Choice
Choice of fund
Under Federal Government legislation, some Australian workers are able to choose the fund that their superannuation contributions are paid into. The legislation applies to Superannuation Guarantee (SG) contributions made by employers on behalf of their employees. SG contributions are the minimum contributions employers are required to pay, by law, into a superannuation fund for their staff.
Do I need to offer choice of superannuation fund?
As an employer, you may be required to provide choice of superannuation fund to employees if you operate under a federal award or you are an incorporated business operating under a state award.
If you're unsure which award you're covered by, and whether you should offer choice, call your professional association or visit www.fwa.gov.au.
What employers need to do
Employers have two major obligations: provide choice to eligible employees and nominate an ‘employer fund'.
1. Nominate an employer fund
The employer fund (previously known as the default fund) receives the SG contributions for your employees if they do not choose a complying fund.
By now you should have selected your employer fund. Did you know that the employer fund must be one of the complying super funds mentioned in the relevant award prior to the effective date for the legislation? For example, if Child Care Super (or any other fund) is mentioned in the relevant award, then the Fund can be the employer fund for employees covered under this award.
2. Ensure your eligible employees have choice
Any choice made by an eligible employee will need to be accompanied by the following information:
- A completed Standard Choice form.On this form the employee can adopt the fund chosen by the employer as default, or they can select their own fund. The Standard Choice form will be provided by the employer or click here for a copy.
- A complying-fund letter from the fund you have chosen. Click here to download the Child Care Super complying fund letter.
- A completed fund member application form. Click here to access the Fund's Product Disclosure Statement and application forms.
Once received, you will need to file the Standard Choice Form and submit the fund application and complying fund letter to the fund to which your employee is applying.
What happens if I am unable to comply?
There are penalties for non-compliance. Generally, the penalty will be calculated as 25% of all non-complying contributions paid, capped at $500 per employee for all quarters within an employer's notice period (this period is to be determined by the ATO).
Do eligible employees have to choose a superannuation fund?
Eligible employees don't have to choose a fund. If they don't make a choice, their contributions should be paid to the employer fund.
A word about advice
Information about the legislation, the employer fund and how things operate is safe for you to give because it's general information available to all. What if your employee asks you - what should I do? Remember that individuals providing financial advice are generally required to be licensed by the Australian Securities and Investments Commission. Giving advice about which super fund an employee should choose, is likely to be considered financial advice.
Who do we call if we would like more information?
Your Superannuation Consultant will be able to help you and your employees with your questions, or your professional association may be able to assist.
The ATO's website also has in-depth information for employers: www.ato.gov.au
