judges' Pensions Scheme. These non-judge members and any future non-judge members are subject to the division 293 tax. The bill therefore includes amendments to the Judges' Pensions Act 1968 that are similar to those made to the legislation for other Commonwealth superannuation schemes.

The second key change included in the bill is to amend the provisions in the Parliamentary Contributory Superannuation Scheme to ensure that, in all circumstances, the calculation of any lump-sum superannuation guarantee safety net benefit meets the superannuation guarantee requirements. The actuary for the Parliamentary Contributory Superannuation Scheme has advised that, in certain limited circumstances, the calculation would not ensure that the benefit would meet the statutory minimum superannuation guarantee requirements. Under the current provisions of the scheme, this could potentially occur where the member converts a significant proportion of their pension into a lump sum and the member has very long service—noting that the main benefits cease accruing after 18 years—and/or the member is over 65 at retirement, in which case a lower lump-sum conversion factor applies, and/or the member's superannuation salary is significantly lower than the member's salary for superannuation guarantee purposes. The bill therefore includes amendments to the Parliamentary Contributory Superannuation Act 1948 to ensure that any lump-sum superannuation guarantee safety net benefit calculated under the scheme will meet the statutory minimum superannuation guarantee requirements. The amendments do not increase any parliamentary pension entitlements for any individual members.

The third key change included in the bill concerns reversionary superannuation benefits payable to, or in respect of, children. The Parliamentary Contributory Superannuation Act 1948, the Judges' Pensions Act 1968, the Federal Circuit Court of Australia Act 1999, the Superannuation Act 1976 and the Superannuation Act 1922 provide for benefits to be payable to, or in respect of, a person who is the child of a deceased member of one of the schemes established by those acts. Generally, to be eligible for a reversionary benefit, the requirement is that the child must prove that, from the age of 16 and above, they remain in formal full-time education. In addition, in some schemes where the child is aged between 16 and 25, the child must also not be ordinarily in employment. The amendments increase the minimum age that a child will have to be to meet the test of being in full-time education from age 16 to age 18 and remove the requirement for an eligible child to not be ordinarily in employment. This reflects that a majority of current children do not leave formal education until at least the age of 18 and that part-time and casual employment is common. These changes are consistent with those that have already been made to the Military Superannuation and Benefits Scheme.

The fourth key change included in the bill is in relation to the Commonwealth Superannuation Corporation Board. Under the changes, the Commonwealth Superannuation Corporation Board will be reduced from 11 to nine directors. The bill also includes two minor amendments to the Parliamentary Contributory Superannuation Act 1948. The first provides the Parliamentary Retiring Allowances Trust with the flexibility to pass a resolution without a meeting. However, this flexibility is subject to the trust first determining in writing that it may make decisions without a meeting and setting out the way in which trustees are to indicate agreement with proposed decisions. The second allows an actuary other than only the Australian Government Actuary to provide advice in relation to the Parliamentary Contributory Superannuation Scheme. The bill also corrects a misdescribed amendment relating to the Judges' Pensions Act 1968.

Once again, I thank members for their contribution and commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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