SUPERANNUATION LAW REFORM AMENDMENT BILL 2007 Second Reading Speech

Northern Territory Second Reading Speeches

SUPERANNUATION LAW REFORM AMENDMENT BILL 2007

(This an uncorrected proof of the daily report. It is made available under the condition that it is recognised as such.)

The main purpose of the Superannuation Law Reform Bill 2007 is to amend the Superannuation Act to establish a death and invalidity scheme for Northern Territory public sector employees in choice of fund superannuation arrangements, and to provide new superannuation products for members of the Northern Territory Government Public Authority Superannuation Scheme, NTGPASS.

The bill also makes minor amendments to the Superannuation Act and the Legislative Assembly Members Superannuation Fund Act, the LAMS Act, to clarify that interest applied to NTGPASS and LAMS member superannuation accounts can be either positive or negative, and that the NTGPASS rules comply with the Australia government better super reforms.

The government gave a commitment during the enterprise bargaining negotiations in 2004-05 that equivalent death and invalidity cover will be provided to all Northern Territory public sector employees regardless of their superannuation arrangements and that new NTGPASS superannuation products would be introduced. Since the closure of NTGPASS in August 1999, new employees have had to purchase death and invalidity cover through their choice of fund superannuation arrangements or an insurance provider. This created an inequity between Northern Territory public sector employees because employees who commenced before August 1999 were either members of NTGPASS or the Commonwealth Superannuation Scheme and were automatically covered for death and invalidity at no cost to the employee.

The Northern Territory Government Death and Invalidity Scheme will provide employees and choice of fund superannuation arrangements with lump sum death and invalidity benefits, the equivalent to the benefits provided to NTGPASS members. Membership of the scheme covers Northern Territory public sector employees, police officers, members of parliament, and executive contract officers in choice of fund superannuation arrangements. The scheme will be at no cost to members.

The benefit payable from the scheme is the lump sum equivalent to 17.5% of salary for each year of future year of service to age 65. For the purpose of determining the amount of the benefit payable, the term ‘salary’ has been defined for each class of member of the scheme. For example, a salary for an Executive Contract Officer is their salary for superannuation purposes as specified in the contract. That is, 65% of their total remuneration package; police officer is 130% of salary and the additional 30% consolidates all allowances for superannuation purposes, and is the same as the superannuation salary for a police officer who is a member of NTGPASS; a member of parliament is their basic salary plus any additional salary, for example for ministerial office; and for any other employee of the Northern Territory Public Service, their actual salary and allowances for superannuation purposes.

The scheme commenced on 1 July 2007, however until such time as legislation is passed, arrangements are in place to assess claims in line with the proposed rules of the scheme. As part of the last enterprise bargaining negotiations, this government also made a commitment to provide new superannuation products for NTGPASS members. These included spouse accounts, continuation of membership, member investment choice and allocated pensions.

Spouse accounts, allowing NTGPASS members to establish an account on behalf of their spouse, and continuation of membership, allowing former employees who are members of NTGPASS to continue contributing to the superannuation account, have been implemented and commenced on 1 July 2005. Member investment choice and an allocated pension are the final superannuation products to be implemented for NTGPASS members in line with our previous commitment. Member investment choice commenced 1 July 2007 and allows NTGPASS members to choose from one of five investment options to invest their superannuation account balances in.

The investment options range from a conservative low risk option to an aggressive higher risk option. One of the investment options, the growth option, has been designated as the default investment option for members who do not wish to make a choice. NTGPASS members will be able to switch investment options at any time during the financial year. The first switch in the year will be free, however additional switches made during the year will incur a fee which will be deducted from a member’s account.

An allocated pension product is expected to be available in January 2008 and will allow NTGPASS members to convert their superannuation lump sum into a retirement income stream. Members will have access to member investment choice, and be able to choose the frequency of payments and the amount they wish to receive in that allocated pension account.

Allocated pension account members will be charged a small annual administration fee, which will be deducted from their allocated pension account. The fee will be around $40, similar to the fee charged by the Australian Government Employees Superannuation Trust, AGEST, the Territory’s default superannuation fund for employees in choice of fund superannuation arrangements.

The amendments to the Superannuation Act and the LAMS Act to clarify the definition of interest is simply to ensure the Territory accords with legal advice that it would prudent to amend the governing legislation of NTGPASS and LAMS to make it absolutely clear that interest applied to member accounts can be either positive or negative.

Under the Australian government’s better super reforms, it is not longer compulsory for a person to withdraw their superannuation at age 65. The amendment to the NTGPASS rules to remove the reference to age 65 means that NTGPASS members will be able to keep their superannuation money in the scheme indefinitely.

Madam Speaker, the legislation honours this government’s commitment to various superannuation reforms designed to ensure that all Northern Territory public sector employees are provided with equivalent death and invalidity cover, and have access to similar superannuation products, regardless of their superannuation arrangements. I commend the bill to the House.

Debate adjourned.

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