Overview
- Modern awards must contain a term that requires an employer to make superannuation contributions to a ‘default’ superannuation fund for the benefit of an employee who has no chosen superannuation fund. The Fair Work Commission has a legislative obligation to conduct 4-yearly reviews of such default fund terms under Division 4A of Part 2-3 of the FW Act. In 2014, the Fair Work Commission constituted an expert panel under section 620(1A) of the Fair Work Act for the purposes of a 4-yearly review of default fund terms. However, the Full Federal Court of Australia found that the expert panel was not properly constituted. As a result, the Commission has never completed a review of default fund terms.
- The main process through which default fund terms can be varied under the Fair Work Act is the 4 yearly review, as required by Division 4A of Part 2-3. Outside of this process, the Fair Work Commission has only limited capacity under the Fair Work Act to update such terms. It may rely on the general power to remove ambiguity or uncertainty or to correct an error (section 160), or the power to vary the default fund term in relation to a superannuation fund specified in the term in relation to a standard MySuper product, in limited circumstances (section 159A).
Considerations
- Default fund terms in modern awards continue to play an important role in the superannuation system, ensuring that superannuation contributions are made to an appropriate fund even where an employee does not inform their employer of their chosen fund or does not have a stapled superannuation fund.
- The Fair Work Commission should have the power to review and, where necessary, vary default superannuation fund terms in modern awards. Superannuation products listed in such terms should be able to be scrutinised and contested by relevant stakeholders.
- Any amendments to the default fund provisions of the Fair Work Act should avoid duplicating processes of other government agencies which have direct regulatory oversight of superannuation, including the Australian Prudential Regulation Authority (APRA).