Superannuation Circular No. 20066 - Employer and Employee by ktz54195


									Australian Government
Department of Finance and Administration

Superannuation Circular
No. 2006/6
Employer and Employee Responsibilities under the
Choice of Superannuation Fund Arrangements

This circular addresses responsibilities of employers and employees under the choice of
superannuation fund arrangements (choice) in accordance with the Superannuation
Guarantee (Administration) Act 1992 (SG Act). It is not intended to provide a
comprehensive list of employer and employee responsibilities under choice.

Target Audience
This circular is relevant to Corporate, Human Resource and Finance areas of agencies in
respect of Australian Government (AG) employees and statutory office holders.

Key Points
1. Changes in superannuation since 1 July 2005 mean that most new AG employees
   will be members of accumulation funds and also have choice of fund instead of
   having mandated membership of a defined benefit scheme such as the
   Commonwealth Superannuation Scheme (CSS) or the Public Sector Superannuation
   Scheme (PSS). This places increased responsibilities on employees and may
   therefore result in an increase in superannuation questions directed to employers.

2. Communication about superannuation needs to comply with the guidance provided
   by the Australian Securities and Investments Commission (ASIC) and the
   requirements set out in the Corporations Act 2001 on providing financial advice.
   Generally, advice on superannuation may only be provided by the holder of, or a
   person authorised to operate under, an Australian Financial Services
   License (AFSL).

3. Agencies may provide factual information about the superannuation arrangements
   for its employees without obtaining an AFSL. Information on individual
   superannuation funds is included in the fund’s Product Disclosure Statement (PDS).
   An example of suitable information that employers could provide to employees who
   are able to choose a superannuation fund is provided at Attachment A. This
   document is only intended to provide a guide to agencies on information they could
   provide to employees. The inclusion of a legal disclaimer on any document
   including superannuation information may be appropriate to assist to mitigate the
   risk of inadvertently providing advice. An example of a legal disclaimer is also
   provided in the footer of Attachment A.

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   This circular should be read in conjunction with Superannuation Circular (SC)
   Nos 2006/5, 2006/4, 2006/2, 2006/1 and 2005/5 which are available at Other references made in this circular are available
   from websites, and, unless
   otherwise stated.

Employer Obligations and Responsibilities in relation to
4. Employers have obligations to pay superannuation contributions for most employees
   in accordance with the minimum superannuation guarantee requirements (generally
   9% of ordinary time earnings within the meaning of the SG Act) and comply with
   choice in respect of those contributions under the SG Act. Employers must also
   comply with other relevant superannuation legislation, depending on the
   circumstances of employees. Employers already meet their superannuation
   obligations in respect of employees who are CSS and PSS members or covered by
   the Superannuation (Productivity Benefit) Act 1988. More details on employer’s
   obligations on superannuation contributions can be found in SC 2005/5.

5. Employers that offer choice (see SC 2006/4) are required to provide eligible
   employees with a standard choice form (SCF) which provides information about the
   employer fund (see SC 2006/1) to which contributions will be paid if no valid
   choice is made. Employers must act on an employee’s valid choice within the
   required timeframe and keep necessary records.

6. An employer may have other responsibilities under the rules of its employer fund or
   the chosen fund of the employee, for example, employers contributing to the Public
   Sector Superannuation Accumulation Plan (PSSAP) may have an obligation under
   the PSSAP Rules to pay contributions at a higher rate than the minimum
   superannuation guarantee requirements (see SC 2006/4).
7. It would be prudent for employers to provide employees with clear information on
   superannuation contributions that generally relate to terms and conditions of
   employment. In doing so, an employer should always have regard to the limitations
   placed on providing financial advice by the Corporations Act 2001.

What Should an Employer Tell its Employees about
8. An employer should provide factual information on the superannuation
   arrangements available to its employees. In particular, employers should provide
   factual information to new employees or prospective employees about the employer
   fund. This is usually done by providing the fund’s PDS to all new employees before
   or immediately upon commencement of employment.
9. Employers should only discuss superannuation with employees as it relates to
   employment conditions. This information should include the following:
    whether an employee is automatically joined to a particular fund or has a choice
      of funds (SC 2006/4 and SC 2006/5);

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      an employee’s rights under the choice of fund regime (SC2006/4);
      the name of the employer fund and its relevant information usually provided
       through the PDS of the fund; and
      by specifying on the SCF, whether the employer superannuation contribution
       rate to the employer fund will be higher than that to an employee’s chosen fund.
10. Employers should adhere to an employee’s terms and conditions of employment and
    any other regulatory requirements when providing information. For example, the
    Workplace Relations Regulations 2006 set out requirements on contents of pay
    slips, including the amount of superannuation contribution made each pay period
    and the name of the fund to which the contribution was made.

What Should an Employer not Tell its Employees about
11. Unless it holds or is authorised to operate under an AFSL, an employer should not
    tell its employees about perceived benefits or disadvantages of any particular fund,
    or make comparisons between superannuation funds. This includes, but is not
    limited to, comments on which fund to join or make contributions to, the benefits or
    otherwise of making additional contributions including by salary sacrifice, rolling
    accumulated superannuation into or out of a fund and selecting particular investment
    or insurance options within a superannuation fund.

12. ASIC has issued guidance about the role of employers in providing information to
    employees about superannuation in the course of their duties. This guidance assists
    employers to ensure that the information they are providing does not constitute
    financial advice. Further information on ASIC’s guidance can be obtained at by searching for QFS 55, QFS 147 and QFS 156.

What Are Employees Responsible for in relation to their
13. An employee is responsible for making decisions about the following:
      validly choosing a superannuation fund to receive their employer’s
       contributions, where applicable;
      the level of insurance that suits their individual circumstances (SC 2006/2
       provides more information on insurance);
      whether or not they wish to salary sacrifice for superannuation purposes (where
       available as part of their employment conditions), pay personal superannuation
       contributions or roll accumulated superannuation into or out of a fund;
      selecting particular investment options offered by their fund; and
      the types of products and services they would like to utilise from a
       superannuation fund.

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14. It would be prudent for employees to read the PDS for their fund to be aware of
    such features as the fund’s fees and other costs.

Departmental Contacts
15. For further assistance regarding matters in this circular, or suggestions to improve
    the information provided, agencies may contact the Superannuation Policy Branch
    of this Department at or contact the Department’s
    choice inquiry hotline number on (02) 6215 1666.

Sandra Wilson
Branch Manager
Superannuation Policy Branch
Superannuation and Governance Division
Financial Management Group
18 May 2006

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                                                                                      Attachment A
                                          Employee Checklist

Your employer may be under a legal obligation to make superannuation contributions on
your behalf. If choice of superannuation fund (choice) is available to you, these can be
made to a fund of your choice or to a fund selected by your employer. The following is to
assist you in understanding your position in relation to choice.
 Issue                                   Information
 Choice of Fund
 Are you aware of the                    Ask your employer if you do not know.
 superannuation choice
 arrangements that apply with your       From 1 July 2006 new Australian Government employees may
 employer?                               be able to choose their superannuation fund.
 Choice documents
 If you have choice of fund, have        If you have not received a choice form, ask your employer for it
 you:                                    or check the ATO website at
  been given the Standard
     Choice Form?                        If you do not have the employer fund PDS, ask your employer
  received the Product                  for it or check the website for the Superannuation Fund.
     Disclosure Statement (PDS)
     for the fund your employer             Many superannuation funds produce Product Disclosure
     will make contributions to if           Statements which explain about the superannuation funds.
     you don't make a choice?
 Considering a Choice?
 Do you know what your employer          Ask your employer if you do not know.
 pays for you to a super fund? For       Employer contribution rates can sometimes vary depending on
 example, how much they                  employment status (eg full-time, casual), the terms of
 contribute and how often it is          workplace agreements and superannuation legislation.

 What are the fund's fees? Does          Superannuation funds must describe their fees and costs in their
 your employer pay the                   PDS under the heading “Fees and other costs”. Different Funds
 administration costs or any other       can have different fees and costs. They may be paid by your
 costs?                                  employer or taken from your account with the Fund.

 Do you know about the insurance         Insurance arrangements are also outlined in a fund's PDS.
 arrangements offered by the fund        Insurance needs can change as your circumstances change.
 you are considering? Are you
 aware of any exclusions?

 Superannuation Funds vary with          Products and services are also outlined in a fund's PDS.
 the type of products and services
 they offer. Examples of products        Factors other than those mentioned here can also be relevant to
 and services sometimes offered          a choice of fund decision. For information on choosing a
 are allocated pensions, investment      superannuation fund see For
 choice and financial planning.          information about superannuation generally and about choosing
                                         a fund also see

   The information contained in this document does not constitute a recommendation or opinion about any
   superannuation fund, is not necessarily comprehensive and does not take into account your objectives,
   financial situation or needs. It is provided for your information only. Before making any decisions
   about a Superannuation Fund, including whether to join a fund, you should consider whether the fund is
   appropriate to you, read the Product Disclosure Statement for the fund and, if necessary, consult with a
   financial planner. This information is current as at xx.
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