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2005 has been a year that many businesses would prefer to forget according to Tasmania's largest industry superannuation fund Tasplan General Manager, Neil Cassidy believes that. in terms of the cost and administrative burden associated with new superannuation laws - the last twelve months has been a 'stinker' for business. According to Cassidy, the Federal Government would do well to provide business ( particularly small firms ) with some breathing space before undertaking any further superannuation reforms that impact the corporate sector. Cassidy reflected on the 12 months just past and the impact of super changes upon the business sector; -

From a business perspective, the year began well for many employers with the Federal Government honouring an election commitment to abolish the requirement to report to employees quarterly on superannuation contributions made on their behalf. Whilst this has imposed some hardship on itinerant and casual workers trying to keep track of their super entitlements, the effect was lessened by the decision of many businesses to retain some form of reporting ( once it was there it wasn't difficult to maintain ) and the introduction by super funds of more regular reporting and provision of internet access to contribution records.

The second big event for the year was the first instalment of the Federal Government's Co-contribution payment which hit member accounts from January. Whilst not their fault, some H.R. managers and payroll officers would have had to deal with their fair share of employee questions about why the Federal Government's Co-contribution payment was so slow in reaching member accounts. In some cases, because the Co-contribution is based only on the amount paid into employee accounts in a financial year, there may have been issues for employers about the timing of Superannuation Guarantee payments.

Probably the most heralded change of 2004/05 was the Federal Budget announcement that the superannuation Surcharge would be abolished from July 2005. Whilst not a direct impost for business, the surcharge caused significant problems for salary packaging and made affected staff 'cranky' as they watched their super gobbled up in extra tax. The abolition of the Surcharge will deliver some much - needed relief to a business sector indirectly burdened by this back-door tax.

Next came the introduction of choice of super and the impact it is having on business is profound. Estimates are that it may cost business as much as $25 million per annum to comply with new laws. The essential requirements of choice don't appear all that onerous. In a nutshell, business had to provide a Standard Choice Form, nominate a default fund, make contributions to a fund nominated by an employee and keep records. However, the devil is in the detail in respect to the new choice laws, according to Cassidy. "There are large penalties for non-compliance; a default fund must meet prescribed 'minimum criteria'; employers must be satisfied that funds nominated by employees are 'complying' and various records must be kept in a manner prescribed by regulation." "Add to this the prohibition on employers giving advice to employees ( there are as many laws telling business what not to do as there are telling them what to do ) and many businesses have their work cut out for them." Cassidy urged employers who are not sure to contact their fund or go to the various Government and fund websites which include information to assist them in meeting their obligations under choice.

The introduction of choice and the massive escalation in regulation and compliance cost for superannuation entities has made it very unattractive for companies to operate their own super funds. In 2004/05 the number of corporate funds dropped dramatically with the likelihood that the number of such funds would reduce further in the year ahead.

The year has finished on a good note for most employees with those in the Balanced and Growth options looking forward to double - digit returns for the second year in a row.

Looking ahead to next year, the only major changes on the horizon are the proposed extension of choice to State Awards from July 2006 and the proposed introduction of 'contribution - splitting' from the same date. It remains to be seen how business will be affected if the Government go ahead with the latter initiative. Aside from these, Cassidy hopes businesses will get some respite to allow it to properly bed down the introduction of choice and ensure that their systems and procedures are working.