New law has been introduced in the House of Representatives to allow employees under workplace determinations or enterprise agreements to choose the superannuation fund into which their compulsory employer superannuation guarantee contributions are made. If passed, the new law will apply only to new workplace determinations and enterprise agreements made on or after 1 July 2020.
Currently, some employees do not have the right to choose the superannuation fund into which employer contributions are made. This may occur where an employer makes superannuation contributions under an enterprise agreement or workplace determination – such arrangements satisfy the choice of fund requirements in the superannuation law. Agreements or determinations made by employers may specify a superannuation fund, or several superannuation funds, that an employer may contribute to.
Lack of choice of fund for all workers disadvantages some employees and contributes to employees having multiple superannuation accounts and paying multiple sets of fees and insurance premiums, which can reduce their future retirement income. Extending the possibility of choosing a superannuation fund will reduce the need for multiple superannuation accounts involving multiple fees and insurance premiums, which can erode retirement savings. By employees being able to choose a superannuation reduces fees through increased competition.
Under the proposed changes, an employer will not be required to supply existing employees with a choice form, unless requested once a new determination or agreement is made on or after 1 July 2020. However, under the new law, existing employees will be able to request a choice of superannuation fund form and the employer will be required to act on that request.