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Choice of Fund legislation means many Australian employees are now free to choose the fund they would like to manage their superannuation

What are my Choice of fund obligations?

Employers and Choice of Fund Legislation

Since 1 July 2005, many Australian workers have been able to choose which super fund their superannuation guarantee contributions are paid into. This section will help you understand your rights and responsibilities under this legislation.

Which employees are eligible for Choice?

Generally, the following employees are eligible for Choice:

Employees who are covered by a Federal award.
Employees who are not currently covered by any state award.
Employees who are not currently covered by any Certified Agreement or Australian Workplace Agreement (AWA).

You need to know which awards or industrial agreements cover your employees. If you are unsure of this you should contact your employer organisation.

Which employees are ineligible?

Choice of Fund does not apply:

If a superannuation fund(s) is specified in a certified agreement or Australian Workplace Agreement as the fund to which superannuation guarantee contributions must be made.
To certain employees who are members of public sector schemes.
To certain employees who are members of defined benefit schemes.
In certain agreements under the Victorian Employee Relations Act.

What are some of your obligations?

Under the Choice of fund legislation the obligations of employers include:

Employee type	Action
New Business	Nominate a default fund for employees who do not make a choice.
New Employees	Provide the ‘Standard Choice Form’ within 28 days of starting employment
Employee requests a choice form	For an employee who has not chosen a fund in the last 12 months, provide a ‘Standard Choice Form’ within 28 days of the request
Employee makes a choice and provides you with the required information	Start paying superannuation guarantee contributions into their nominated fund within two months of them providing you with the required information.
When paying employees’ superannuation guarantee contributions	Pay superannuation guarantee contributions (and possibly other superannuation contributions) to: the nominated default fund in the case of employees who do not choose a fund; or the employee’s chosen fund in the case of employees who do make a valid choice.

In addition, employers should:

Nominate a default fund for employees who do not make a choice.
Pay superannuation guarantee contributions (and possibly other superannuation contributions) to:
- the nominated default fund in the case of employees who do not choose a fund; or
- the employee’s chosen fund in the case of employees who do make a valid choice.

What do your employees need to do to make their choice?

Employees wanting to choose need to provide you with information including:

Details of their chosen fund as specified on the Standard Choice Form completed by the employee.
Evidence that their chosen fund is a complying fund and will accept superannuation contributions on their behalf.
When an employee makes a choice, you must start paying superannuation guarantee contributions into their nominated fund within 2 months of them providing you with the required information.

NOTE: There is no limit on the number of times an employee can ask their employer to switch funds within a year. However an employer is only required to act on the employee’s request once every 12 months.

Nominating a default fund

If a super fund is specified in the Federal award covering the employee (i.e. as the fund to which superannuation guarantee contributions should be made), then that is the default fund to which contributions should be made by you if your employees do not choose another fund.

In the following cases, employers must nominate a ‘default fund’:

For employees that do not return a completed Standard Choice Form.
If an applicable Federal award does not specify a particular fund/s.
If an applicable Federal award specifies a number of funds, you must nominate one of them as the default fund.

Choosing your default fund

Industry Super Funds provide an excellent vehicle for handling your company’s super. They do not charge any employer fees for handling your company’s super, while providing your employees with low fees and a history of strong investment returns for their members^, which can all add up to a lifetime of difference for their final retirement payout.

Find 17 Industry Super Funds that could make a lifetime of difference to your employees’ super.

Keep comprehensive records for at least
5 years of:

Details of employees who do not have to be offered choice of superannuation fund.
Records confirming the default fund chosen by you meets the minimum death insurance requirements set out in the legislation.
Records showing the Standard Choice Form has been given to all eligible employees.
Written information the employee provides when they nominate their chosen fund, and receipts or other documents issued by the fund for your contributions on behalf of that employee.

Laws stipulate that penalties apply if these records are not kept.

View and print a checklist for Choice here.

^Past performance is not a reliable indicator of future performance

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Industry Super Funds - A lifetime of difference