In addition to the Stronger Super reforms currently impacting
the superannuation industry, changes made in late 2012 to the
Fair Work Act 2009 have the capacity to significantly
alter the influx of new superannuation contributions to funds where
the fund's participating employers are subject to a modern
award. This is because, generally speaking, if a fund is named in
the modern award, an employer must make contributions to that fund
unless an employee chooses an alternative fund.
The Federal Government has responded to recommendations made by
the Productivity Commission's Report into Default
Superannuation Funds in Modern Awards by implementing significant
changes to the way default funds are included in modern awards.
Before the changes, there were no objective criteria for funds
to be included in a modern award. Going forward, an expert panel of
the Fair Work Commission must make and publish a default
superannuation list, having regard to whether it is in the best
interests of employees covered by the modern award for a particular
fund to be included in the list. The Fair Work Commission will then
review each modern award and ensure that it specifies at least two,
but generally no more than 10, default funds from the list. This
review will occur every four years.
These changes will see important opportunities created for
superannuation funds to be listed as a default superannuation fund
under modern awards, while those funds that are not listed stand to
What can be done?
Fund trustees that offer a generic 'MySuper' product may
make an application to the Fair Work Commission to be listed as a
default superannuation fund under their industry modern award.
With the review process to begin soon after 1 January 2014, fund
trustees are strongly encouraged to begin preparing their
In making the application, fund trustees are required to show
that the product offered is in the best interests of the employees
covered by the modern award.
As an alternative, to avoid making an application and
participating in the four yearly review process, fund trustees may
agree with employers that their superannuation fund is to be named
as a default fund under an enterprise agreement. The enterprise
agreement will then operate to the exclusion of the requirements in
the modern award.
Including a superannuation fund under an enterprise agreement or
making a successful application to the Fair Work Commission will
ensure the superannuation fund continues to receive employer
contributions for employees covered by a modern award or enterprise
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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