Legislation to allow more workers to choose their superannuation fund – in the future – has passed the Parliament.
The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 passed the Parliament on Tuesday, with amendments.
Currently not all employees can choose which superannuation fund receives their employer contributions. Choice of super fund can be restricted by workplace determinations of enterprise agreements. Under the changes, in the future workers will be able to choose their super fund if they are under a new agreement.
As originally drafted, the change would have applied to new workplace determinations or enterprise agreements made on or after 1 July 2020 – the Bill was introduced to the Parliament in November 2019. But the Government’s amendment pushed this back to 1 January 2021.
The Government says this will expand super choice by around 800,000 people, or about 40% of all employees covered by current agreements.
The successful crossbench amendment requires APRA to conduct a review of the changes, including any unintended consequences, within 30 months of the commencement of the Act.
The change to super choice was announced by the Government in October 2015. It was originally introduced in a Bill to Parliament in 2017, but it stalled in the senate and lapsed with the last election.
The Government says the Bill “addresses” the findings of the Financial System Inquiry and Productivity Commission inquiry into superannuation. However, the 2014 Financial System Inquiry recommended all employees be given choice of super fund – not just employees under new agreements. Likewise the Productivity Commission recommended that clauses in enterprise and workplace agreements that limited choice of super fund should be “invalidated”. The Explanatory Material to the Bill says this approach wasn’t taken to minimise the compliance cost on employers. The Government has yet to fully respond to the Productivity Commission report into superannuation, despite having it since December 2018.
More to come.