The President of the Superannuation Fund Management Board has forwarded for advice the following memorandum received by him from the Secretary to the Department of Defence:

I desire to inform you that the question has arisen regarding the applicability to officers of the Naval Forces (Sea-going) of the provisions of the Superannuation Act 1922.

2. Naval Financial Regulations Nos 40 and 41 definitely provide for the accumulation of deferred pay to the credit of every officer and man entered for service in the Permanent Naval Forces (Sea-going). This system of deferred pay has been in force since 1911.
3. It is apparent that officers of the Sea-going Forces come within the ambit of the term 'employee' as defined in section 4 of the Superannuation Act 1922.
4. It is therefore desired to ascertain whether the right of an officer of the Sea-going Forces to receive accumulated deferred pay with interest under the conditions specified in Naval Financial Regulations, is regarded as a 'vested or contingent right to a pension, superannuation allowance or gratuity' within the meaning of section 51 of the Superannuation Act 1922, which would preclude such officer from being required or permitted to contribute for units of pension under that Act.
5. (5) It might also be mentioned that this question applies to some extent to officers of the Royal Australian Air Force, in which the conditions governing the deferred pay system are identical to those pertaining to the Permanent Naval Forces (Sea-going), with the exception that the Minister, when approving of rates of pay, prescribed for the Royal Australian Air Force, made the proviso that the whole question was subject to review if, and when, the Superannuation Act was passed. Section 51 of the Superannuation Act 1922 is as follows:

51 Notwithstanding anything contained in this Act, an employee who has a vested or contingent right to a pension, superannuation allowance, or gratuity under any other Act (not including the Australian Soldiers' Repatriation Act 1920-1921) or State Act shall not be required or permitted to contribute for units of pension under this Act, except in pursuance of the provisions of this Division, nor shall pension under this Act be payable to or in respect of any such employee except in pursuance of those provisions.

I understand that under the Naval Financial Regulations the officers of the Sea-going Forces referred to receive active pay at certain rates, and that in addition deferred pay at prescribed rates is credited to them. This deferred pay carries interest. If not made earlier, payment of deferred pay, together with accrued interest, is made to the officer upon his retirement from the Service either at the age fixed for his retirement, or earlier if he retires through ill-health, or to his dependants if he dies in the Service. Payment may, however, be made at the end of seven years of service, or after seven years after the last payment. In exceptional cases payment of part of the deferred pay may be made at other times.

If the officer is an officer of the Royal Navy, whose services are lent to the Commonwealth, and the Commonwealth is liable to contribute towards the pension of the officer, the amount of such contributions is deducted from the amount of deferred pay credited to the officer.

But for the provision for payment at the end of each period of seven years, I should have been disposed to hold that deferred pay under the existing Regulations is a superannuation allowance within the meaning of section 51 of the Superannuation Act 1922.

If payment, however, is made every seven years, the system cannot be regarded as a superannuation system.⁽¹⁾

I understand that all the officers of the Sea-going Forces who are affected come under the existing Regulations.

As regards the Air Force-in so far as the officers of that Force are employees within the meaning of section 4 of the Superannuation Act 1922 (as to which see my opinion of this date upon another file⁽²⁾) and in so far as the Regulations providing for deferred pay are similar in purport to the Naval Financial Regulations upon which this opinion is based, this advising will apply with the same force to the Air Force.

[Vol. 19, p. 204]

(1) On 3 January 1923 regulation 40 of the Naval Financial Regulations was amended, by S.R. 1923 No.l, with effect, in regard to officers, that payment after seven years would no longer be permissible.

Following this amendment the question was again submitted to the Solicitor-General, who, on 17 January 1923 [Vol. 19, p. 248], stated: 'In my opinion deferred pay under the Regulations as amended is a superannuation allowance within the meaning of section 51 of the Superannuation Act 1922'.

(2) Opinion [Vol. 19, p. 207] not published.