Australia law extends super fund choice to enterprise agreements

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Employees subject to Australian workplace determinations or enterprise agreements will be able to choose the superannuation fund to which compulsory employer contributions are paid, now that the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 has received Royal Assent. The bill was reintroduced after a previous bill lapsed prior to the May 2019 federal election.


The law applies to new workplace determinations and enterprise agreements made on or after 1 Jan 2021, and sets out how fund choice will be treated under both new and existing enterprise agreements.

Treatment of existing agreements. Currently, employers satisfy the “choice of fund” requirement if they make contributions according to the terms of an enterprise agreement or workplace determination. Under the new bill, existing agreements and workplace determinations agreed to before 1 Jul 2020 could continue to restrict or exclude “choice of fund” until their expiration.

Existing employees, agreements concluded after 31 Dec 2020. Under the bill, if the employee hasn’t chosen a fund, employers wouldn’t breach the “choice of fund” requirement if they continue to contribute to the employee’s existing fund in accordance with the pre-1 Jan 2021 agreement or determination. However, if a pre-1 Jan 2021 agreement or determination is replaced by a post-31 Dec 2020 agreement or determination, employers must provide employees with a standard choice form, if requested.

New employees, agreements concluded after 31 Dec 2020. New employees starting work under the terms of an agreement concluded after 31 Dec 2020, must be given a standard choice form. If an employee doesn’t choose a fund, default fund arrangements would apply.

Australian Prudential Regulation Authority (APRA) review. APRA is required to review and identify any unintended consequences of the amendments made by this Act on the operation of defined benefits schemes, and the ongoing viability and profitability of defined benefits schemes, to be completed within 30 months of commencement of the Act.

The Government welcomed the passage of the Bill, saying it “will allow around 800,000 Australians to make choices about where their hard-earned retirement savings are invested, representing around 40% of all employees covered by a current enterprise agreement,”

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Paul Shallue
by Paul Shallue

Principal, Mercer Wealth

Stephanie Rosseau
by Stephanie Rosseau

Principal, Mercer’s Law & Policy Group

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