Recent changes to local government legislation – employee superannuation arrangements
The purpose of this bulletin is to inform local governments of legislative amendments to change the arrangements for local government employee superannuation, including the introduction of choice of fund for local government employees.
The Revenue and Other Legislation Amendment Act 2016, which was enacted on 9 December 2016, amended the City of Brisbane Act 2010 (COBA) and Local Government Act 2009 (LGA) to:
- provide local government employees with choice of superannuation fund
- prescribe the Local Government Superannuation Scheme as the default superannuation fund for local government employees who do not exercise choice of fund
- allow the general public to become members of Local Government Superannuation Scheme
- • change the name of the Local Government Superannuation Scheme to LGIAsuper to reflect the fund’s name change in February 2016.
The amendments to the COBA and LGA have not yet commenced and will commence on a day to be fixed by proclamation. It is expected the amendments will commence on 1 July 2017, however, further advice will be provided about the commencement date.
Choice of fund
The amendments to the COBA and LGA will allow local government employees to choose their superannuation fund. This means new and existing employees can choose to have their superannuation contributions paid to a fund other than LGIAsuper. However, choice of fund will not extend to members of the defined benefit category of LGIAsuper.
The LGA prescribes that LGIAsuper will be the default superannuation fund for employees who do not exercise choice of fund, including employees of Brisbane City Council.
Employer and Employee Superannuation Contributions
The level of superannuation contributions currently made by employers or employees will be unaffected by the exercise of choice of fund. Employer and employees contributions rates will not change.
Public Offer Superannuation Fund
The amendments also allow the general public to become members of LGIAsuper, however, this change does not impact local governments.
One of the key considerations for local governments as employers arising from the introduction of choice of fund is the capacity of payroll systems to pay contributions and transmit data to multiple funds, including self-managed superannuation funds.
The Federal Government has legislated that superannuation contribution data and payment information is to be transmitted electronically by employers under a uniform data and messaging standard, referred to as SuperStream.
The Australian Taxation Office (ATO) has published on its website detailed information to assist employers comply with the SuperStream requirements.
To use SuperStream, an employer will need to pay superannuation contributions and send employee information electronically. The information published by the ATO includes an Employer checklist: step-by-step guide and a SuperStream decision tool to assist employers choose the right solution.
The options available to an employer include:
- a payroll system that meets the SuperStream standard
- a superannuation clearing house.
Although the decision about which solution to use is a matter for each local government to consider, using a superannuation clearing house can make the process much simpler.
With the introduction of choice of fund for local government employees from 1 July 2017, LGIAsuper will provide all local government employers with access to a clearing house at no cost. LGIAsuper’s clearing house is an easy-to-use online system that lets employers submit super contributions for all their employees to any number of funds in one simple transaction. For more information on how to access this clearing house please contact LGIAsuper directly on 1800 444 396.
Any further enquiries on this matter should be addressed to:
Mr Bill Hastie
Manager (Local Government Policy)
Department of Infrastructure, Local Government and Planning
P: (07) 3452 6710