The Government will ease the transition to superannuation choice for businesses and employees, and minimise the burden on employers in complying with their choice obligations.
Some superannuation funds require employers to become a 'participating employer' before they can make contributions to the fund. This can impose additional obligations on employers, such as the need to make contributions more regularly.
"I can reassure employers that the choice legislation in no way compels them to become a participating employer" said Minister for Revenue and Assistant Treasurer, Mal Brough. "Employees can only choose a fund which will accept contributions from their employer at the time the employee chooses that fund. A fund which requires the employer to become a participating employer before they will accept contributions does not satisfy this requirement.
Mr Brough also announced the Government will amend legislation to exempt certain employers from having to choose a default fund. The default fund is used when employees do not choose their own fund.
"Some employers have never had to select a default fund as all of their employees are required to choose a fund as a condition of employment. The current choice legislation requires these employers to now select a default fund and advise their employees of its existence, imposing unnecessary compliance costs of business given that employees have already exercised choice. The Government will legislate to exempt these employers from choosing a default fund."
Mr Brough also reassured employees that their employers will not be able to charge them for offering a choice of fund. This would discourage many employees from taking up their right to choose their own fund, and undermine the Government's policy.
Increased funding of $48.5 million for the Australian Taxation Office (ATO), $23 million for the Australian Securities and Investments Commission (ASIC) and $4.6 million for the Superannuation Complaints Tribunal (SCT) will assist in the smooth transition to super choice.