Super choice changes ease burden on employers

Minister for Revenue and Assistant Treasurer Mal Brough has sought to reassure employers that they will not be unnecessarily burdened by choice of fund requirements, including excusing some from having to choose a default fund for their employees.

With the countdown to the July 1 start date for super choice on in earnest, Brough said the choice legislation would be altered to exempt some employers — those who require workers to pick a fund as a condition of employment — from having to assign a default fund.

The current rules require all employers to have in place a default fund in case employees fail to 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,” Brough said in a statement.

“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.”

Brough also reassured employers that they would be able to reject an employee’s choice if the chosen fund required that the company becomes a ‘participating employer’.

Some funds require companies to become ‘participating employers’ before they accept contributions, a move Brough said would impose undue obligations on employers, including the possibility that they would have to make more regular super payments.

“I can reassure employers that the choice legislation in no way compels them to become a participating employer,” Brough said.

“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.”

However, Brough warned employers that they could not charge employees for any added costs associated with choice of fund.

He said charging employees would discourage them from making a choice and undermine the Government’s policy.