This is Information Sheet 241 (INFO 241). It is for trustees of regulated superannuation funds and their associates.

This information sheet explains:

• the prohibition in section 68A against particular conduct by a trustee or its associates
• the exemptions from section 68A that are available in regulation 13.18A of the Superannuation Industry (Supervision) Regulations 1994 (SIS Regulations)
• the penalties that apply for a breach of section 68A.

Example 1: Corporate hospitality (breach of section 68A)

A superannuation trustee gives tickets to a sporting event grand final to employers who have selected its fund as the default fund for employee superannuation guarantee contributions. This is part of the trustee’s corporate hospitality and entertainment budget. The trustee also gives tickets to employers who use another trustee’s fund as the employer’s default fund.

The trustee is likely to be in breach of section 68A for providing the tickets to each group of employers.

The fact that the employer’s staff were able to attend the sporting event grand final courtesy of the trustee is likely to influence an employer’s decision on which fund is suitable for its employees, and how the employer communicates to its employees about that fund.

If the provision of the sporting tickets is widely known, it might also influence other employers more generally. That is, it could potentially create an expectation around being given valuable corporate hospitality if the employer chooses the fund.

On the other hand, if the corporate hospitality is tea and coffee at a meeting to discuss the fund, it is unlikely to be a breach of section 68A because the goods offered are of such low value that they could not be considered reasonably likely to influence the employer.

Example 2: Free educational seminars relating to the payment of superannuation contributions to a fund (no breach of section 68A)

An associate of a superannuation trustee provides free educational seminars at the employer’s premises if the trustee’s fund is selected by the employer as its default fund for employee superannuation guarantee contributions. These educational seminars are not broadly offered to members of the fund.

The seminars focus on topics such as salary sacrificing to superannuation, non-concessional contributions, and claiming deductions on personal superannuation contributions. Having the seminars delivered on the employer’s business premises benefits the employer, who is able to highlight the availability of the seminars as making working for the employer more attractive.

Potentially, the provision of seminars by an associate of the trustee may be an incentive that could reasonably be expected to influence the choice of fund into which the employer pays employee superannuation guarantee contributions. However, it may not be a breach of section 68A. This is because when a trustee, or its associate, provides advice services to an employer, or employees, that relate solely to the payment of superannuation contributions to a fund, the trustee can rely on the exemption in regulation 13.18A(1)(c) of the SIS Regulations.

When a trustee, or its associate, provides advice services on unrelated topics, they will not be able to rely on the exemption in regulation 13.18A(1)(c). For example, it is likely that a trustee would be in breach of section 68A if it provides free seminars on general wellbeing topics, such as nutrition. These services could reasonably be expected to influence an employer’s decision in selecting a default fund, and are not an exempted service under regulation 13.18A(1)(c).

Example 3: Discounted premiums on business insurance policies (breach of section 68A)

Thomas owns and operates a small construction company. The default superannuation fund selected by Thomas for his employees is operated by a superannuation trustee that is part of a financial services group. The trustee told Thomas that if he picked its fund as the default fund, one of the benefits would be discounted premiums on insurance policies held by Thomas’ business.

These discounted insurance premiums are offered by a related body corporate (i.e. an associate) of the trustee.

The offer of discounted premiums on these insurance policies is likely to be a breach of section 68A because it could reasonably be expected to influence the choice of fund into which employee superannuation guarantee contributions are paid by Thomas.

Example 4: Clearing house facilities (no breach of section 68A)

A superannuation trustee offers a free clearing house facility to employers who nominate its fund as the default superannuation fund for employee superannuation guarantee contributions.

This clearing house facility allows employers to make a single payment to the clearing house, which then distributes the payments to each employee’s fund. The clearing house facility also allows the employer to update employee information in one convenient location. The trustee considers that this is a feature that distinguishes it from other trustees, and provides employers with a valuable service that reduces the administrative burden of processing and paying employee superannuation guarantee contributions.

While the offer of a clearing house facility is an incentive that could reasonably be expected to influence the choice of fund into which an employer pays its employee superannuation guarantee contributions, it is not a breach of section 68A. This is because regulation 13.18A(1)(b) of the SIS Regulations specifically excludes this type of service from the operation of section 68A.

Regulation 13.18A provides a number of exemptions from the operation of section 68A, most notably regulation 13.18A(1)(b) and (c) for administrative-type services. While this example has highlighted one practical example of this exemption, trustees will need to seek their own legal advice on whether other administrative services a trustee may wish to offer to employers are exempted from section 68A.

Example 5: Discounts on administration fees for employees (no breach of section 68A)

In relation to the fund’s MySuper product, the superannuation trustee and an employer enter into an arrangement that secures the employer a reduced administration fee for employees, as permitted under the SIS Act.

This discounting of the administration fee does not result in a breach of section 68A. The SIS Act contemplates that these types of discounts can be lawfully arranged between a trustee and an employer in limited circumstances for the benefit of employees.

Example 6: Fund update over modest lunch (no breach of section 68A)

A superannuation trustee holds updates twice a year for employers that have selected its fund as the default superannuation fund for employee superannuation guarantee contributions.

The purpose of these events is to provide employers with an update on the fund’s features and benefits, as well as an update on the fund’s performance. These events are held at lunchtime and the trustee provides sandwiches and fruit, as well as sparkling water and soft drinks, for employer representatives.

The provision of a modest lunch to employers during a fund update event is unlikely to be a breach of section 68A. It would not reasonably be expected to influence the decision of those employers in relation to:

• their employees’ default superannuation fund, or
• encouraging employees to choose or retain membership of the fund.

This does not mean, however, that all food and drink expenditure associated with fund update events cannot lead to a breach of section 68A. It will depend on whether this could reasonably be expected to influence the employer. For example, if the fund update is provided at an expensive restaurant where a three-course meal matched with premium wines is served, there may be a breach of section 68A.

Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

This is information sheet was reissued August 2021.