Exposure draft legislation to extend choice of fund to more employees under enterprise agreements and workplace determinations made from 1 July 2016 has been released for comment. This is the Government’s response to recommendation 12 of the Financial System Inquiry Final Report.
Under the Superannuation Guarantee (Administration) Act 1992 (SGAA), employers must comply with choice of fund requirements when paying superannuation guarantee (SG) contributions. This gives most employees the opportunity to choose the superannuation fund into which their SG contributions are paid. Employers that do not comply are penalised by an increased SG shortfall for the quarter.
There are some exemptions from an employer being required to offer employees a choice of fund. One such exemption is where contributions are made in accordance with enterprise agreements or workplace determinations. As a result some employees do not get to choose their superannuation fund.
The Government proposes changes to remove deemed compliance with choice for contributions under enterprise agreements and workplace determinations made from 1 July 2016.
The changes will also ensure employers are not penalised with a SG shortfall if they rely on the existing exemptions from choice of fund requirements for employees in certain defined benefit schemes.