Superannuation mobility on the cards for APS

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Amid the current push for mobility between different public service jurisdictions, or between the government and private sectors, Australian Public Service employees’ superannuation options have remained inflexible.

But moving to a job outside the Commonwealth is about to become a bit easier, under a bill introduced into the Australian Parliament on Thursday that would give members of the main Commonwealth staff super fund the same mobility options as most Australians.

At the moment, APS employees who go to work for a state government or move into the private sector are unable to nominate a Public Sector Superannuation Accumulation Plan account as the place to pay new super.

Instead, they need to choose between keeping the money paid by the APS in that account and having new super put into a separate fund — with the extra ongoing costs that brings — and moving their money out of the PSSAP, which also entails extra costs.

The Superannuation Amendment (PSSAP Membership) Bill 2016 would enable members of the PSSAP who move to non-Commonwealth employment to choose to remain a contributory member of the fund.

The PSSAP, which was established on 1 July 2005, is the current default fund for new Commonwealth employees and employees of prescribed Commonwealth entities. As a fully funded accumulation scheme, the PSSAP provides more modern, flexible superannuation arrangements than the older Commonwealth defined benefit superannuation schemes, all of which are now closed to new members. There are currently nearly 90,000 contributing members and around 40,000 people who have money with PSSAP but are no longer paying into it.

The changes will bring the PSSAP into line with other super funds, which normally allow people to remain contributory members after they move to a different job.

There are some restrictions, however. One that will continue to prove difficult for some contractors is that a person must have been a Commonwealth employee or office holder for a continuous period of at least 12 months to be able to obtain membership.

Those who move from Commonwealth employment to certain other roles with the Commonwealth — for example, service with the Australian Defence Force — will not be affected by the changes. They will continue to be subject to the Commonwealth superannuation arrangements specifically established for persons in these roles.

Under the changes, PSSAP members can only maintain membership if they’re going to work for an employer who is obligated to pay super, so sole traders will not be able to remain contributory members.

The bill has moved to its second reading in the House of Representatives, but Parliament has now risen until February next year.