Offering employees a choice of fund

Your employees can generally choose their own super fund for their Superannuation Guarantee (SG) contributions to be paid into. You must provide them with a Standard Choice form within 28 days from the day they started working with you. You need to complete section B of the form with details of your default super fund before giving it to your employees. 


Most employees are eligible to choose a super fund to receive super guarantee contributions. Your employee is entitled to choose their own fund if they are:

  • employed under a federal award
  • employed under a former state award, now known as a 'notional agreement preserving state award' (NAPSA)
  • employed under another award or industrial agreement that doesn't require super support
  • not employed under any state award or industrial agreement (including contractors employed wholly or principally for their labour).

 

Some state laws also provide for choice of super fund under state based arrangements.

 

If an employee is covered by a federal award, they are entitled to choose a super fund. The award requires contributions to be made to specific super fund(s) only where the employee involved has not chosen a fund.


Your employee may not be eligible to choose their super fund if you are required to pay super contributions:

  • under a state industrial award or preserved state agreement
  • under a federal industrial agreement such as

-         a collective agreement

-         a pre-reform certified agreement

-         an old industrial relations (IR) agreement

-         an individual transitional employment agreement (ITEA)

-         a workplace determination

-         an enterprise agreement

-         an Australian Workplace Agreement (AWA) or pre-reform AWA

  • under an award or agreement that requires you to pay super contributions to a particular super fund
  • to the Commonwealth Super Scheme, Public Sector Super Scheme or another unfunded public sector scheme.


You can find out if your employee is covered by an award or agreement by checking with:

  • Fair Work Ombudsman (for federal and state awards and agreements)
  • The government agency responsible for workplace relations in your state or territory
  • Your employer association.


An employee can choose a super fund by returning a completed Standard choice form to you or by providing you with a written notice that includes their employee identifier (if you have given them one) and the following information about their chosen super fund:

  • The fund name, ABN and USI*
  • The employee’s super account name and number
  • A compliance statement
  • Payment details for making contributions.

 

* A Unique Superannuation Identifier (USI) is used by superannuation fund administrators to identify superannuation funds for electronic rollovers.


In most circumstances you are required to comply with your employee’s choice of fund request, however, you may refuse a request if:

  • the employee hasn’t provided all the required information:

-         the fund name, ABN and USI

-         the employee’s super account name and number

-         a compliance statement

-         payment details for making contributions

  • the employee has nominated another fund in the previous 12 months (you can however, choose to accept their request).


If your employee provides a valid choice of fund request, you must start paying SG to the employee’s chosen fund within two months after receiving the request. Any contributions you make in the two months after receiving the form can be made to either your employer nominated super fund (your default fund) or the employee’s chosen fund.

 

You should retain the employee’s choice form for your records.


If you've provided a Standard choice form to an employee and they haven't chosen a fund you must pay super contributions for your employee to your employer nominated superannuation fund (your default fund).


You could be liable for a 'choice liability' which is part of the superannuation guarantee charge (SGC). You could incur the choice liability if you:

  • don't give your eligible employees a Standard choice form within 28 days of them starting work
  • don’t pay your employee’s super contributions to their chosen super fund
  • charge your employees a fee for complying with their choice of fund.

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