Michael Sukkar (Deakin, Liberal Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Public Sector Superannuation Legislation Amendment Bill 2022 makes consequential amendments to a number of public sector superannuation acts as a result of the parliament's enactment last year of the Your Future, Your Super reforms. This bill ensures that relevant Commonwealth public sector superannuation arrangements are treated consistent with those sector-wide reforms that apply to other Australians.

Because of the unique complexities inherent in some of these Commonwealth arrangements, that don't exist for other MySuper products, these consequential reforms have necessarily been drafted after the enactment of last year's legislation. In the 2020-21 federal budget, the government announced the Your Future, Your Super suite of superannuation reforms. These reforms made the superannuation system better for members in four primary ways:

The Public Sector Superannuation Legislation Amendment Bill 2022 makes consequential amendments to the Parliamentary Superannuation Act 2004, the Superannuation Act 2005 (which establishes the Public Sector Superannuation Accumulation Plan known as PSSap) and the Federal Circuit and Family Court of Australia Act 2021, to apply the relevant Your Future, Your Super reforms.

The consequential amendments to the Parliamentary Superannuation Act 2004 and the Federal Circuit and Family Court of Australia Act 2021 will enable an existing superannuation account of a new parliamentarian, and division 2 judge of the Federal Circuit and Family Court of Australia to follow them as they change jobs, consistent with the treatment of other Australians.

This 'stapling' reform reduces account fees, avoiding new super accounts being opened every time a person starts a new job.

The consequential amendments bring these superannuation arrangements into line with the general choice of fund requirements set out under the Superannuation Guarantee (Administration) Act 1992.

Included in the consequential amendments are updated arrangements to select a default fund in instances where a fund has failed the Australian Prudential Regulation Authority annual performance test for MySuper products in two consecutive years. In such circumstances, the fund is required to notify its members that it failed the test and is unable to accept new members into the product. The bill includes consequential amendments providing arrangements to then determine a well-performing new default fund for new parliamentarians and APS employees.

I now turn to the detail of the bill.

Part 1 of schedule 1 to the bill amends the Parliamentary Superannuation Act 2004 and the Superannuation Act 2005.

The Parliamentary Superannuation Act 2004 sets out the superannuation arrangements for persons who first become members of the federal parliament, or return to the parliament after a previous period in parliament, at or after the 9 October 2004 election. The amendments have, therefore, no impact on the Commonwealth's pre-2004 closed parliamentary scheme.

Part 1 of schedule 1 to the bill amends the Parliamentary Superannuation Act 2004 to allow Commonwealth employer contributions for new parliamentarians covered by the act to be paid to a parliamentarian's pre-existing fund, that is, their stapled fund, except where another fund is expressly chosen by that person.

Currently Commonwealth employer contributions for the parliamentarians covered by the Parliamentary Superannuation Act 2004 can only be paid to a fund chosen by the parliamentarian or to a default fund selected by the Minister for Finance.

Part 1 of schedule 1 to the bill also amends the Parliamentary Superannuation Act 2004 to put in place new arrangements for the determination of a default fund for new parliamentarians if an existing default fund cannot accept new members because of not meeting for two consecutive years the annual performance test as is required for MySuper products. The bill specifies the objective requirements of, and a disallowable instrument for, that determination.

The Superannuation Act 2005 established the Public Sector Superannuation Accumulation Plan (PSSAP) on 1 July 2005. PSSAP is the default fund for new APS employees.

Where a new APS employee does not choose a superannuation fund and has no stapled fund, the person becomes a member of the PSSAP and employer contributions in respect of them are paid to the PSSAP (MySuper product).

Part 1 of schedule 1 to the bill amends the Superannuation Act 2005 to allow an alternative default fund to be put in place if the PSSAP (MySuper product) cannot accept new members because of not meeting for two consecutive years the annual performance test for MySuper products. PSSAP continues to perform well compared to the market, I might add, but it is appropriate that there is a transparent approach provided, as a contingency, in case of an underperformance scenario.

The changes to the Parliamentary Superannuation Act 2004 and the Superannuation Act 2005 ensure that, if ever a scenario was to arise where the existing default fund for parliamentarians or APS employees could not accept new members, the Commonwealth can continue to meet its default fund obligations that are required under the Superannuation Guarantee (Administration) Act 1992.

A new default fund can only be determined transparently in accordance with a methodological approach prescribed by the Minister for Finance in a disallowable legislative instrument.

The prescribed method must include a requirement that the fund be a complying superannuation fund; and involve either an assessment of funds according to fees and costs and investment returns, or a comparison of one or more publicly available rankings of funds that take account of fees and costs and, of course, investment returns. In other words the test requires an objective comparison based on the performance of alternative funds.

The amendments to the Superannuation Act 2005 will also allow the minister to determine, through a disallowable legislative instrument, administration matters related to an alternative default fund. This is to ensure alignment and continuation of employer contribution arrangements for the alternative default fund, with those that apply in relation to PSSAP.

Part 2 of schedule 1 to the bill makes consequential amendments to the Governance of Australian Government Superannuation Schemes Act 2011 and the Parliamentary Business Resources Act 2017.

Part 3 of schedule 1 to the bill amends the Federal Circuit and Family Court of Australia Act 2021.

Currently under that act, the Commonwealth superannuation contributions for Division 2 judges of the Federal Circuit and Family Court of Australia can only be paid to a fund chosen by a judge.

Part 3 of schedule 1 to the bill amends the Federal Circuit and Family Court of Australia Act 2021 to allow Commonwealth superannuation contributions to also be paid to a stapled fund where the judge has not chosen a fund.

The bill will also allow Commonwealth superannuation contributions to be paid to a default fund if the judge has not chosen a fund and has no stapled fund.

Part 4 of schedule 1 to the bill puts in place transitional arrangements related to the amendments to the Parliamentary Superannuation Act 2004.

I commend this bill.

Debate adjourned.