Super Choice of Fund and Enterprise Agreements Bill Passed
The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 received Royal Assent on 3 September 2020. The changes the Bill makes will extend the super “choice of fund” regime to employees covered by enterprise agreements and workplace determinations made from 1 January 2021 (revised from 1 July 2020).
Federal Treasurer Josh Frydenberg has said this will allow another 800,000 people to make choices about where their super guarantee contributions are invested, representing around 40% of all employees covered by a current enterprise agreement. The measure was originally announced as part of the Government’s response to the Murray Financial Services Inquiry (FSI) in October 2015.
Choice of fund extended to enterprise agreements
The Bill amends s 32C of the Superannuation Guarantee (Administration) Act 1992 (SGAA) to enable employees to choose their own super fund where they are employed under a workplace determination or enterprise agreement made on or after 1 January 2021. This will require an employer to give a standard choice form to an employee in certain circumstances; for example, upon commencement of their employment or when receiving a written request from an employee.
An employer will not be required to provide existing employees with a choice form, unless they request it once a new determination or agreement is made on or after 1 January 2021. However, existing employees will be able to request a choice of fund form from their employer and the employer will be required to act on such a request.
Where a new employee does not choose a fund, the proposed changes will enable an employer to continue to make compulsory super guarantee contributions for an employee with the same fund, in accordance with the previous determination or agreement, and comply with the choice of fund rules.
If a workplace determination or enterprise agreement made after January 2021 includes a term that restricts choice, such a term will not be enforceable under s 32Z of the SGAA to the extent that the employer instead makes contributions to an employee’s chosen fund. Examples of terms which restrict choice include terms that list several funds the employer must choose between to make contributions to.
A technical amendment (s 20(3A) of the SGAA) will ensure employers are not penalised with a SG shortfall if they rely on the existing exemptions for employees in certain defined benefit schemes.
Start date revised to 1 January 2021
The Bill was passed after the House of Representatives agreed to the two Government Senate amendments to revise the start date so that it applies to enterprise agreements and workplace determinations made from 1 January 2021 (instead of 1 July 2020, as originally proposed). The other amendment by Senator Rex Patrick (Independent) requires the Australian Prudential Regulation Authority (APRA) to review the provisions to identify any unintended consequences, including the ongoing viability and profitability of defined benefits schemes. The APRA review will need to be completed within 30 months of Royal Assent to the Bill and must involve consultation with industry stakeholders.
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