Fair Work Amendment Act 2012 (174 of 2012)

Schedule 1   Default superannuation

Fair Work Act 2009

18   After Division 4 of Part 2-3

Insert:

Division 4A - 4 yearly reviews of default fund terms of modern awards

Subdivision A - 4 yearly reviews of default fund terms

156A 4 yearly reviews of default fund terms

Timing of 4 yearly reviews

(1) The FWC must conduct a 4 yearly review of default fund terms of modern awards starting as soon as practicable after each 4th anniversary of the commencement of this Part.

Note: The President may give directions about the conduct of those reviews (see section 582).

Two stages of the 4 yearly reviews

(2) There are 2 stages of the 4 yearly review.

(3) In the first stage, the FWC must make the Default Superannuation List for the purposes of the review.

Note: For the first stage, the FWC must be constituted by an Expert Panel (see subsections 617(4) and (5)).

(4) In the second stage, the FWC:

(a) must review the default fund term of each modern award; and

(b) must make a determination varying the term in accordance with section 156H; and

(c) if section 156J applies - must make a determination varying the term in accordance with that section.

Note: For the second stage, the FWC must be constituted by a Full Bench (see subsections 616(2A) and (3A)).

Subdivision B - The first stage of the 4 yearly review

156B Making the Default Superannuation List

(1) In the 4 yearly review, the FWC must make and publish the Default Superannuation List .

(2) The Default Superannuation List must specify each generic MySuper product that the FWC has determined under section 156E is to be included on the list.

(3) The Default Superannuation List must not specify any other product.

156C Applications to list a MySuper product

(1) Before making the Default Superannuation List, the FWC must publish a notice that invites superannuation funds that offer a generic MySuper product to apply to the FWC to have the product included on the list.

(2) The notice must specify the period in which an application may be made.

(3) After the notice is published, a superannuation fund that offers a generic MySuper product may make a written application to have the product included on the list.

(4) The application must:

(a) be made in the period specified in the notice; and

(b) be accompanied by any fees that are prescribed by the regulations; and

(c) provide information relating to the first stage criteria.

(5) The FWC must publish any application made under subsection (3).

(6) However, if an application includes information that is claimed by the superannuation fund to be confidential or commercially sensitive, and the FWC is satisfied that the information is confidential or commercially sensitive:

(a) the FWC may decide not to publish the information; and

(b) if it does so, it must instead publish a summary of the information which contains sufficient detail to allow a reasonable understanding of the substance of the information (without disclosing anything that is confidential or commercially sensitive).

(7) A reference in this Act (other than in this section) in relation to an application made under subsection (3) includes a reference to a summary referred to in paragraph (6)(b).

156D Submissions on applications to list a MySuper product

(1) The FWC must ensure that all persons and bodies have a reasonable opportunity to make written submissions to the FWC in relation to an application made under subsection 156C(3).

(2) If:

(a) a person or body makes a written submission in relation to an application made under subsection 156C(3); and

(b) the person or body has an interest in relation to:

(i) the superannuation fund that made the application; or

(ii) if the person or body refers to another superannuation fund in the submission - that superannuation fund;

then the person or body must disclose that interest in the submission.

(3) The FWC must publish any submission that is made.

156E Determining applications to list a MySuper product

(1) If an application is made under subsection 156C(3) to have a generic MySuper product included on the Default Superannuation List, the FWC must make a determination about whether to include the product on the list.

(2) The FWC must not determine that the product is to be included on the list unless, taking into account:

(a) the information provided in the application; and

(b) the first stage criteria; and

(c) any submissions that were made in relation to the application;

the FWC is satisfied that including the product on the list would be in the best interest of default fund employees to whom modern awards apply or a particular class of those employees.

156F First stage criteria

The first stage criteria are as follows:

(a) the appropriateness of the MySuper product's long term investment return target and risk profile;

(b) the superannuation fund's expected ability to deliver on the MySuper product's long term investment return target, given its risk profile;

(c) the appropriateness of the fees and costs associated with the MySuper product, given:

(i) its stated long term investment return target and risk profile; and

(ii) the quality and timeliness of services provided;

(d) the net returns on contributions invested in the MySuper product;

(e) whether the superannuation fund's governance practices are consistent with meeting the best interests of members of the fund, including whether there are mechanisms in place to deal with conflict of interest;

(f) the appropriateness of any insurance offered in relation to the MySuper product;

(g) the quality of advice given to a member of the superannuation fund relating to the member's existing interest in the fund and products offered by the fund;

(h) the administrative efficiency of the superannuation fund;

(i) any other matters the FWC considers relevant.

Subdivision C - Second stage of the 4 yearly review

156G Review of the default fund term of modern awards

(1) As soon as practicable after the Default Superannuation List is made, the FWC must review the default fund term of each modern award.

(2) The FWC must ensure that the following persons have a reasonable opportunity to make written submissions (including submissions requesting that a particular superannuation fund be specified in the term in relation to a generic MySuper product) to the FWC in relation to the default fund term of the award:

(a) an employee and employer that are covered by the modern award;

(b) an organisation that is entitled to represent the industrial interests of one or more employees or employers that are covered by the award;

(c) if the award includes an outworker term - an organisation that is entitled to represent the industrial interests of one or more outworkers to whom the outworker term relates.

(3) If:

(a) a person or body (whether or not a person referred to in subsection (2)) makes a written submission in relation to the default fund term of a modern award; and

(b) the person or body refers to a particular superannuation fund in the submission; and

(c) the person or body has an interest in relation to that superannuation fund;

then the person or body must disclose that interest in the submission.

(4) The FWC must publish any submission that is made.

156H Default fund term must specify certain superannuation funds

(1) After reviewing the default fund term of a modern award, the FWC must make a determination varying the term:

(a) to remove every superannuation fund that is specified in the term in relation to a generic MySuper product; and

(b) to specify at least 2, but no more than 10, superannuation funds in relation to generic MySuper products that satisfy the second stage test.

Note: See subsection (3) for when the default fund term may specify more than 10 superannuation funds.

(2) A generic MySuper product satisfies the second stage test if:

(a) it is on the Default Superannuation List; and

(b) the FWC is satisfied that specifying a superannuation fund in relation to the product in the default fund term of the modern award would be in the best interests of the default fund employees to whom the modern award applies, taking into account:

(i) any submissions that were made in relation to the default fund term of the award; and

(ii) any other matter the FWC considers relevant.

(3) The default fund term may specify more than 10 superannuation funds in relation to generic MySuper products that satisfy the second stage test if, taking into account the range of occupations of employees covered by the modern award, the FWC is satisfied it is warranted.

156J Variation to comply with section 149D

If, at the time of the 4 yearly review, the default fund term of a modern award does not comply with section 149D, the FWC must make a determination varying the term so that it does.

156K Transitional authorisation for certain superannuation funds

(1) The FWC may make a transitional authorisation in relation to a superannuation fund (other than a superannuation fund referred to in subsection 149D(1), (2), (3) or (4)) if, at the time of the 4 yearly review, the FWC is satisfied that it is appropriate to make the authorisation.

(2) The transitional authorisation comes into operation on the day it is made and ceases to be in operation on the day specified in the authorisation.

156L Publishing documents under this Division

If the FWC is required by this Division to publish a document, the FWC must publish the document on its website or by any other means that the FWC considers appropriate.