Your super, your choice - Senate passes bill allowing choice of fund for employees

It's been a long time coming, but employees covered by an enterprise agreement can, from 1 January 2021, choose their preferred super fund.

They are no longer bound by their employer's choice of super fund.

On 25 August 2020 the Senate passed the new laws which permit employees covered by enterprise agreements or a workplace determination to choose their superannuation fund (including a self-managed superfund). ¹

The new laws:

• Remove restrictions which meant all their super guarantee payments were made to a super fund chosen by their employer;
• Allows approximately 800,000 Australians to choose where their super will be invested.

If a workplace determination or enterprise agreement made on or after 1 July 2020 includes a term that restricts choice of superannuation fund (for example, if it disregards the changes made by the Bill), then that term will not be enforceable if the employee has given the employer, or the Commissioner of Taxation, written notice of its chosen fund. ²

Examples of terms which restrict choice include terms that specify the name of the fund to which the employer must contribute, or terms that list several funds the employer must choose between to make contributions to.

The Treasurer Josh Frydenberg and Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, stated that the Bill addresses the findings of the Financial System Inquiry and the Productivity Commission Inquiry into the efficiency and competitiveness of the superannuation system which found that this reform was 'much needed' and that denying choice of fund can discourage member engagement and lead to them paying higher fees.

The changes are not retrospective which will means that the new law will only effect employees who enter into a new workplace agreement or determination after 1 January 2021.

1. The new laws are in the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019
2. Section 32Z of the Superannuation Guarantee (Administration) Act 1992

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

More Cleardocs information on related topics

You can read earlier ClearLaw articles on a range of topics, such as:

• Your SMSF Investment Strategy and COVID
• SMSF Trustee disqualified after transferring money as part of 'emergency payment'
• Problems in passing on a TRIS as a death benefit solved by parliament
• TRIS's and traps

Order related document packages

• SMSF Pension Commutation
• SMSF Pension Pack
• Superannuation Trust (SMSF)
• Update to SMSF