Richard Colbeck (Tasmania, Liberal Party, Parliamentary Secretary to the Minister for Finance and Administration) Share this | Hansard source

The government has indicated that the issue of extending eligibility for death benefits in these schemes to persons in an independency relationship with a scheme member is being examined. However, because of the design of these schemes, a number of technical matters and also budgetary considerations need to be fully examined before any decision could be made. The issue of eligibility for death benefits is not a matter for consideration in this bill as this bill deals with an unrelated matter: the establishment of a single trustee board for the CSS, the PSS and the PSSAP. In that circumstance, the government will not be supporting the proposed amendment.

The government is committed to providing all Australian government employees with equitable and flexible superannuation arrangements and has introduced the Public Sector Superannuation Accumulation Plan to provide a fully funded accumulation scheme for new employees. Through the PSSAP the government provides for death benefits to be available to the dependant of a scheme member, which can include a person in an interdependency relationship. Members can also nominate a dependant, dependants or a legal personal representative to receive those benefits.

The PSSAP applies to new Australian government employees who commenced employment on or after 1 July 2005. Most Australian superannuation schemes are accumulation schemes, like the PSSAP, which can be readily adapted to pay death benefits to people in an interdependency relationship with no cost to the scheme. However, the CSS and the PSS are closed defined benefit schemes. They are more complex and have very prescriptive rules to determine eligibility for death benefits.

Unlike accumulation funds, benefits in the CSS and the PSS are unfunded. This means that benefits in the CSS and the PSS are funded by the government from the budget when they become payable rather than as they accrue, such as in accumulation funds. Unlike accumulation funds, benefits in the CSS and the PSS are usually provided in pension form to eligible spouses and children and are payable for life in the case of a spouse. Extending eligibility for death benefits from the CSS and the PSS to people in an interdependency relationship is likely to increase scheme costs and the government’s unfunded liabilities because these changes may mean that some people would qualify for a lifetime pension which they would not otherwise be entitled to receive. This could obviously have a significant impact on the budget.

Question negatived.