Choice of Superannuation for Employees

Last updated June 2011

Since 1 July 2005 employees gain the right to choose where their superannuation savings are to be invested.

Some key points of Superannuation Choice include:

• Employers who do not offer choice to eligible employees may be fined up to 25% of the employee's SG contribution up to a maximum of $500 per employee per quarter - payable to your employee's super account

• Most Australian employees will be eligible, except:
  - Where superannuation contributions are made under a State Industrial Award, Certified Agreement or Australian Workplace Agreement; or
  - Members of certain defined benefit funds and public sector schemes

• Employees can switch funds every 12 months.

• If an employee elects not to select a fund or fails to supply adequate details of their chosen fund, then the employer pays their super into a ‘default fund’. In general there are legal requirements regarding your default fund but it should have the following characteristics:
  - Quality insurance cover – Group insurance can provide your employees with lower premiums plus eliminate the need to supply medicals or complete time-consuming forms.
  - Excellent investment and fund manager choice across all asset classes.
  - Clearing house facilities - Super funds with a clearing house facility will accept one payment for all employees’ contributions and distribute to various super funds as per each employee’s requirements. This will save you significant time and money.
  - Competitive fees and excellent service to both employers and employees via the web and telephone

Employers need to keep records to verify that they have provided a Standard Choice Form to all eligible employees and paid SG contributions to the correct fund(s).

WARNING: Employers are not licensed to give financial advice and cannot advise employees on which superannuation fund to choose.

Should financial advice be required, we can refer the matter onto our financial planners, Mr Glenn Setches and Mrs Lis Keilty of OzPlan Financial Services Pty Ltd.

If you wish to speak to Glenn or Lis, please phone our office on (03) 5623 2276.