Another change for HR professionals to get their heads around with the new MySuper regime is the new set of rules around selection of default funds under modern awards.
From 1 January 2013, the Fair Work Commission (FWC) has been given “the power to establish an expert panel to assess default funds named in modern awards and enterprise bargaining agreements (EBA). This change follows recommendations made by the Productivity Commission.
Under the new rules, all default funds nominated for workers employed under a modern award will need to be approved and listed by FWC. The default-fund list will generally include between two and 10 MySuper products. Tailored MySuper and corporate funds will not be named in modern awards, but may apply for inclusion.
The FWC will review the fund list every four years in conjunction with its award review process. For some employees, these will be important changes, according to REST’s Damian Hill.
“In the first instance, employers need to comply with the default fund under an industrial award or EBA.” However, if an employee has the power to choose a superannuation fund, you also may want to see whether a new employee wants to keep their existing superannuation fund (and insurance),” he says.
Although super funds will carry the main burden, employers are likely to face more choices when it comes to selecting a default fund under a modern award. “It is likely to result in an increase in the number of funds listed as a default fund under an award (and potentially a small number being delisted),” Hill explains.
One snag is that this new system is unlikely to be ready any time soon.
Russell Investments’ Tim Furlan believes this will be an issue HR professionals need to monitor. “FWC will need to appoint an expert panel to assess applications and then make a board review, so the process is likely to drag out for most of 2013. This will make it difficult for employers with large groups of award employees to make decisions in this area.”