What is Choice of Fund?
What does Choice of Fund mean to me?
What is Choice of Fund?
The "Choice of Fund" legislation allows many employees to choose the superannuation fund their employer makes superannuation guarantee (SG) contributions into from 1 July 2005.
The Choice of Fund legislation is designed to encourage employees to take a greater interest in their superannuation. Enabling employees to choose where their contributions are applied allows them to take greater control in the accumulation of their retirement savings.
What does Choice of Fund mean to me?
Will Choice affect me?
The Choice of Fund legislation does not apply to all employees.
If you are covered by a Federal or Territory award (including Victorian common rule award); or there is no award, you are eligible for Choice of Fund.
Your employer will not have to offer you choice in accordance with the Choice of Fund regime if:
- Your employer contributes to either the Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) for you prior to 1 July 2006.
- Your employer contributes to another unfunded defined benefit public sector scheme for you.
- If you are covered by a Certified Agreement or an Australian Workplace Agreement which requires your employer to make a superannuation contribution for you
- If you are covered by a State Industrial Award you will not be eligible for Choice of Fund where the Award requires your employer to make a contribution for you.
Visit the Australian Government's SuperChoice web site for further information on eligibility.
What are the obligations of my employer?
If you are eligible for Choice of Fund, your employer will be required to:
| |
|
Select an employer fund
|
Your employer must select an employer fund to pay their SG contributions for you if you do not make a choice. |
| Offer Choice |
For employees as at 1 July 2005:
Your employer is required to provide each employee to whom it must offer choice employed at 1 July 2005with a Standard Choice Form by 29 July 2005. The Standard Choice Form can then be used by you to advise of your chosen superannuation fund.
New employees from 1 July 2005:
Your employer must give each new employee a Standard Choice Form within 28 days of commencing employment.
Ongoing
Once you have been offered choice your employer does not have to offer you a Standard Choice Form again unless:
- you have not previously exercised choice and your employer changes the employer fund;
- your employer becomes aware that the fund chosen by you is no longer a complying fund;
- you request the Form and you have not exercised choice within the previous 12 months.
|
| Follow employees instructions |
If an employee chooses to have their superannuation contributions paid into an alternative fund to the employer fund, your employer has 2 months to start paying their super into their chosen fund. |
What is an employer fund?
An employer fund is the fund selected by your employer as the fund to which it will pay SG contributions for you if you do not make a choice.
If an employee is eligible to choose a fund for their employer contributions but does not exercise their right or they make an invalid choice, the employer will continue to pay their employer contributions to the employer fund.
The employer fund must be a complying superannuation fund or retirement savings account. If the employer fund is a superannuation fund it must offer minimum levels of death cover for members:
- at a premium of at least $0.50 per week for those under 56 years, OR
- with at least the level of insurance cover shown below:
| Age range |
Level of insurance |
| 20-34 |
$50,000 |
| 35 to 39 |
$35,000 |
| 40-44 |
$20,000 |
| 45-49 |
$20,000 |
| 50-55 |
$7,000 |
It is not a requirement that the employer select that minimum insurance cover, provided it is actually offered by the fund.
What is in the Standard Choice Form?
The Standard Choice Form is an Australian Taxation Office form, which must be given by employers to eligible employees to allow employees to choose the fund into which their superannuation guarantee (SG) contributions are paid. It consists of 3 parts.
Part A must be completed by the employer and includes:
- employer name
- employer fund name and other details
- prior fund to which employer (SG) contributions have been made
- details of whether any super contributions in excess of the 9% SG contribution will continue to be paid if the employee chooses a fund other than the employer fund.
Part B must be completed by the employee if they wish to make a choice.
Part C includes space for the employer to record the date on which they received the Standard Choice Form from an employee who makes a choice. This is important as all records must be kept for a period of 5 year.
How do I nominate a Choice Fund?
If you are an eligible to make a choice, you can make a choice at any time by giving your employer the necessary information about your selected fund in writing or by completing Part B of the Standard Choice Form.. The information you will need to include in your nomination includes:
- the full name and contact details of the fund
- your account name and membership number in the fund
- the fund's Australian business number (if it has one)
- the fund's product identification number
- written advice from the fund's trustee that it is complying and can accept employer contributions, and
- information about the method of payment for your contributions and the information needed to make the payments
What funds can I choose?
You can choose any complying superannuation fund or retirement savings account (RSA).
Can my employer refuse my Choice of Fund nomination?
Your Choice of Fund nomination can only be refused by your employer if:
- you have chosen a fund that is not complying;
- you have not provided all relevant fund information; or
- you have nominated another chosen fund within the previous 12 months. (The legislation stipulates that an employee can only nominate a choice every 12 months. Your employer can however accept choice nominations more regularly but is not required to do so.)
What to consider when making my Choice?
Compare fees and costs with available fund features
You need to compare the fees charged by superannuation funds as well as the fees for the investment options within the funds. Funds with limited features and lower growth investment strategies may cost less but may not provide the benefits of higher cost funds. You need to balance these features against each other.
Investment options and performance
Compare the number and quality of investment options available within the funds that you are considering. Do the investment options available meet your investment time horizon and risk profile? Investment performance can make a considerable difference to your account balance. Superannuation is a long-term investment and investment performance should be judged over at least a 5 year period.
Death and disability benefits
Many superannuation funds pay benefits if you die or if an accident or illness does not allow you to continue working. Compare the premiums charged, the ability for you to tailor your insured benefit to meet your needs, as well as the terms and conditions of insurance. You may wish to seek the advice of a financial planner to ensure that the insurance cover is enough and to increase your cover to provide the financial protection you require.
What can a financial planner help me with?
Our qualified financial planners will provide a financial plan and recommend investments and other financial products based on your personal needs and circumstances. Our financial planners can:
- assist you to identify your financial goals;
- enable you to make informed decisions about your finances;
- assist you in choosing products that suit your particular objectives, financial situation and needs.
Before you make a decision:
see your financial adviser;
email us, or
Call 13 11 55 - ask for "Life and Super".
Disclaimers:
This Education Pack is published by Suncorp Financial Services Pty Ltd ABN 50 010 844 621, Australian Financial Services Licensee ("the Licensee"). The Licensee is a member of the Suncorp Group and may recommend products provided by related companies. As a result, those companies may receive fees or charges, details of which are set out in the relevant Product Disclosure Statement. The Licensee receives commission from the providers of products that it recommends, including other members of the Suncorp Group. Further information about these commissions is contained in the Licensee’s Financial Services Guide.
Any advice contained in this Education Pack is provided by representatives of the Licensee and has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice you should consider the appropriateness of the advice having regard to your own objectives, financial situations and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement before making any decision regarding the product. For a copy of the Product Disclosure Statement or the Licensee’s FSG contact us on 13 11 55, electronically on direct@suncorp.com.au or at: Suncorp Financial Services Pty Ltd, GPO Box 1453, Brisbane Qld 4001.
