Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 Amendments to the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2003

Outline of chapter

1.1 Amendments 2 and 3 to the bill prescribe the superannuation funds that an employer must make contributions to if an employee does not choose a superannuation fund and when employers must provide a standard choice form.

1.2 Amendment 4 inserts a new provision into the Superannuation Industry (Supervision) Act 1993 (SIS Act) in relation to the conduct of superannuation funds.

Explanation of amendments

Superannuation Guarantee (Administration) Act 1992

1.3 Section 32C of the bill prescribes the contributions that satisfy the choice of fund requirements. Generally, an employer will satisfy these requirements if they make contributions to a fund chosen by an employee.

1.4 If the employee does not choose a fund then the employer must make contributions to an eligible choice fund. [ Amendment 2 ]

1.5 An eligible choice fund must satisfy the requirement to offer insurance in respect of death. These requirements are to be determined by regulations.

1.6 If the employer changes the fund to which the employer is contributing under subsection 32C(2) on behalf of an employee, then the employer must provide a standard choice form to the employee within 28 days after the change. [ Amendment 3 ]

Superannuation Industry (Supervision) Act 1993

1.7 A new section will be inserted into the SIS Act to prohibit a trustee of a regulated superannuation fund, or an associate of a trustee of a regulated superannuation fund to provide or withhold benefits to a person on the basis that one or more of their employees is a member of the superannuation fund. [ Amendment 4 ]

1.8 For example, a superannuation fund will not be able to offer an employer an inducement, such as a free holiday, to encourage them to choose their fund for employees who do not choose a fund.

1.9 The regulations may prescribe certain exceptions to this general rule.

1.10 A person who suffers loss or damage because of a contravention of this provision by another person may recover the amount of the loss or damage from that person. Any action must commence within six years after the day on which the cause of action arose.