Superannuation - [2013] FWC 8765

[2013] FWC 8765

FAIR WORK COMMISSION

STATEMENT

Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
Schedule 5, item 6—Review of all modern awards (other than modern enterprise awards and State reference public sector modern awards) after first 2 years

Fair Work Act 2009
s.156A—4 yearly reviews of default fund terms

Superannuation
(AM2013/25)

JUSTICE ROSS

MELBOURNE, 7 NOVEMBER 2013

Superannuation.

[1] This statement sets out the processes the Fair Work Commission (the Commission) generally proposes to adopt in respect of its various responsibilities concerning the superannuation clauses in modern awards. The processes cover the:

● Transitional Review of modern awards (Item 6 of Schedule 5 of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009).

● Mandatory term for a defined benefit member (s.149A, Fair Work Act 2009 (FW Act)).

● Funds offering a MySuper product (s.155A, FW Act).

● Four yearly reviews of default fund terms (Division 4A of Part 2-3 of the FW Act).

● Superannuation provisions in enterprise agreements (s.194(h), FW Act).

Transitional Review of modern awards

[2] Twelve applications have been made to vary the superannuation provisions in 22 modern awards as part of the Transitional Review of modern awards commenced in 2012. These applications seek to insert additional default superannuation funds into one or more modern awards. The applications are scheduled for hearing before a Full Bench of the Commission on 9 December 2013. The notice of listing for the hearing is on the Commission website at Review

[3] There are two primary elements to the 2013 Review – including a mandatory term for a defined benefit member in modern awards and an examination of default funds to determine if they offer a MySuper product.

[4] Section 149A of the FW Act requires a modern award to include a term that permits an employer covered by the award to make superannuation contributions to a superannuation fund or scheme in relation to a default fund employee who is covered by the award and who is a defined benefit member of the fund or scheme.

[5] A “default fund employee” is an employee who has no chosen fund within the meaning of the Superannuation Guarantee (Administration) Act 1992.

[6] Section 155A(1) of the FW Act provides that a modern award must not include a term that has the effect of requiring or permitting superannuation contributions, for the benefit of an employee covered by the award who is a default fund employee, to be made to a superannuation fund or scheme specified in the award, unless it is a fund that offers a MySuper product or it is an exempt public sector superannuation scheme.

[7] These sections, together with Part 2 of Schedule 1 to the FW Act, require a review of all modern awards by 31 December 2013 to ensure they comply with ss.149A and 155A.

[8] As a result, during the last quarter of 2013 the Commission will:

(a) consult with the Australian Prudential Regulation Authority (APRA) on the superannuation funds that offer a MySuper product;

(b) publish for comment, draft determinations varying modern awards to ensure they comply with sections 149A and 155A; and

(c) issue final determinations updating modern awards to comply with sections 149A and 155A.

Four yearly reviews of default fund terms

[9] Division 4A of Part 2-3 of the FW Act commences on 1 January 2014. The Division requires the Commission to conduct a four yearly review of the default fund terms of modern awards as soon as practicable after 1 January 2014.

[10] A “default fund term” is a term of a modern award that requires, permits or prohibits an employer covered by the award to make contributions to a superannuation fund for the benefit of an employee who is covered by the award and has no chosen fund within the meaning of the Superannuation Guarantee (Administration) Act 1992.

[11] The first part of the four yearly review is to be conducted by an Expert Panel of the Commission. The Expert Panel for the four yearly review comprises:

● a Chair, who is the President of the Commission, or a Presidential member appointed by the President to be Chair,

● three members who are Presidential or Commissioner members of the Commission, and

● three Expert Panel members who have knowledge of, or experience in, finance, investment management or superannuation.

[12] The second part of the four yearly review is to be conducted by a Full Bench of the Commission.

[13] The Expert Panel must make a Default Superannuation List and a Schedule of Approved Employer MySuper Products.

[14] A Full Bench then reviews the default fund term in each modern award and makes a determination varying the term to remove every specified superannuation fund, specify a number of superannuation funds in relation to standard MySuper products from the Default Superannuation List, make any transitional provisions and ensure the term complies with s.149D of the FW Act (including in relation to the Schedule of Approved Employer MySuper Products).

[15] A determination varying the default fund term of a modern award must not take effect before 1 January 2015.

[16] The four yearly review of default fund terms will be undertaken separately but in parallel with the other four yearly review of modern awards to be conducted by the Commission in 2014.

[17] Consistent with the requirements in the FW Act therefore, in early 2014 the Commission will publish notices inviting superannuation funds that offer a MySuper product, or employers to which an employer MySuper product relates, to apply to the Commission to have the product included in the Default Superannuation List or the Schedule of Approved Employer MySuper Products. Subject to confidentiality or commercial sensitivity issues, the applications made will be published by the Commission.

[18] The Commission will then invite submissions in relation to the applications and publish the submissions made. Subsequently, a determination on the MySuper products to be included on the list or schedule will be issued by the Commission and the list and schedule will be made and published.

[19] After that, submissions from prescribed persons on the default fund term of each modern award (including submissions requesting that a particular superannuation fund be specified in the term in relation to a MySuper product) will be sought and published by the Commission.

[20] Finally, the Commission will issue determinations removing the superannuation funds specified in the default fund term of each modern award, setting out the funds from the Default Superannuation List to be specified in the term and any transitional provisions, and varying the term to otherwise comply with the FW Act.

[21] A draft timetable for the four yearly review of the default fund terms in modern awards will be published shortly.

Superannuation provisions in enterprise agreements

[22] From 1 January 2014, section 194(h) of the FW Act provides that a term of an enterprise agreement is an unlawful term if it is a term that has the effect of requiring or permitting contributions for a default fund employee to be made to a superannuation fund or scheme that is specified in the agreement which is not a fund that offers a MySuper Product, not a fund or scheme of which the employee and other relevant employees are defined benefit members, and not an exempt public sector superannuation scheme.

[23] Further information about the Commission’s responsibilities concerning superannuation clauses in modern awards, including the requirements regarding its various reviews of such clauses and the timetable for its 2013 Review, is contained on the Commission’s website at All inquiries should be directed to [email protected] .

PRESIDENT

Printed by authority of the Commonwealth Government Printer