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1996
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.*
The Superannuation (Axiom Funds Management Corporation) Bill 1996 is
cognate with this Bill.
* Amended in committee--see table at end of volume.
Preliminary
Clause l sets out the name of the proposed Act.
Clause 2 provides that the proposed Act is to commence on a day or days
appointed by proclamation.
Clause 3 sets out the objects of the proposed Act, which are to establish
separate trustees for the accumulation style State public sector
superannuation schemes (the FSS Trustee Corporation (FTC)) and the
defined benefit style State public sector superannuation schemes (the SAS
Trustee Corporation (STC)), to establish statutory bodies to provide scheme
administration services (the Superannuation Administration Authority of
New South Wales (SAA)) and to provide for investment services (to be
provided for STC schemes by the Axiom Funds Management Corporation
(AFMC)), to define their responsibilities and functions and to enable the
establishment of additional superannuation schemes for State public sector
employees by trust deed.
Clause 4 defines words and expressions used in the proposed Act.
Clause 5 enables additional superannuation schemes to be brought within
the Act by proclamation.
Clause 6 provides that introductory notes to Parts or Divisions and other
notes in the text of the Act do not form part of the proposed Act.
Part 2 Trustee for FTC schemes ( K C )
Division 1
Establishment and principal functions of FTC
Clause 7 constitutes FTC.
Clause 8 makes FTC the trustee for the FTC schemes. These schemes will
be the First State Superannuation Scheme and the Public Sector Executives
Superannuation Scheme. Both schemes are open to State public sector
employees and both provide benefits of an "accumulation" kind rather than
specified or defined benefits. FTC will be a trustee for the purposes of
Division 2 of Part 2 of the Trustee Act 1925, which has the effect of applying
the obligations, duties and rights of trustees under that Act to it.
Explanatory note page 2
Clause 9 sets out the principal functions of FTC, including the
administration and investment and management of the FTC schemes and the
FTC funds, providing for the custody of assets and securities of the FTC
schemes, and the payment of benefits under the schemes.
Clause 10 imposes on FTC duties to act honestly in relation to its trustee
functions, to exercise due care, skill and diligence, to exercise its functions in
the best interests of the beneficiaries under the FTC schemes and not to do
anything that would hinder the exercise of its functions as trustee. All of
these duties reflect those imposed on superannuation trustees under the
Superannuation Industry (Supervision) Act 1993 of the Commonwealth (the
"Commonwealth Act"). FTC must also take into account Government policy
statements, the interests of beneficiaries and the Heads of Government
Agreement between the State and the Commonwealth Government as to
requirements for State public sector superannuation schemes. The
Commonwealth Act sets out the requirements for superannuation trustees and
schemes, although it will not apply directly to the State public sector
superannuation schemes the proposed Act will apply many of its
requirements.
Clause 11 sets out a procedure for laying Government policy statements
given under proposed section 10 before each House of Parliament.
Clause 12 confers on FTC power to enter into contracts or arrangements
with other persons to provide superannuation investment management
services for the FTC funds or part of them and to provide superannuation
scheme administration services and custodial services, as well as for other
services.
Clause 13 confers on FTC all powers necessary or convenient for, or in
connection with, the exercise of FTC's functions.
Division 2
Investment of FTC funds
Clause 14 requires FTC to determine and give effect to an investment
strategy and a reserves strategy for the FTC funds and sets out the matters
FTC must have regard to in doing so.
Clause 15 requires FTC, in exercising its function of investing and
managing the FTC funds, to enter into a contract or an arrangement with an
investment manager or managers for the provision of superannuation
investment management services. FTC must ensure that any such manager
Explanatory note page 3
operates within FTC's investment powers and complies with its investment
strategy and reserves strategy. FTC may, but is not required to, enter into a
contract or an arrangement with AFMC.
Clause 16 requires FTC to exercise its function of providing for the custody
of the assets and securities of an FTC scheme by entering into a contract or
an arrangement with a person to provide custodial services. FTC must ensure
that the person operates within FTC's powers and complies with FTC's
policies.
Clause 17 sets out FTC's borrowing and investment powers.
Clause 18 places restrictions on investment of the FTC fund, including
prohibiting investment other than on an arms-length basis.
Division 3
Administration of FTC schemes
Clause 19 requires FTC to exercise its function of administering the FTC
schemes by entering into a contract or an arrangement with a person to
provide superannuation scheme administration services. FTC must ensure
that any such person operates within FTC's powers and complies with its
policies. FTC may, but is not required to, enter into a contract or an
arrangement with SAA.
Clause 20 enables FTC to enter into contracts or arrangements for the
provision of additional benefits under the FTC schemes, in the event of the
death or invalidity of a scheme member.
Clause 21 enables FTC to compromise or otherwise settle claims.
Clause 22 enables FTC to determine disputes relating to FTC schemes.
Clause 23 confers on FTC power to request evidence from third parties for
the purpose of settling claims or determining disputes.
Division 4
Management of FTC
Clause 24 establishes the FTC Board. It is to have 9 part-time members
appointed by the Minister and is to manage and control the affairs of FTC.
Four members are to represent the interests of employers and four are to
represent the interests of employees, the other member is to be the
Chairperson.
Clause 25 provides for the appointment of the Chairperson of the FTC
Board by the Minister and sets out the experience required for appointment.
The Minister must consult with the Labor Council of New South Wales
before making the appointment.
Explanatory note page 4
Clause 26 sets out the requirements for the appointment of the employer
representative members.
Clause 27 sets out the requirements for the appointment of the employee
representative members.
Clause 28 imposes a duty on members of the FTC Board to exercise a
reasonable degree of care and diligence for the purpose of ensuring that FTC
carries out its duties as trustee.
Clause 29 provides for the appointment of a chief executive officer of FTC
and confers on the chief executive officer the function of exercising the
day-to-day management of FTC. The chief executive officer will be subject
to the control and direction of the FTC Board.
Clause 30 provides for the employment of FTC staff.
Clause 31 enables FTC to appoint agents.
Clause 32 gives FTC the power to delegate its functions.
Clause 33 enables the FTC Board to establish committees to give advice
and assistance to the Board in connection with any particular matter or
function of the Board.
Clause 34 requires FTC to prepare a corporate plan for each financial year
and sets out the matters it is to contain.
Clause 35 exempts an FTC Board member, or a person acting under the
direction of FTC or the Board, from liability for an act or omission done or
omitted in good faith for the purpose of executing the proposed Act or any
other Act. The proposed section also provides for the FTC funds to
indemnify FTC for liability resulting from actions, liabilities, claims or
demands against FTC.
Division 5
Financial provisions
Clause 36 requires FTC to maintain an FTC Administration Account.
Clause 37 provides for FTC's administration costs to be charged against the
Administration Account and for their recovery from employers, members and
former members of, and contributors and former contributors to, the FTC
schemes. FTC is to determine the amount, rate or basis for contribution to
administration costs.
Clause 38 provides for the source of payment of administration costs in the
FTC schemes.
Clause 39 makes the year commencing l July the financial year of FTC.
Explanatory note page 5
Division 6
Miscellaneous
Clause 40 enables a person aggrieved by a decision of FTC about a dispute
to appeal to the Industrial Relations Commission in Court Session.
Clause 41 requires the FTC Board to report matters having a significant
adverse effect on the functions of FTC to the Minister. The report must be
made within 3 days of becoming aware of the matter. Written notice must be
given of any event which results in an inability to pay benefits.
Clause 42 enables the Minister to request information from time to time
from FTC.
Clause 43 provides for the manner and form of accounts and other records
relating to FTC schemes.
Clause 44 provides for the manner in which documents may be served on
FTC.
Clause 45 removes the need to prove (unless evidence to the contrary is
given) matters relating to the constitution and resolutions of FTC and
appointments of FTC Board members and their meetings.
Clause 46 enables FTC to recover money owed to it as a debt in a court of
competent jurisdiction.
Clause 47 provides for the keeping and use of FTC's seal.
Part 3
Trustee for STC schemes (STC)
Division 1
Establishment and principal functions of STC
Clause 48 continues the State Authorities Superannuation Board and
renames it the SAS Trustee Corporation.
Clause 49 makes STC the trustee for the STC schemes. These schemes will
include the State Superannuation Scheme, the State Authorities
Superannuation Scheme, the State Authorities Non-contributory
Superannuation Scheme and the Police Superannuation Scheme and other
schemes. None of these schemes are currently open to new members, though
some still have contributors. They all provide benefits of a specified kind or
defined benefits, related to contributions and years of service. STC will be a
trustee for the purposes of Division 2 of Part 2 of the Trustee Act 1925, which
has the effect of applying the obligations, duties and rights of trustees under
that Act to it.
Explanatory note page 6
Clause 50 sets out the principal functions of STC, including the
administration and investment and management of the STC schemes and the
STC funds, providing for the custody of assets and securities of the STC
schemes, and the payment of benefits under the schemes.
Clause 51 imposes on STC duties to act honestly in relation to its trustee
functions, to exercise due care, skill and diligence, to exercise its functions in
the best interests of the beneficiaries under the STC schemes and not to do
anything that would hinder the exercise of its functions as trustee. All of
these duties reflect those imposed on superannuation trustees under the
Superannuation Industry (Supervision) Act I993 of the Commonwealth (the
"Commonwealth Act"). STC must also take into account Government policy
statements, the interests of beneficiaries and the Heads of Government
Agreement between the State and the Commonwealth Government as to
requirements for State public sector superannuation schemes as well as future
liabilities. The Commonwealth Act sets out the requirements for
superannuation trustees and schemes, although it will not apply directly to
the State public sector superannuation schemes the proposed Act will apply
many of its requirements.
Clause 52 sets out a procedure for laying Government policy statements
given under proposed section 51 before each House of Parliament.
Clause 53 confers on STC power to enter into contracts or arrangements
with other persons to provide superannuation investment management
services for one or more of the STC funds, or part of an STC fund, and to
provide superannuation scheme administration services and custodial
services, as well as for other services.
Clause 54 prohibits STC from entering into a contract or an arrangement
under proposed section 53 (1) (a), (b) or (c) except with the Minister's
consent.
Clause 55 enables the Minister to give directions to STC as to the exercise
of its functions if the Minister is of the opinion that an act or omission by
STC has had or may have a significant adverse effect on the Consolidated
Fund or the financial management of the State. STC must comply with any
such direction.
Clause 56 sets out a procedure for laying Ministerial directions to STC
before Parliament within 14 sitting days after any such direction is given.
Clause 57 confers on STC all powers necessary or convenient for, or in
connection with, the exercise of STC's functions.
Explanatory note page 7
Division 2
Investment of STC funds
Clause 58 requires STC to determine and give effect to an investment
strategy and a reserves strategy for the STC funds and sets out the matters
STC must have regard to in doing so.
Clause 59 requires STC, in exercising its function of investing and
managing the STC funds, to enter into a contract or an arrangement with an
investment manager or managers for the provision of superannuation
investment management services. STC must ensure that any such manager
operates within STC's investment powers and complies with its investment
strategy and reserves strategy.
Clause 60 provides that STC must enter into a contract or an arrangement
with AFMC to be the first investment manager. The contract or arrangement
is to be for a fixed period, determined by the Minister, from the
commencement of the proposed section. After the end of that period, STC
may enter another contract or arrangement with AFMC (or its successors) or
with another service provider.
Clause 61 requires STC to exercise its function of providing for the custody
of the assets and securities of an STC scheme by entering into a contract or
an arrangement with a person to provide custodial services. STC must ensure
that the person operates within STC's powers and complies with STC's
policies.
Clause 62 sets out STC's borrowing and investment powers.
Clause 63 places restrictions on investment of the STC fund, including
prohibiting investment other than on an arms-length basis.
Division 3
Administration of STC schemes
Clause 64 requires STC to exercise its function of administering the STC
schemes by entering into a contract or an arrangement with a person to
provide superannuation scheme administration services. STC must enter into
a contract or an arrangement with SAA and must ensure that any such person
operates within STC's powers and complies with its policies.
Clause 65 enables STC to enter into contracts or arrangements for the
provision of additional benefits under STC schemes, in the event of the death
or invalidity of a scheme member.
Clause 66 enables STC to compromise or otherwise settle claims.
Clause 67 enables STC to determine disputes relating to STC schemes.
Clause 68 confers on STC power to request evidence from third parties for
the purpose of settling claims or determining disputes.
Explanatory note page 8
Division 4
Management of STC
Clause 69 establishes the STC Board. It is to have 8 part-time members and
1 full-time member appointed by the Minister and is to manage and control
the affairs of STC. Four members are to represent the interests of employers
and four are to represent the interests of employees (one of these is to be a
full-time member).
Clause 70 provides for the appointment of the Chairperson of the STC
Board by the Minister and sets out the experience required for appointment.
The Minister must consult with the Labor Council of New South Wales
before making the appointment.
Clause 71 sets out the requirements for the appointment of the employer
representative members.
Clause 72 sets out the requirements for the appointment of the employee
representative members.
Clause 73 imposes a duty on members of the STC Board to exercise a
reasonable degree of care and diligence for the purpose of ensuring that STC
carries out its duties as trustee.
Clause 74 provides for the appointment of a chief executive officer of STC
and confers on the chief executive officer the function of exercising the
day-to-day management of STC. The chief executive officer will be subject
to the control and direction of the STC Board.
Clause 75 provides for the employment of STC staff.
Clause 76 enables STC to appoint agents.
Clause 77 gives STC the power to delegate its functions.
Clause 78 enables the STC Board to establish committees to give advice
and assistance to the Board in connection with any particular matter or
function of the Board.
Clause 79 requires STC to prepare a corporate plan for each financial year
and sets out the matters it is to contain.
Clause 80 exempts an STC Board member, or a person acting under the
direction of STC or the Board, from liability for an act or omission done or
omitted in good faith for the purpose of executing the proposed Act or any
other Act. The proposed section also provides for the STC funds to
indemnify STC for liability resulting from actions, liabilities, claims or
demands against STC.
Explanatory note page 9
Division 5
Financial provisions
Clause 81 continues the amalgamation of the STC funds under the
Superannuation Administration Act 1991, with each fund having a separate
account.
Clause 82 enables STC to re-establish the amalgamated funds as separate
funds and to amalgamate separated funds.
Clause 83 confers on STC any powers necessary or convenient in relation to
the re-establishment of separate funds or their amalgamation.
Clause 84 requires STC to maintain an STC Administration Account.
Clause 85 provides for STC's administration costs to be charged against the
Administration Account and for their recovery from employers, members and
former members of, and contibutors and former contributors to, the STC
schemes. STC is to determine the amount, rate or basis for contribution to
administration costs.
Clause 86 provides for the source of payment of administration costs in the
STC schemes.
Clause 87 makes the year commencing 1 July the financial year of STC.
Division 6
Miscellaneous
Clause 88 enables a person aggrieved by a decision of STC about a dispute
to appeal to the Industrial Relations Commission in Court Session.
Clause 89 requires the STC Board to report matters having a significant
adverse effect on the functions of STC to the Minister. The report must be
made within 3 days of becoming aware of the matter. Written notice must be
given of any event which results in an inability to pay benefits.
Clause 90 enables the Minister to request information from time to time
from STC.
Clause 91 provides for the manner and form of accounts and other records
relating to STC schemes.
Clause 92 provides for the manner in which documents may be served on
STC.
Clause 93 removes the need to prove (unless evidence to the contrary is
given) matters relating to the constitution and resolutions of STC and
appointments of STC Board members and their meetings.
Clause 94 enables STC to recover money owed to it as a debt in a court of
competent jurisdiction.
Clause 95 provides for the keeping and use of STC's seal.
Explanatory note page 10
Part 4
Superannuation Administration Authority (SAA)
Division 1
Establishment and principal functions of SAA
Clause 96 constitutes the Superannuation Administration Authority of New
South Wales.
Clause 97 gives SAA the functions of providing superannuation scheme
administration services for State public sector superannuation schemes on
behalf of trustees and other ancillary functions, including entering into
contracts or arrangements with scheme trustees and other administrative
functions.
Clause 98 sets out services which are taken to be superannuation scheme
administration services, including collecting contributions, keeping and
maintaining member records, preparing financial statements on behalf of
trustees and processing claims and the payment of benefits.
Clause 99 requires SAA to charge consideration for the provision of its
services.
Clause 100 confers on SAA power to enter into contracts or arrangements
with trustees to provide superannuation scheme administration services. SAA
may enter into such a contract or an arrangement with FTC in relation to the
ETC schemes. SAA must enter into such a contract or arrangement with STC
in relation to the STC schemes.
Clause 101 confers on SAA all powers necessary or convenient for, or in
connection with, the exercise of SAA's functions.
Division 2
Management of SAA
Clause 102 provides for the appointment of a chief executive officer of
SAA and his or her conditions of appointment.
Clause 103 provides that the chief executive officer is to manage and
control the affairs of SAA and that any act, matter or thing done in the name
of, or on behalf of, SAA by the chief executive officer is taken to have been
done by SAA.
Clause 104 makes SAA subject to the direction and control of the Minister
in the exercise of its functions.
Explanatory note page 11
Clause 105 enables SAA to employ staff and to fix their wages, salary and
conditions and to engage consultants.
Clause 106 gives SAA the power to delegate its functions.
Clause 107 requires SAA to prepare a corporate plan for each financial year
and sets out the matters it is to contain.
Clause 108 exempts the chief executive officer of SAA, or any person
acting under the direction of SAA or the chief executive officer from liability
for an act or thing done or omitted to be done in good faith for the purpose of
executing the proposed Act or any other Act.
Division 3
Financial provisions
Clause 109 requires SAA to maintain an SAA Administration Account.
Clause 110 provides for SAA's administration costs to be charged against
the Administration Account and for the recovery of costs related to the STC
funds from STC.
Clause l11 sets out SAA's borrowing and investment powers and exempts
SAA from stamp duty.
Clause 112 makes the year commencing 1 July the financial year of SAA.
Division 4
Miscellaneous
Clause 113 requires the chief executive officer of SAA to report matters
having a significant effect on the functions of SAA to the Minister. The
report must be made within 3 days of becoming aware of the matter.
Clause 114 enables the Minister to request information from time to time
from SAA.
Clause 115 provides for the manner in which documents may be served on
SAA.
Clause 116 provides for the recovery of money owing to SAA as a debt in a
court of competent jurisdiction.
Clause 117 enables SAA to publish procedures or guidelines as to conflicts
of interests in relation to contracts and other commercial arrangements with
S AA.
Clause 118 provides for the keeping and use of SAA's seal.
Explanatory note page 12
Part 5
Miscellaneous
Division 1
Offences and remedies relating to officers
Clause 119 makes it an offence for the chief executive officer of a
superannuation authority, a member of the Board of an authority or another
person who is concerned in, or takes part in, the authority's management, to
fail to act honestly in the exercise of powers, and discharge of functions as
such an officer (maximum penalty $50,000 or 5 years imprisonment). It also
makes it an offence for such a person to fail to use a reasonable degree of
care and diligence when exercising powers and discharging functions
(maximum penalty $10,000), to make improper use of information acquired
because of his or her position and to use his or her position to gain an
advantage or to cause detriment to the authority (maximum penalty for each
offence $50,000 or 5 years imprisonment). FTC, STC, SAA and AFMC are
superannuation authorities.
Clause 120 enables a superannuation authority to recover, as a debt owed to
it, any profit made by a person from a contravention of proposed section 119
or loss or damage caused to- the authority by such a contravention.
Clause 121 enables persons other than FTC or STC to recover for loss or
damage suffered as a result of a contravention of proposed sections relating
to the trustees' and Board members' duties from any person knowingly
involved in the contravention.
Clause 122 provides a defence for an action under proposed section 121
where the contravention concerned an investment and the investment was in
accordance with the investment strategy.
Clause 123 provides a defence for an action under proposed section 121
where the contravention concerned FTC or STC funds reserves and their
management was in accordance with the reserves strategy.
Clause 124 sets out defences for actions under proposed section 121 where
it can be shown there was a reasonable mistake or reasonable reliance on
information supplied by another person or that the contravention was due to
the act or default of another person or an accident or some other cause
beyond the person's control.
Division 2
General provisions
Clause 125 provides that the proposed Act binds the Crown.
Explanatory note page 13
Clause 126 provides that offences under the proposed Act are to be dealt
with summarily by a Local Court or the Supreme Court in its summary
jurisdiction. It limits the maximum penalty that may be imposed by a Local
Court for an offence to $5,000 or 12 months imprisonment, or both.
Clause 127 provides for the Minister to approve the preparation of a trust
deed providing for a superannuation scheme for the benefit of State public
sector employees, or a class or classes of State public sector employees. The
clause also provides for arrangements to be made to incorporate a trustee for
any such scheme.
Clause 128 enables regulations to be made in respect of the transfer of
members of FTC or STC schemes to any such new superannuation scheme,
and in relation to related matters.
Clause 129 sets out the power to make regulations under the proposed Act.
Clause 130 repeals the Superannuation Administration Act 1991 and the
Superannuation Administration Amendment Act 1995.
Clause 131 is a formal provision giving effect to Schedule 3 which contains
savings and transitional provisions.
Clause 132 is a formal provision giving effect to Schedule 4 which contains
consequential amendments to other Acts.
Clause 133 provides for the review of the Act by the Minister 5 years after
the date of assent to the Act.
Schedule 1
Provisions relating to FTC Board
Part 1
Definitions
Part 1 defines expressions used in the Schedule.
Part 2
Members
Part 2 contains provisions relating to the appointment and conditions and
vacation of office of members.
Part 3
Procedure
Part 3 contains provisions relating to the procedure of the Board.
Explanatory note page 14
Schedule 2
Provisions relating to STC Board
Part 1
Definitions
Part 1 defines expressions used in the Schedule.
Part 2
Members
Part 2 contains provisions relating to the appointment and conditions and
vacation of office of members.
Part 3
Procedure
Part 3 contains provisions relating to the procedure of the Board.
Schedule 3
Savings and transitional provisions
The Schedule contains savings and transitional provisions consequent on the
enactment of the proposed Act and the proposed Superannuation (Axiom
Funds Management Corporation) Act 1996.
Schedule 4
Consequential amendments to other Acts
The Schedule contains amendments to other Acts consequential on the
enactment of the proposed Act and the proposed Superannuation (Axiom
Funds Management Corporation) Act 1996. These amendments include the
abolition of the Public Sector Executives Superannuation Board (its functions
will be exercised by FTC).
Explanatory note page 15