Legislative Council Fifty-Fourth Parliament, Second Session (54-2) 54 2 Parliament of South Australia Legislative Council published Bills Statutes Amendment (Fund Selection and Other Superannuation Matters) Bill Statutes Amendment (Fund Selection and Other Superannuation Matters) Bill Statutes Amendment (Fund Selection and Other Superannuation Matters) Bill Second Reading Second Reading The Hon. R.I. LUCAS Legislative Council The Hon. R.I. LUCAS (Treasurer) (16:31): I move: That this bill be now read a second time. I seek leave to have the second reading explanation and the detailed explanation of clauses inserted in Hansard without my reading them. Leave granted. This Bill seeks to make amendments to the following Acts for the purpose of making amendments to the superannuation arrangements provided under those statutes: the Southern State Superannuation Act 2009 (Triple S Act)and the Superannuation Act 1988. The main proposal dealt with in the Bill is the introduction of 'choice of fund' and 'portability' for members of the Southern State Superannuation Scheme (Triple S). Triple S membership is currently mandated for the majority of South Australian public sector employees, despite this fund not always being favoured by some such employees as the fund of their choice. In addition, the long standing requirement for mandated Triple S membership no longer aligns with general community standards to provide freedom of choice to public servants regarding their superannuation in the same way that applies to private sector employees. Triple S is also the last open exempt (accumulation) superannuation scheme in Australia that does not offer choice of fund to its members (with equivalent funds in other state jurisdictions all doing so). The Bill therefore introduces a proposal whereby members of Triple Swill generally be permitted to direct their government superannuation contributions (including salary sacrifice contributions) to an eligible superannuation fund, rather than to Triple S. The Bill also incorporates the current ability to elect to direct employer contributions to Super SA Select into this regime and provides that any person who has already done so is still included. However, the Bill does not contemplate 'full' choice of fund under the Superannuation Guarantee Administration Act 1992 (Cth) (SGAA), but instead introduces a 'state-based' arrangement. The facility has therefore been designed to fall within the scope of the existing exemption applicable to government employers from full choice of fund, as contributions will continue to be made, even to the selected fund, pursuant to the Triple S Act (being a law of the state). For example, even if a member makes a fund selection, government employer contributions will still continue to be made pursuant to section 21 of the Act, on the same basis that they are made in respect of Triple S members; namely the same contribution rate, generally on the full salary of a member, with the same definition of 'salary' applicable to Triple S members. This also ensures public sector employees are treated equitably in terms of employer superannuation contributions, regardless of whether they are members of Triple S or another complying fund of their choice. Where a member makes a fund selection, the Bill provides for them to request that their entire accrued balance will be transferred to the selected fund, in which case membership in Triple S would cease. However, members may instead request a portion of their superannuation to be rolled over to the selected complying fund ('portability'), or take no action at all, in which case their full accrued balance would remain in Triple S. In both cases, their Triple S membership (and any insurance coverage they hold) would continue. In addition, the Bill provides that members may only select one fund at a time. They can make subsequent elections for their superannuation to be directed to another fund (including the direction of their government employer contributions back to Triple S), subject to special timing restrictions. The insurance entitlements of such persons will be addressed by regulation. The Bill also seeks to introduce 'portability' for members of Triple S, which will enable them to rollover/transfer their accrued superannuation balance to a complying fund of their choice. This is subject to a minimum amount being retained at the time of transfer, (which will generally be set by the Board, other than in the case of prescribed members, which will be set by regulation). Currently, the ability to exercise portability is generally restricted to those members who have terminated public sector employment. However, if a member exercises portability, it would be the responsibility of that member to ensure that sufficient funds are held in Triple S, via ad hoc voluntary contributions or rollovers to Triple S, to maintain administration and insurance premiums. If they do not, then this will impact their Triple S insurance and membership. This is particularly relevant for those who have also made a fund selection and would thus no longer have regular employment contributions coming in to Triple S to sustain their account. The Bill has particular implications for prescribed members of Triple S (Police and SA Ambulance). Given the nature of the employment of these members and the inherent risks associated with these occupations, Triple S insurance is of significant importance. As a result, employer contributions and compulsory member contributions will continue to be required to be made to Triple S (noting they will also continue to have the ability to direct these contributions to Super SA Select, Super SA's taxed superannuation fund). This will ensure that adequate funds remain in Triple S to sustain premiums in respect of their mandatory insurance. Prescribed members of Triple S will, however, be permitted to exercise portability, subject to minimum amounts being retained in Triple S that will be set by regulation. Operational Ambulance members will also be impacted the same way. The second part of the Bill concerns the Super SA Board's employment powers. Pursuant to section 10(3) of the Superannuation Act 1988, the Super SA Board makes use of the staff of the Department of Treasury and Finance, as an administrative unit of the Public Service, to administer the superannuation schemes for which it is responsible. Section 10(1) of that Act also permits the Board to employ staff directly with the approval of the Minister to assist it in carrying out its responsibilities under that Act (ie administration of Lump Sum, Pension and SA Ambulance Service Superannuation Schemes). Such employees will not be public service employees. However, this employment power does not extend to the employment of staff in connection with the other Act for which the Super SA Board is responsible, the Southern State Superannuation Act 2009. This Act governs the administration of the state's main public sector scheme, Triple S. The final part of the Bill therefore seeks to make amendments to the Superannuation Act 1988 to correct this anomaly in order to extend that employment power to those engaged in the administration of that Act also. If the Board employs one or more staff directly, the Bill also makes a number of other consequential employment changes. Firstly, Super SA (as a branch of Treasury and Finance) also administers a number of other superannuation schemes, for which the Super SA Board is not responsible. In this regard, the governing legislation of those schemes provides that the relevant boards responsible for their administration may make use of the staff of an administrative unit of the public service (eg the Department of Treasury and Finance). However, the Superannuation Act 1988 currently provides that any person employed by the Super SA Board is not a public service employee. The Bill therefore clarifies that in the event that such staff are employed by the Super SA Board (rather than DTF), those employees will also be permitted to assist in the administration of those other schemes. The Bill also provides that the Board is not a 'national system employer' under the Fair Work Act 2009 (Commonwealth) in respect of any such person, to assist in ensuring that employment conditions would be subject to the Fair Work Act 1994 (SA) (as is currently the case for public sector employees). Also, should the Board determine to employ Super SA's Chief Executive Officer directly in the future, the terms and functions of the appointment have been specified (rather than the existing arrangement of that role being appointed by the Department of Treasury and Finance). Explanation of Clauses Explanation of Clauses Part 1—Preliminary 1—Short title This clause is formal. 2—Commencement Although operation of the measure will commence on the day of assent, the majority of the provisions will commence on a day to be fixed by proclamation. 3—Amendment provisions This clause is formal. Part 2—Amendment of Southern State Superannuation Act 2009 4—Amendment of section 3—Interpretation This clause inserts new definitions of fund and fund selection. The latter term is defined by reference to proposed section 21C(5), which is inserted by clause 10. The definitions of salary and salary sacrifice contribution are also amended to take account of the fact that some provisions of the Act referring to salary may apply to former members of the Triple S scheme who have made fund selections. 5—Amendment of section 5—Employer contribution percentage The amendments made by this clause are consequential on amendments made to section 20 of the Act that mean that a member who has made a fund selection may make contributions to their selected fund rather than to the Treasurer. 6—Amendment of section 15—Other accounts to be kept by Board Section 15 sets out account keeping requirements that apply to the Board. This clause amends the section so that the Board is not required to maintain accounts of employer contributions paid to another fund pursuant to a fund selection. 7—Amendment of section 19—Membership of scheme This clause recasts section 19(2). The effect of this amendment is that a person who makes a fund selection and opts to roll over all amounts standing to the credit of accounts maintained by the Board on their behalf to the selected fund is not a member of the Triple S scheme. This operates subject to section 21H, which allows for a person who has made a fund selection, and opted to rollover all amounts, to return to the Triple S scheme. 8—Amendment of section 20—Contributions Section 20 as amended by this clause will provide that a member who has made a fund selection cannot make contributions to the Treasurer as a deduction from salary but may, if the Board is continuing to maintain a contribution account on behalf of the member, make monetary contributions to the Treasurer. 9—Amendment of section 21—Payments by employers Section 21 imposes an obligation on employers to make payments on behalf of members of the Triple S scheme. This clause proposes amendments to section 21 that are consequential on the fact that a person who has made a fund selection may cease to be a member of the scheme. If a person's superannuation arrangements have been transferred to another fund under section 21C, the employer is required to make payments to the person's selected fund rather than to the Treasurer. 10—Insertion of Part 3A This clause inserts a new Part. Part 3A—Portability and fund selection Division 1—Interpretation 21A—Interpretation Section 21A provides definitions of a number of terms that are used in Part 3A. Division 2—Portability 21B—Transfer of funds This section provides that amounts standing to the credit of one or more accounts maintained by the Board on behalf of a member may, at the option of the member, be transferred to another complying fund. This general rule operates subject to certain matters set out in the section. Division 3—Fund selection 21C—Member may direct employer contributions to other fund Section 21C applies to a person who is a member of the Triple S scheme if— the person's employer is required to pay an amount to the Treasurer on behalf of the person under section 21; and the person is not a member of the scheme solely by virtue of an arrangement under section 6 with a participating employer; and the person is not excluded from the operation of the section by the regulations. A person to whom the section applies may, by giving a notice to the person's employer, direct the employer to make payments required to be made by the employer on behalf of the person under section 21 to an eligible fund specified in the notice. The notice is a fund selection notice for the purposes of Part 3A and a person who gives a valid direction makes a fund selection for the purposes of the Act. 21D—Effect of fund selection If a person makes a fund selection, the liability of the person's employer to make payments on behalf of the person under section 21 will be determined in accordance with that section. This means that the person's employer will be required to make payments to the person's selected fund rather than to the Treasurer. This section also provides that all amounts standing to the credit of accounts maintained by the Board on behalf of a member who has made a fund selection may, at the option of the member, be rolled over to the member's selected fund. This does not apply in relation to a police member or a member of a prescribed class. 21E—Employer obligations This clause sets out the circumstances in which an employer of a person to whom section 21C applies must provide the person with a fund selection notice. 21F—Matters affecting eligibility of funds If the fund specified by a person who has made a fund selection ceases to exist, ceases to accept contributions or ceases to be an eligible fund, and the person does not, within the prescribed period, give their employer a new fund selection notice specifying a different eligible fund, section 21 then applies as if the person had not made a fund selection. 21G—Change in employer A direction given by a person under section 21C(3) continues to operate despite the person commencing employment with another employer that is also required to make payments on behalf of the person under section 21. 21H—Person may elect to return to Triple S scheme A person who has made a fund selection may direct their employer to make payments required to be made by the employer on behalf of the person under section 21 to the Triple S scheme. If the person's membership of the scheme has ceased and they are eligible to be a member of the scheme, the person will become a member of the scheme. 21I—Immunity from liability This section provides that no liability attaches to an employer or the Board in connection with action taken in compliance with a direction under Division 3 of Part 3A. 21J—Employer to report to Board This section requires an employer of a person who has made a fund selection to report to the Board on matters relating to the fund selection. 11—Amendment of section 24—Employer benefits and contributions if person on leave without pay This clause makes consequential amendments to section 24. 12—Amendment of section 28—Confidentiality This clause makes a consequential amendment to section 28 of the Act so as to enable certain confidential information to be divulged to a person responsible for the administration of a fund— that is a selected fund for the purposes of a fund selection; or to which amounts are to be, or have been, transferred on behalf of a member under Part 3A, provided the information is divulged for purposes related to the administration of the Act. 13—Amendment of section 30—Regulations Section 30(4) of the Act authorises the making of regulations that provide for administrative charges to be fixed by the Board. The amendment made by this clause prevents the fixing of charges in connection with the making of fund selections. 14—Amendment of Schedule 1—Transitional provisions Schedule 1 clause 12 of the Act sets out certain entitlements for a person who became a member of the Triple S scheme by virtue of section 14(2a) of the Southern State Superannuation Act 1994. As amended by this clause, clause 12 will cease to apply to such a person if the member makes a fund selection. Furthermore, if an amount standing to the credit of an account maintained by the Board on behalf of such a member is at any time transferred to another fund under section 21B, the retirement benefits to which the member would be entitled under the regulations are to be determined for the purposes of clause 12(2) of the Schedule as if the transfer had not occurred. Part 3—Amendment of Superannuation Act 1988 15—Amendment of section 8—Board's membership Section 8(2) of the Superannuation Act 1988 prevents a person who is employed in duties connected with the administration of the Act or the Southern State Superannuation Act 2009 from being eligible for election as a member of the South Australian Superannuation Board. This clause amends the section so that a person occupying the position of chief executive officer of the Board can be eligible to be elected as a member of the Board. 16—Insertion of section 9A This clause inserts a new section. 9A—Chief executive officer Section 9A provides for the appointment by the Governor of a person nominated by the Board as the chief executive officer of the Board. The person is to be appointed for a term of up to 5 years and is eligible for reappointment. The chief executive officer's remuneration is to be determined by the Board. 17—Amendment of section 10—Staff of Board Section 10(1) of the Act provides that the Board may, with the Minister's approval, appoint staff to assist it in carrying out its responsibilities under the Act. As amended by this clause, the provision will also refer to the Board's responsibilities under other Acts. A person appointed under the section may assist in the administration of other superannuation schemes or funds established or administered by the Board, or otherwise assist the Board in the performance or exercise of any other functions or powers. Section 10 as amended will also include a declaration that the Board is not a national system employer for the purposes of the Fair Work Act 2009 of the Commonwealth. 18—Amendment of section 21—Reports Section 21 as amended by this clause will require the Board's annual report to the Minister to include prescribed information relating to the remuneration of the chief executive officer. Debate adjourned on motion of Hon. E.S. Bourke.