Information for employers
Choice of super fund legislation took effect on 1 July 2005, giving more than 5 million Australian employees the right to choose their super fund, many for the first time. The introduction of choice of fund has encouraged people to take more control of their super and financial future.
From 1 July 2006, even more employees will be able to nominate the fund to which their SG contributions are paid.
As an employer, you need to:
- Determine whether some of all of your employees are eligible for Choice of Fund
- Nominate a default fund (or funds if necessary for different groups of employees)
- Provide eligible employees with a Standard Choice form
- Maintain records showing your compliance with the legislation
Does Choice of Fund apply?
To ascertain if your employees are eligible to choose their fund, you will need to determine what governs the terms and conditions of their employment. In some businesses, you will need to consider this for different groups of employees or even for individual employees separately.
Generally, Choice of Fund legislation applies to:
- employees covered by a Federal Award
- staff not covered by any award or registered agreement
- employees covered by State Awards whose employers are incorporated businesses (i.e. companies)
However, Choice of Fund legislation is not applicable for staff whose employment is:
- Covered by a Federal Certified Agreement, Australian Workplace Agreement or State Agreement prior to 27 March 2006 or Workplace Agreements from 27 March 2006 that provide for superannuation arrangements or nominate the superannuation fund to which contributions are to be made.
- Covered by a State Award where the employer is not a constitutional corporation (this may include a partnership, trust, etc).
- Covered by certain agreements under the Victorian Employee Relations Act (1992)
Other circumstances where Choice will not apply include where staff are involved in defined benefit funds or in certain public sector funds.
Choosing a default fund
Employees do not have to choose their own superannuation fund, even if they are eligible to choose. If they do not advise you of a chosen fund, you should pay contributions to the Fund you have chosen as your Employer (or default) fund, provided it is a complying fund offering at least the minimum level of insurance arrangements, such as CareSuper.
If your employees are covered by a Federal Award or former State Award (now known as a Notional Agreement for Preserving State Awards – NAPSA), you should refer to the relevant Award as its provisions may determine the fund/s which you will need to nominate. Although superannuation is not one of the core matters that will remain in Awards from 1 July 2008, any existing provisions will be valid until that time. Some awards already allow for payments to be made to several funds or a fund that has been agreed.
The Work Choices Act provides for the establishment of different types of workplace agreements, both collective and individual. If these apply in your business, it is possible to nominate a default fund via these agreements. You should contact a CareSuper Client Partnership Manager for further information.
You may need to select different employer (default) funds for different segments of your workforce, depending on what determines their conditions of employment.
It is worthwhile comparing the features of the funds you are considering as default funds to ensure that you have your employees' best interests in mind. Features to consider include:
- Is there adequate and flexible insurance cover?
- Are there suitable investment options available?
- What fund services are available?
- What are the fees and costs?
- Does the fund have a good investment performance history?
- Is the communication regular and easy to understand?
Standard Choice Form
Employers are required to provide eligible employees with a Standard Choice Form within 28 days in the following circumstances:
- When an employee commences work with your business
- For existing employees who are eligible for Choice and who are employed under NAPSAs, following a request for a form
- Upon request by an employee. While employees can choose a fund at any time, you only have to accept one Standard Choice form from an employee in a 12 month period, although you have the discretion to do so more often
- When you become aware that a chosen fund is no longer an eligible choice fund
- Where the employee is a member of the default fund and you change your chosen default fund.
Standard Choice forms are available on this page in the related downloads section to the right or by calling the CareSuperLine. They are also available from the Australian Taxation Office.
If an employee chooses a fund other than the default fund, you must commence paying into that fund, provided it is a complying eligible choice fund, within two months of receiving the notification. Note that the responsibility for transferring any existing funds into the new account rests with the employee.
Any employee who does not become an insured member within 120 days of commencing employment with a Care Super participating employer will received limited cover for 12 months. After a period of 12 months, full cover will apply for Death and TPD insurance. In addition, intentional self-inflicted injury or infection and suicide, whether or not the person is sane at the time, will not be covered for the first 12 months of Death and TPD cover. Full Death and TPD cover applies after this 12 month period elapses. Please refer to the Insurance Guide for the exclusions that apply to Income Protection.
Record Keeping
Employers are required to maintain records for five years, showing their compliance with Choice of Fund legislation. Records should include:
- Who is eligible and ineligible for Choice
- Which default funds apply to which employees or groups of employees
- The dates Standard Choice forms were issued to employees and to whom
- Method in which the form was issued
- Dates on which forms have been returned (where applicable)
- For each employee who makes a choice, the name of the fund nominated
- Confirmation that the funds nominated are complying funds
- If they are not complying funds, dates on which you advised the relevant employees
- The date on which the first contribution was paid in accordance with the employee’s request
For further information, you can contact the Care Superline or the Australian Taxation Office.
