Choice of Super Funds — Bedlam or Ho Hum?

By Scott Charaneka, Partner, Deacons

From an election commitment which began in the mid 90's, the government's "choice of super fund" policy has finally been realised

The Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004 was passed on 30 June 2004. The new "choice of super fund" regime will commence on 1 July 2005 and will operate within the superannuation guarantee platform.

Like the perennial bridesmaid, it was expected that this policy would be forever waiting for its big day to arrive. Now that day is at hand, a surprised industry has much work to do in a short space of time.

Like many things in superannuation, an understanding of this new regime requires a close review of the law to determine its scope and compliance requirements. The need to offer a choice of superannuation funds to employees does not operate uniformly among all types of employees.

Choice applies principally to federal award employees and to non-award employees, or where an enterprise agreement or state award does not appropriately address superannuation matters. The choice regime also distinguishes between accumulation and defined benefit superannuation arrangements. However, being a member of a defined benefit superannuation fund does not automatically forfeit an employee's eligibility for choice. This depends on the exact terms of the relevant trust deed.

This article sets out the issues employers and employees have to deal with in this new era of superannuation.

(CCH Australian Super News; issue 10, 15 November 2004)