Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004 (102 of 2004)

Schedule 1   Choice of superannuation funds

Superannuation Guarantee (Administration) Act 1992

22   After Part 3

Insert:

Part 3A - Choice of fund requirements

Division 1 - Overview of Part

32A Purpose of Part

This Part sets out the circumstances in which contributions are made in compliance with the choice of fund requirements. This is important because an employer's individual superannuation guarantee shortfall for an employee for a quarter may be increased where contributions do not comply.

32B Structure of Part

The structure of this Part is as follows:

Division 2 - Which contributions satisfy the choice of fund requirements?

32C Contributions that satisfy the choice of fund requirements

Contributions to certain funds

(1) A contribution to a fund by an employer for the benefit of an employee is made in compliance with the choice of fund requirements if the contribution is made to a fund that, at the time that the contribution is made, is:

(a) a chosen fund for the employee (see Division 4); or

(b) if the employee is not a Commonwealth employee who is a member of the CSS or the PSS - an unfunded public sector scheme.

Contributions to other funds

(2) A contribution to a fund by an employer for the benefit of an employee is made in compliance with the choice of fund requirements if, at the time the contribution is made:

(a) there is no chosen fund for the employee; and

(b) the fund is an eligible choice fund for the employer; and

(c) the fund complies with the requirements (if any) set out in the regulations in relation to offering insurance in respect of death.

(2A) Subsection (2) does not apply if the employer is required under section 32N to give the employee a standard choice form and the employer does not do this by the time specified in the subsection concerned. However, this subsection ceases to apply from the time that the employer gives the standard choice form to the employee.

Contributions to the CSS

(3) A contribution to a fund by an employer for the benefit of an employee at a particular time is also made in compliance with the choice of fund requirements if the contribution is made to the CSS. However, this subsection does not apply if the law of the Commonwealth under which the contribution is made has been prescribed in relation to that time under regulations made for the purpose of this subsection.

Contributions to the PSS

(4) A contribution to a fund by an employer for the benefit of an employee at a particular time is also made in compliance with the choice of fund requirements if the contribution is made to the PSS. However, this subsection does not apply if the law of the Commonwealth under which the contribution is made has been prescribed in relation to that time under regulations made for the purpose of this subsection.

Contributions under the Superannuation (Productivity Benefit) Act 1988

(5) A contribution to a fund by an employer for the benefit of an employee at a particular time is also made in compliance with the choice of fund requirements if the contribution is made under the Superannuation (Productivity Benefit) Act 1988. However, this subsection does not apply if that Act has been prescribed in relation to that time under regulations made for the purpose of this subsection.

Contributions under AWAs or certified agreements

(6) A contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution is made under, or in accordance with, an AWA or a certified agreement under the Workplace Relations Act 1996 or a certified agreement under the Industrial Relations Act 1988.

Contributions under certain Victorian agreements

(7) A contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution is made under, or in accordance with, an employment agreement that was in force under the Employee Relations Act 1992 of Victoria and which continues to be in operation by virtue of section 515 of the Workplace Relations Act 1996.

Contributions under State awards

(8) A contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution, or a part of the contribution, is made under, or in accordance with, a State industrial award.

Contributions under prescribed legislation

(9) A contribution to a fund by an employer for the benefit of an employee at a particular time is also made in compliance with the choice of fund requirements if the contribution is made under a law of the Commonwealth, of a State or of a Territory and the law is prescribed in relation to that time under regulations made for the purpose of this subsection.

Contributions made after employees cease employment

(10) If:

(a) an employee ceases to be employed by an employer; and

(b) after the employment ceases, the employer makes a contribution to a fund for the benefit of the employee and in respect of the employment;

then, for the purposes of this section, the contribution is taken to have been made immediately before the employment ceases.

Note: This section is used in determining if an individual superannuation guarantee shortfall is increased under subsection 19(2A) or (2B). Where subsection 19(2B) is relevant, the contributions referred to in this section are the notional contributions referred to in paragraph 19(2B)(b).

Division 3 - Eligible choice funds

32D What funds are eligible choice funds?

A fund is an eligible choice fund for an employer at a particular time if:

(a) it is a complying superannuation fund at that time; or

(b) it is a complying superannuation scheme at that time; or

(c) it is an RSA; or

(d) at that time, a benefit certificate in relation to the fund is conclusively presumed under section 24, in relation to the employer, to be a certificate in relation to a complying superannuation scheme; or

(e) contributions made by the employer to the fund at that time are conclusively presumed under section 25 to be contributions to a complying superannuation fund.

32E Meaning of funds - includes RSAs and schemes

(1) In this Part:

fund means:

(a) a superannuation fund; and

(b) a superannuation scheme; and

(c) an RSA.

(2) For the purposes of this Part, the holder of an RSA is taken to be a member.

Division 4 - Choosing a fund

32F What is a chosen fund

(1) If an employee wants a fund to be a chosen fund for the employee, the employee must give the employer written notice to that effect.

Note: A fund can only be a chosen fund if the employer is able to make contributions to the fund for the benefit of the employee (see subsection 32G(2)).

(2) The fund becomes a chosen fund for the employee 2 months after the employee gives the notice to the employer or at such earlier time after the notice is given as the employer determines.

(3) A fund (the selected fund ) cannot become a chosen fund for an employee under this section if:

(a) immediately before the employee gave the notice to the employer, the employee was a defined benefit member of a defined benefit superannuation scheme; and

(b) even if the selected fund were to become a chosen fund for the employee, the employee would be entitled, on the employee's retirement, resignation or retrenchment, to the same amount of benefit from the defined benefit superannuation scheme as the employee would be entitled if the selected fund were not a chosen fund for the employee.

32FA Employer may refuse to accept certain chosen funds

(1) An employer may refuse to accept the fund chosen by an employee under section 32F if the employee does not provide, together with the notice under that section:

(a) a written statement setting out:

(i) contact details for the fund; and

(ii) any other prescribed information; and

(b) written evidence that the fund will accept contributions made by the employer for the benefit of the employee.

(2) An employer may refuse to accept the fund chosen by an employee under section 32F if the employee has chosen another fund within the previous 12 months.

32G Limit on funds that may be chosen

(1) The fund chosen by the employee must be an eligible choice fund for the employer at the time that the choice is made.

(2) The fund chosen by the employee must be a fund to which the employer can make contributions for the benefit of the employee at the time that the choice is made.

32H When fund ceases to be a chosen fund

(1) A fund (the old fund ) ceases to be a chosen fund for an employee if:

(a) there is another fund that is a chosen fund for the employee; and

(b) the employee has not given the employer a written notice stating that the old fund continues to be a chosen fund for the employee.

(2) A fund also ceases to be a chosen fund if the employee requests the employer, under subsection 32N(3), to give him or her a standard choice form and the employer does not do this by the time specified in that subsection.

(3) A fund also ceases to be a chosen fund if it is impossible for the employer to contribute on behalf of the employee to the chosen fund. This may occur immediately after the fund becomes a chosen fund for the employee.

Example: The chosen fund is closed to new members or ceases to accept further contributions.

(4) A fund also ceases to be a chosen fund if the fund ceases to be an eligible choice fund for the employer. This may occur immediately after the fund becomes a chosen fund for the employee.

Division 6 - Standard choice forms

32N When a standard choice form must be provided

(1) An employer must give a standard choice form before 29 July 2005 to each employee employed by the employer on 1 July 2005.

(2) An employer must give a standard choice form to an employee within 28 days of the employee first commencing employment with the employer.

(3) An employer must also give a standard choice form to an employee within 28 days of the employee giving the employer a written request to do so. However, a request is taken never to have been made if the employee has been given a standard choice form within the previous 12 months.

(4) An employer must also give a standard choice form to an employee within 28 days of the employer becoming aware that there ceased to be any chosen fund for the employee because of:

(a) subsection 32H(3) (employer unable to contribute to fund); or

(b) subsection 32H(4) (fund ceasing to be eligible choice fund).

(5) An employer must also give a standard choice form to an employee if:

(a) the employer is making contributions, in accordance with subsection 32C(2), to a fund for the benefit of the employee; and

(b) the employer changes the fund to which the employer makes contributions, in accordance with that subsection, for the benefit of the employee.

The standard choice form must be given within 28 days after the change.

(6) An employer may also give a standard choice form at any time.

32NA When a standard choice form does not have to be provided

(1) An employer is not required under section 32N to give an employee a standard choice form if the employee has chosen a fund under section 32F by the time specified in subsection 32N(1), (2), (3) or (4).

(2) An employer is not required under section 32N to give an employee a standard choice form if:

(a) the employer is making contributions of a kind mentioned in subsections 32C(3) to (9) for the benefit of the employee; and

(b) the contributions are made in compliance with the choice of fund requirements.

32P Standard choice form

(1) For the purposes of this Part, a standard choice form is a form that is in writing and that contains the following information:

(a) a statement that the employee may choose any eligible choice fund for the employer as a chosen fund for the employee;

(c) the name of the fund that the employer will contribute to if the employee does not make a choice;

(e) other information that is required, under the regulations, to be included in the form;

(g) if the employee is a member of a defined benefits scheme - information in relation to that scheme that is required, under the regulations, to be included.

(2) The regulations may require additional information in relation to funds to be made available to employees and may prescribe where and when such information is to be made available.

Division 8 - Miscellaneous

32X Application of Part to different employers of an employee

This Part applies separately to each employer of an employee. For example, a fund that is a chosen fund of an employee as a result of a standard choice form being given by an employer is only a chosen fund in relation to the operation of these provisions to that employer.

32Y Notional earnings base to continue to be used

(1) This section applies if:

(a) an employer is contributing to a fund (the choice fund ) that is a chosen fund of an employee; and

(b) it is reasonable to assume that, if the choice of fund requirements did not apply, the employer would instead have contributed to a different fund (the other fund ) for the benefit of that employee; and

(c) contributions to the other fund would not have been covered by subsection 23(5).

(2) This section also applies if:

(a) an employer is contributing to a fund (the choice fund ) that is a chosen fund of an employee; and

(b) it is reasonable to assume that, if the choice of fund requirements did not apply, that a reduction in the charge percentage for the employer would have been made under subsection 22(2) as a result of a scheme (the other fund ) for the benefit of that employee.

(3) In working out the reduction in the charge percentage under subsection 23(2), (3), (4), (4A) or (4D) as a result of a contribution to the choice fund, the employee's notional earnings base is taken to be equal to the lesser of that notional earnings base and the amount that would have been the employee's notional earnings base if the contribution had been made to the other fund, or the reduction had been made under subsection 22(2) as a result of the other fund (as the case requires).

(4) In working out the reduction in the charge percentage under subsection 23(5) as a result of a contribution to the choice fund, the employee's ordinary time earnings are taken to be equal to the lesser of those ordinary time earnings and the amount that would have been the employee's notional earnings base if the contribution had been made to the other fund, or the reduction had been made under subsection 22(2) as a result of the other fund (as the case requires).

32Z Contributions satisfy Commonwealth or Territory industrial award requirements

A requirement in a Commonwealth industrial award or a Territory industrial award that an employer make contributions to a superannuation fund on behalf of an employee is not enforceable to the extent that the employer instead makes the contributions on behalf of the employee, in compliance with this Part, to another superannuation fund that is a chosen fund.

32ZA Employers not liable for damages

An employer is not liable to compensate any person for loss or damage arising from anything done by the employer in complying with this Part.