Changes for Employee Superannuation Options
From the 1st of January 2021 the law relating to employees and their choice of superannuation fund has changed.
New workplace determinations and enterprise agreements made on or after this date must now offer employees the right to choose the super fund to which you pay their compulsory super contributions.
Once a new determination or agreement is in place, an employer needs to offer choice of super fund to:
- Existing employees who request to choose their super fund.
- All new employees.
An employee can nominate their fund by completing the standard choice form through ATO online services linked to their myGov account.
Alternatively, employers can give their employee a Superannuation (super) standard choice form to complete. An employer must then pay the employee’s compulsory super to their nominated fund.
If an employee doesn’t nominate a fund, an employer can continue to pay an employee’s super to the same fund previously contributed to, or into a default fund.
Source: ATO – Employees now have more super choice
Note: This is not the same as the legislation implemented on the 1st of July 2005, where the primary objective was to make it law to give employees the right to choose which superannuation fund will receive their employer superannuation contributions. This change is in regard to agreements made at an enterprise level between employers and employees and their union, about terms and conditions of employment.
What is An Enterprise Agreement?
An enterprise agreement is between one or more national system employers and their employees, as specified in the agreement. Enterprise agreements are negotiated by the parties through collective bargaining in good faith, primarily at the enterprise level. Under the Fair Work Act 2009, an enterprise can mean any kind of business, activity, project or undertaking.
Enterprise agreements made on or after 1st January 2021 need to provide employees with a choice of superannuation fund. Any restrictions placed on employees’ choice of superannuation fund in enterprise agreements made on or after 1st January 2021 are not enforceable. Failure to pay superannuation into an employee’s choice of superannuation fund may result in employers having to pay superannuation charges.
Source: FWO – Enterprise bargaining