Revised Explanatory Memorandum
General outline and financial impact
Choice of superannuation funds
Schedule 1 to this bill amends the SGAA 1992 to:
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- require employers to make superannuation contributions on behalf of an employee to a complying superannuation fund, superannuation scheme or RSA in compliance with the choice of fund requirements; and
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- provide for penalties for breach of the choice of fund requirements.
Date of effect : The amendments will apply from 1 July 2005. To avoid having to pay any penalty, employers will be required to provide superannuation support in compliance with the choice of fund requirements from this date on.
Proposal announced : This proposal was first announced in the 1997-1998 Federal Budget. Previous legislation to implement the proposal was defeated in the Senate on 8 August 2001. Details of the measure were given in Minister for Revenue and Assistant Treasurer's Press Release No. C42/02 of 14 May 2002. Revised details of the measure were announced in Minister for Revenue and Assistant Treasurer's Press Releases No. C40/03 of 25 May 2003 and No. C94/03 of 9 October 2003.
Financial impact : This measure will involve expenditure of $28 million over four years. This is being fully absorbed within the existing resourcing of the ATO. This bill allows choice to be extended to CSS and PSS members. The financial impact of allowing choice to be offered to these members will be outlined in the explanatory memorandum for other legislation necessary to facilitate that compliance.
Compliance cost impact : The compliance cost impact for groups affected by the measure is set out in the following table:
| Impact group | Initial costs | Recurrent costs |
| Employers | $27 million | $18 million |
| Employees | n/a* | n/a* |
| Fund/RSA providers | $7 million | $2 million |
* The costs for employees are unquantifiable.
Summary of regulation impact statement
Regulation impact on business
Impact : Providing choice of fund will increase costs to some employers. The Government believes the benefits of choice to employees and the community more generally, outweigh these costs.
Main points : Employers will:
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- need to familiarise themselves with the change;
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- have to make contributions to a greater number of funds and RSAs than at present; and
have additional record keeping requirements in keeping track of employee choices.