Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020

Overview

The Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 was enacted by the Parliament of Australia to amend the Superannuation Guarantee (Administration) Act 1992. This legislation was introduced to address the issue of allowing members of defined benefit superannuation schemes to have a choice in selecting their superannuation fund, a right that was previously not available to them. The policy objective of this Act is to provide a more equitable system where superannuation members can exercise their choice of fund, aligning the rights of members in defined benefit schemes with those in other superannuation arrangements. The Act mandates the Australian Prudential Regulation Authority (APRA) to conduct a comprehensive review of the amendments within 30 months from its commencement, focusing on identifying any unintended consequences on defined benefit schemes and suggesting any necessary legislative changes to rectify these issues. This review is to be completed and reported to the Minister, who is then required to table the report in both Houses of the Parliament. The Minister in this context refers to the individual administering the Superannuation Guarantee (Administration) Act 1992. The Act aims to ensure that the amendments do not adversely affect the ongoing viability and profitability of defined benefit schemes.

Scope and Application

The Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 amends the Superannuation Guarantee (Administration) Act 1992 to give employees greater choice over their superannuation funds, particularly in defined benefit schemes. This Act applies to employers, employees, and superannuation funds across Australia, with the amendments coming into effect on 4 September 2020. The Act modifies the Superannuation Guarantee (Administration) Act 1992 to allow employees in defined benefit schemes to choose another superannuation fund under certain conditions, such as retirement, resignation, or retrenchment, provided their benefit amount remains unaffected. Notably, the Act also mandates that the Australian Prudential Regulation Authority (APRA) conduct a review within 30 months of the Act's commencement to assess any unintended consequences on the viability and profitability of defined benefit schemes and recommend any necessary legislative amendments. The review must involve consultations with industry stakeholders, and APRA's findings must be reported to the Minister, who will then table the report in both Houses of Parliament.

Key Provisions

The main operative sections of the Treasury Laws Amendment (Your Superannuation, Your Choice) Act 2020 (C2020A00080) primarily concern amendments to the Superannuation Guarantee (Administration) Act 1992 (SGA Act). Specifically, Schedule 1 of the Act modifies the circumstances under which members of defined benefit schemes can choose their superannuation fund. For instance, section 19(2B)(c) now specifies that defined benefit members cannot choose another fund in certain cases (section 1). Additionally, section 20 is retitled to clarify the specific conditions under which members cannot choose another fund (section 2). Subsection 20(1) has been amended to include a reference to subsection (3A) (section 3). Subsection 20(3A) adds a new condition under which a member's benefit is not affected, ensuring the member would receive the same retirement benefit regardless of the contributions made (section 4). Paragraphs 32C(6)(g) and (6)(h) have been updated to include a temporal limit, specifying that only determinations and agreements made before 1 January 2021 are covered (sections 5 and 6). Finally, a new subsection 32C(6AA) has been inserted to clarify when contributions made by employers are considered compliant with the choice of fund requirements (section 7). The Act imposes specific obligations on parties involved in the administration of superannuation funds. Employers are required to ensure that any contributions made to a superannuation fund comply with the choice of fund requirements, particularly for members of defined benefit schemes (subsection 32C(6AA)). The Australian Prudential Regulation Authority (APRA) has the obligation to conduct a comprehensive review of the amendments within 30 months of the Act's commencement, focusing on any unintended consequences of these changes on defined benefit schemes (section 4). This review must include consultations with industry stakeholders, and APRA is required to submit a written report to the Minister, who must then table this report in both Houses of Parliament (sections 4(4)–(7)). Breaches of the provisions in the Act may result in civil or criminal consequences, although the specific penalties are not detailed in the Act itself. Generally, under the SGA Act, non-compliance with superannuation guarantee requirements can lead to penalties, including fines and imprisonment. The maximum penalties can vary depending on the severity and nature of the breach, with repeat offenders or serious breaches potentially facing higher penalties. The Act does not specify maximum penalties within its text, but the existing framework under the SGA Act provides a basis for determining the potential consequences of non-compliance.