Compliance with the Act primarily falls on the trustees. They must ensure the Fund is maintained properly and administered in accordance with the Act. The following are key operational requirements.
Maintain the Fund: s 5 requires the trustees to maintain the Fund in the Treasury or other place they determine. All contributions and payments must be paid into the Fund (s 6), and all pensions and benefits must be paid from it (s 6(2)). The trustees must ensure that bank accounts are operated with cheques signed as prescribed by regulations (s 13).
Investment and financial management: The trustees must enter into financial arrangements under Part 6 of the Government Sector Finance Act 2018 (s 7(1)). They must invest money available for investment through investment managers appointed for that purpose (s 7(2), (3)). The trustees must not lend to contributors or beneficiaries, borrow except for temporary finance, or invest except at arm’s length unless it is an in-house asset under SIS (s 7(4)). They must determine and give effect to an investment strategy and a reserves strategy (s 8(1)). The investment strategy must have regard to risk, return, diversification, liquidity, ability to discharge liabilities, and any other matter required under SIS (s 8(2)). The reserves strategy must be consistent with the investment strategy and the ability to pay liabilities (s 8(3)). The trustees must ensure that any investment of assets complies with these strategies.
Actuarial investigations: The trustees must arrange for triennial actuarial investigations as at each 30 June following 1972 (s 10(1)). They must appoint an actuary to conduct each investigation (s 10(2)). The actuary must complete the investigation and report within six months (s 10(2A)). The Minister may extend this period for special circumstances (s 10(2B)). The report must include statements of the value of assets and liabilities, uncovered liabilities, membership numbers, benefit payments, investment earnings, expenses, and major changes since the last investigation (s 10(3B)). The trustees must forward the report to the Minister within three months (or another period approved by the Minister) with their comments (s 10(2C)). The actuary must recommend annual amounts to be paid into the Fund for the following three years (s 10(3)). The trustees may also seek interim actuarial recommendations if investments may need to be realised (s 10(4)). The Minister may require an interim investigation between triennial investigations, but not within three months of a completed investigation or within six months of the next triennial investigation (s 10A).
Contributions: The designated employer must deduct 12½ per cent from each salary instalment of each continuing member (s 18). If a member has elected salary sacrifice, the designated employer must apply the foregone remuneration to the deduction requirement (s 18AA). The trustees must approve the salary sacrifice election (s 18AA(1)). The trustees may determine periods when deductions are not accepted, but only if necessary for Commonwealth superannuation standard compliance (s 18A). A member aged 65 with 20 years’ service may elect to cease deductions; the trustees must approve the election (s 18B(3)). The trustees must give advice to the Treasurer on contributions and interim advances needed (s 11(1)). The Treasurer then determines the amounts to be paid into the Fund from the Consolidated Fund (s 11(2), (3)).
Payment of benefits: The trustees must pay benefits in accordance with Part 3. For a pension under s 19, the trustees must calculate the annual rate using the formula, current basic salary at the time of each instalment, and the member’s total salary and total basic salary. They must pay by instalments at intervals they determine (s 28). When a member becomes entitled to a pension, the trustees must allow the former member to elect within three months to convert part to a lump sum (s 20). The trustees must calculate the lump sum as ten times the annual pension amount converted, and reduce the pension accordingly under s 21B. The trustees must preserve benefits as required by Commonwealth standards (s 22B), and pay preserved benefits only in circumstances permitted by those standards (s 22BA). For deferred pensions, the trustees must pay only when the former member reaches 55, or earlier if approved for hardship (s 19D) or ill-health (s 19E). For hardship, the trustees must have regard to the former member’s financial circumstances and capacity to meet reasonable and immediate commitments (s 19D(2)). For ill-health, the trustees must be satisfied the member would be incapable of performing duties, based on medical certificates from two practitioners (s 19E(2)-(4)). The trustees must also pay children’s pensions (s 23B) and spouse/partner pensions (s 23) on death. For spouse pensions, the trustees must calculate the pension as three-quarters of the member’s pension or 45 per cent of current basic salary, whichever is greater, and apply the three-year marriage rule (s 23(1A)). The trustees must handle competing claims for spouse benefits under s 30B, including apportionment and withholding payment for 30 days.
Compliance with Commonwealth standards: The trustees must ensure all benefits comply with relevant Commonwealth superannuation standards. They must determine the minimum employer-financed benefit to avoid a superannuation guarantee shortfall (s 30(1)). They must increase any pension or lump sum that is employer-financed if it is below that minimum (s 30(2)). They must make adjustments to benefits paid after 1 July 1992 retrospectively if necessary (s 30A). The trustees may commute part of a pension to a lump sum for surcharge adjustment (s 28D). They must pay a member who has attained age 65 the whole or part of the benefit if needed for standard compliance (s 28E).
Family law: On receiving notice of a family law superannuation entitlement, the trustees must take action within the timeframes set by regulations: either pay the non-member spouse (if the member spouse is in receipt of pension or the non-member has met a condition of release) or transfer the amount to a complying superannuation fund or RSA nominated by the non-member spouse (s 29C(3)). If the non-member fails to nominate, the trustees must transfer the payment to the FTC for crediting to the Aware Super Fund (s 29C(5)). The trustees must reduce the member spouse’s benefits in accordance with regulations (s 29D). They may charge costs (s 29C(3)(a),(b); regs under s 29E cover fees).
Reporting and transparency: The trustees must give information to members and other persons as determined under s 32A, having regard to what a regulated superannuation fund would provide. They must furnish information to the Insurance and Superannuation Commissioner as reasonably required (s 32B). They must forward actuarial reports to the Minister (s 10(2C)). They must keep the Fund’s accounts and ensure that cheques are signed properly (s 13). The trustees must maintain accounts and reserves for preserved benefits (s 22B(4)). They must also make regulations as required for matters including family law payment splits, surcharge adjustments, and transitional provisions (s 33). The trustees should ensure that any benefit reduction or suspension under s 19AA is documented and that appeals are handled carefully. They should also ensure that elections under s 20 and s 27A are handled promptly and that the three-month time limits are strictly applied. Trustees must be aware of their duties under the Trustee Act 1925 and their fiduciary duties, and must act in good faith, as they are indemnified under s 17A only for acts done in good faith. They must also ensure that the Fund’s investment and reserves strategies are documented and regularly reviewed, and that all financial arrangements comply with the Government Sector Finance Act 2018.