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SuperValuers Newsletter - October 2003
New PSS Arrangements
On the 17 October, the Minister for Finance and Administration announced the closure of the PSS defined benefit scheme from 1 July 2005. It will be replaced by a PSS accumulation scheme. There are no valuation consequences for current PSS members. They will not be allowed to transfer to the new arrangements. The same applies to members with a preserved interest.
For further details of this change, go to: www.finance.gov.au/super/questions_and_answers.html.
Senate listing of Superannuation Legislation Amendment (Family Law) Bill 2002
On Thursday 16 October, the third reading speech was first listed on the Senate Draft Legislation Program for the above Bill. The Senate did not consider the Bill. The next opportunity will be during the week commencing 27 October. The Bill amends Military and Commonwealth superannuation schemes to allow member’s superannuation interest to be allocated and paid to the member’s former spouse.
Nothing illustrates the need for the legislation than an example of a military member who was in receipt of a pension that, say, was split on a 50/50 basis. After the orders were enacted, the non member spouse would be paid half the pension. However, the authority to pay stems from the member’s entitlement. If the member re-entered the Defence Force, his entitlement to the pension would cease and so would the pension paid to his former spouse. The Bill creates a separate interest and the non member’s entitlement is independent of the member. A much more equitable outcome.
When the Bill is passed by the Senate, it should become law after about one month. This allows time for Royal assent and a 2 week period before the Bill becomes law. However, it is speculative as to when the Senate will consider the Bill.
In the meantime, and as a separate exercise, the scheme specific factors are still to be introduced as a disallowable instrument. The scheme specific factors recognize the specific structure of the military and commonwealth schemes. For example, the default factors assume that the superannuation benefits grow equally in each year of employment. This is not the case for these schemes.
The Superannuation Legislation Amendment (Family Law) Bill 2002 and the scheme specific factors are interrelated and it is understood that these may be introduced with the same date of effect.
The valuation implications of the Bill and the scheme specific factors are marked. Differences as high as 30% between the two methodologies have been noted with the scheme specific factors generally giving the higher valuation.
Further information will be in the next newsletter.
News from www.supervaluers.com.au
- Military super is now available
- Credit card payments are available
- SuperValuers will create a monthly account for you
- Free fax back service is available where we circle the valuation inputs from the Form 6 and fax back them back.
- No obligation demonstration of web site on your premises available in some states
The above provides a brief summary of Family Law legislation as it applies to superannuation. It is not intended and should not be relied upon as advice. You should always seek professional advice for your specific circumstances.
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