Life is full of choices and the super system is no different.
But there is one area where not everybody has a choice and that’s when it comes to selecting the super fund into which their employer directs the Superannuation Guarantee (SG) contributions they make on their behalf.
Most Australians – whatever the industry or company they work in – have the right to choose the super fund they want their employer to pay their SG into, providing it is a complying super fund under the super regulations. And in most cases, businesses are happy to allow their employees to choose their own super fund.
This does not mean, however, you need to choose a new super fund each time you start a new job. Generally you can choose to have your new employer pay your SG contributions into your existing super fund – if you have one. Keeping the same super fund as you move between jobs can be sensible, as it means you are only paying one set of fees and charges.
It is not compulsory to choose your own super fund. If you decide not to choose your super fund, your employer is still required to pay your SG contributions.
The contributions will, however, be paid into the default super fund selected by your employer for their employees, or the super fund listed in the industrial award (if any) under which you are employed.
Who can’t choose their own super fund?
Although the majority of Australians have the right to choose their own super fund (sometimes called fund choice), there are still around 30% of the working population that cannot select their own fund. This is usually because their super fund is selected as part of the industrial award or enterprise bargaining agreement (EBA) under which they are employed.
In these cases, under industrial law your employer is not permitted to pay your SG contributions into any other super fund than those listed in the award agreement.
This means employees are not eligible to nominate the super fund into which they want the SG contributions paid. Unfortunately, there is nothing you can do about it.
If you are unable to choose your own super fund and unhappy with the fund your employer is using, remember you can roll over SG contributions made into a particular super fund into a fund of your choice at a later date.
Employee eligibility to choose their own super fund
Generally eligible to choose your own super fund for SG payments if:
Generally NOT eligible to choose your own super fund for SG payments if
Source: Table based on information from the ATO website.
If you are not sure what award or industrial agreement, if any, you are covered by, it’s a good idea to speak to your employer’s HR or payroll department.
Alternatively, you can phone your state or territory’s workplace relations department or visit the Fair Work Ombudsman’s website for information about the award or industrial agreement that applies in your workplace.
You can choose a super fund to receive your SG contributions at any time, but you cannot make your employer change the super fund it is currently paying your contributions into more than once each year.
Telling your employer about your choice
If you are not already a member of a super fund when you start a new job, you will need to join one so you can give the contact details to your employer. As soon as you receive your membership details from the super fund, make sure you inform your employer or the HR department so they can begin paying your super contributions into the correct account.
You will need to officially tell your employer the details of the fund you have selected by filling in a Superannuation Standard Choice Form. Your employer should give you this form when you start employment. By law, your employer must give you a Superannuation Standard Choice form within 28 days of starting work with them.
If you employer does not give you a Standard Choice Form to make a choice of super fund, or you want to make a choice after you have been employed for a while, you can download and print out the ATO’s Standard Choice Form here.
On the form you will need to include details such as your super fund’s Australian Business Number (ABN) and product identification number (SPIN), both which should be in the welcome pack your super fund sends to you. These details can also usually be found on the super fund’s website.
Once you have completed the form, give it to your employer. You do not need to send it to your super fund or the ATO.
Your employer must start making payments into your nominated super fund within two months of you providing them with a Standard Choice Form.
For more information, see SuperGuide article Guide to the Superannuation Standard Choice Form.
Important note: It is illegal for your employer to try to influence your choice of super fund.
Unless your employer holds a Financial Services Licence, your employer is not legally permitted to provide you with any information about a super fund other than factual information, or information regarding the ‘default’ fund your employer has selected.
What if my employer refuses to allow me to choose?
In most cases (other than those listed in the table above), your employer must allow you to choose your own super fund for payment of SG contributions.
In the past, employers often complained or refused to let employees choose a different super fund because of the extra paperwork involved. Super funds now make it very easy for employers to make contributions into their funds.
Employers are also required to be compliant with the ATO’s SuperStream system (which requires super contributions to be paid and reported in a standard electronic format), so complaints about the extra workload are not really valid.
In addition, smaller employers can use the free service offered by the ATO’s Small Business Superannuation Clearing House (SBSCH) for making SG contributions. Businesses with 19 or fewer employees or an annual aggregated turnover of less than $10 million can use this service.
The employer makes a single payment to the SBSCH and it then distributes the payments to each employee’s chosen super fund. So, if your employer complains about making contributions to multiple super funds, ask them to check out the SBSCH service.
If your employer still refuses to allow you to choose your own fund, contact the ATO’s SG hotline on 13 10 20. Choosing your super fund is part of your entitlement to the SG, so if your employer refuses to comply, the ATO should be able to follow up about it.
Note: The ATO has a responsibility to investigate situations where your employer did not offer you choice of a super fund, or did not act on your choice within two months. BUT, if you are not entitled to choose your super fund because of your industrial award or EBA, the ATO will not be able to assist.
For more information on fund choice and considerations when choosing a super fund, see the following SuperGuide articles:
- Super funds with the lowest fees for life and TPD insurance
- Best performing super funds over 5 calendar years (to December 2018)
- Super and pension funds with the lowest fees
- Guide to the Superannuation Standard Choice Form
- What are the different types of super funds?
- How to review your super fund
- What is MySuper, and which super funds are MySuper funds?
- How to compare super funds in 7 easy steps