Summary: Last week the government passed a bill allowing workers to choose their superannuation fund. This new piece of legislation will give the ability for employees to override enterprise bargaining agreements that previously had them tied to a mandated fund.
The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 allows an estimated 800,000 Australians, or around 40 per cent of all employees covered by an EBA, to choose their fund.
The background to this Bill was that people with multiple superannuation accounts could throughout their working life be up to 6% worse off at retirement due to duplicate costs. In construction of the Bill they also found that were around 10million zombie superfund accounts taking fees without any active engagement with the fund.
A report from the Attorney-General’s department last December found 85 current enterprise agreements locked 13,974 workers into Maritime Super, Labour Union Co-Operative Retirement Fund, Mine Super, TWU Super and WA Super, even if the workers already had a different fund.
Given the spirit of what superannuation was intended for, this Bill set about laying out legislation that would give freedom to employees to choose their own fund regardless of work contracts.
We will now see the Superannuation Guarantee (Administration) Act 1992 (SGAA) amended to ensure employees under new workplace determinations or enterprise agreements have an opportunity to choose the superannuation fund for their compulsory employer contributions.
The start date was delayed to January 1, 2021, and APRA will conduct a review in two years on the impact on defined benefit schemes, such as those operated by UniSuper.
All new employees must be provided with a the ATO standard super choice form.
In addition, any employees who were previously restricted to a specific superannuation fund due to an enterprise agreement can now choose their own super fund when their existing employer enters into a new agreement with them after 1 January 2021.
According to the explanatory memorandum any employee can choose their own super fund (including an SMSF) where they are employed under a workplace determination or enterprise agreement that is made on or after 1 July 2020 (this date was amended to 1 January 2021).
Article published by Chloe Ward - National Superannuation Technical Manager
GPS Wealth ©
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