House of Representatives

Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill 2005

Second Reading Speech

Mr Brough (Longman - Minister for Revenue and Assistant Treasurer)

I move:

That this bill be now read a second time.

This bill gives effect to announcements made by the government earlier this year to ease the transition to superannuation choice for businesses and employees, and minimise the burden on employers in complying with their choice obligations.

The Superannuation Holding Account Special Account was originally established to receive small superannuation amounts from employers who cannot find a superannuation fund. This facility is no longer needed, as retirement savings accounts (RSAs) offer similar low-cost benefits for employers. This bill will amend the legislation to make the Superannuation Holding Account Special Account an eligible choice fund until 30 June 2006, giving employers a further year to make arrangements to contribute to a superannuation fund or retirement savings account. From 1 July 2006, the Superannuation Holding Account Special Account will be closed to new employer deposits.

This bill will amend the choice of fund legislation to specify additional circumstances where an employer does not have to provide an employee with the standard choice form, thus avoiding the imposition of unnecessary cost on some employers.

It is important that employees are not discouraged from exercising their right to choose a fund through the actions of their employer. This bill ensures that employers cannot recoup part or all of the administrative costs associated with implementing their choice of fund obligations by charging employees.

The choice legislation ensures that fund trustees do not try to inappropriately induce employers to move their employee's contributions to the trustee's fund by offering them personal incentives. This bill will make the Australian Securities and Investment Commission the agency that administers this provision.

The bill clarifies a number of matters, such as the test for whether a defined benefit fund is in surplus, the obligation on the employer to contribute to the fund specified as the default fund on the standard choice form, and the choice of fund penalty provisions. This bill is another of the bills that this government has put before the House building on our strong commitment to Australians building stronger and more secure retirement incomes and it follows from the earlier introduction today by the Treasurer of the abolition of the surcharge bill.

Full details of the measures in this bill are contained in the explanatory memorandum.

I commend this bill and present the explanatory memorandum.

Debate (on motion by Mr Rudd) adjourned.