Commonwealth legislation

Superannuation (Productivity Benefit) (Second Interest Factor) Declaration 2013

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Jurisdiction

Commonwealth

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legislative instrument

Plain English Summary

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This Declaration sets the formula used to calculate the “second interest factor” under the Superannuation (Productivity Benefit) Act 1988 for 2013–14 and each year after. The factor equals (Interest rate × Number of days) ÷ 365, where Interest rate uses the Reserve Bank’s most recent published estimate of the 10‑year Treasury bond yield before 1 June and Number of days depends on the employee’s membership or interim‑benefit timing. It affects Commonwealth employees’ productivity‑benefit interest calculations and requires employers/administrators to apply the formula when computing payments.

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Superannuation (Productivity Benefit) (Second Interest Factor) Declaration 2013

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Superannuation (Productivity Benefit) (Second Interest Factor) Declaration 20131

I, PENELOPE YING YEN WONG, Minister for Finance and Deregulation, make the following Declaration under paragraph 3E (1) (b) of the Superannuation (Productivity Benefit) Act 1988.

Dated 7th May 2013

PENELOPE YING YEN WONG

Minister for Finance and Deregulation

1 Name of Declaration

This Declaration is the Superannuation (Productivity Benefit) (Second Interest Factor) Declaration 2013.

2 Commencement

This Declaration commences on 1 July 2013.

3 Definitions

In this Declaration:

Act means the Superannuation (Productivity Benefit) Act 1988.

Interest rate means a rate equal to the estimated closing yield last published by the Reserve Bank of Australia before 1 June in the financial year immediately preceding the relevant financial year in respect of 10-year non-rebate Treasury Bonds.

Number of days means:

(a) in the case of an employee who becomes a fund employee during the relevant financial year — the number of days in the period:

(i) starting on the day after the last day of the last pay period for the employee ending before 1 July of the relevant financial year; and

(ii) ending at the end of the day on which an amount first becomes payable under section 4F of the Act; or

(b) in the case of an employee in respect of whom an interim benefit becomes payable under section 6 of the Act during the relevant financial year — the number of days between:

(i) the day after the last day of the last pay period for the employee ending before 1 July of the relevant financial year; and

(ii) the day on which the interim benefit becomes payable; or

(c) in the case of an employee who does not become a fund employee during the relevant financial year, and in respect of whom an interim benefit does not become payable during that year — the number of days between:

(i) the day following the last day of the last pay period for the employee ending before 1 July of the relevant financial year; and

(ii) 30 June of the relevant financial year.

Relevant financial year means a period commencing on 1 July and ending on 30 June the following calendar year, which:

(a) commences on or after 1 July 2013; and

(b) is the financial year to which the second interest factor is to be applied in relation to an employee under section 8A of the Act.

4 Application

This Declaration declares the second interest factor, for the purposes of section 8A of the Act, to be applied for the 2013‑2014 financial year and each subsequent financial year.

Example

A person first becomes an employee on 1 May 2006, and becomes a fund member on 1 August 2014.

First, the first interest factors are applied for each financial year.

Then the second interest factors are applied for each financial year in the period between 1 July 2006 and 30 June 2013. These factors are found in previous annual Declarations.

To determine the second interest factor for the 2013‑2014 financial year, apply the formula in section 5 of this Declaration, using 2013‑2014 as the relevant financial year.

To determine the second interest factor for the 2014‑2015 financial year, apply the formula in section 5 of this Declaration, using 2014-2015 as the relevant financial year.

5 Declared second interest factor

For section 8A of the Act, the declared second interest factor for the relevant financial year is:

Interest rate x Number of days
365

Note

Note: 1. All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See www.frli.gov.au.

Source text

Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.

1 Superannuation (Productivity Benefit) (Second Interest Factor) Declaration 2013