Since its inception, the scheme created by the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) has been supplemented by provisions in modern awards and enterprise agreements identifying the funds to which compulsory employer contributions are to be made.
While the choice of fund provisions were inserted into the SGAA in 2004, providing for the right of employees to choose the fund to which their employer made compulsory superannuation contributions, superannuation clauses in awards and agreements have been able to override that choice. On 4 September 2020, the SGAA was amended to make those provisions unenforceable if they are made on or after 1 January 2021. This means new employees under these awards and agreements have the right to select their superannuation fund.
An employee exercises their choice by giving the employer written notice of the chosen fund on a standard choice form. An employer must provide a standard choice form to an employee within 28 days of them first commencing employment with the employer, or within 28 days of the employee giving the employer a written request to do so.
The standard choice form is in the form approved by the Commissioner of Taxation. Section A is completed by the employee if they wish to nominate a fund for the employer to make contributions on their behalf.
If, at the time the employer needs to make superannuation contributions on behalf of the employee to avoid a superannuation guarantee shortfall, the employer does not have either a completed choice form from the employee or some other written notice indicating a chosen fund, the employer can meet the choice of fund requirements by making the contributions to the default fund nominated in an award or agreement regulating the employee’s employment. Section B of the standard choice form is completed by the employer if it wishes to specify a fund into which contributions will be made in default of choice.
In the case of employees covered by an award or agreement made prior to 1 January 2021 that stipulates the fund for making superannuation guarantee contributions, there is no requirement to give the employee a standard choice form unless they request it. However, the recent SGAA amendments provide that employers must allow employees to choose their own superannuation fund, even if a clause in an agreement or award made on or after 1 January 2021 specifies the fund or lists several funds to which the employer must contribute. The employer is required to give a standard choice form to an employee in the circumstances set out in section 32N of the SGAA. If a new employee does not choose a fund, the employer may only then contribute to the default fund specified in the choice form.
Further amendments that took effect on 23 June 2021 provide that if a new employee (who has started their employment on or after 1 November 2021) has no chosen fund but has an existing ‘stapled’ fund, the employer must make contributions to the employee’s stapled fund rather than the fund specified in the choice form. A stapled fund is the fund the employee first joined in their working life. Employers will be required to request the Commissioner of Taxation to identify whether a stapled fund exists for an employee. It is anticipated this will be done electronically.