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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 made on their behalf.
If you’re uncertain whether or not you can choose your own super fund, here’s a simple guide to the fund choice rules.
Who can choose their own super fund?
Most Aussies – whatever the industry or company they work in – have the right to select their own super fund (sometimes called fund choice). And in most cases, their employers are happy to allow their employees to choose their own super fund.
If you can choose your super fund, your employer will pay the SG contributions they make on your behalf into the super fund you select providing it’s a complying super fund under the super regulations.
You don’t need to choose a new super fund each time you start a new job. Generally, when you swap jobs 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.
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Who can’t choose?
Although the majority of us have the right to choose our own super fund, 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 agreement (EA) 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 at the moment, but from 1 January 2021 this situation will change.
Expansion of fund choice from 1 January 2021
New legislation to give more Aussies the ability to choose their own super fund passed Parliament on 25 August 2020, to allow more employees to choose which super fund receives their employer contributions.
In the past, choice of super fund could be restricted by enterprise agreements (EA) and workplace determinations that specified a particular super fund.
Under the new Treasury Laws Amendment (Your Superannuation, Your Choice) Bill, the choice of fund rules will apply to employees covered by workplace determinations and EAs made on or after 1 January 2021. According to the Treasurer, the reforms will give another 800,000 employees the freedom to select their own super fund.
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If you are a member of some defined benefit super funds, the new legislation may not give you choice of fund.
Are you eligible to choose your own super fund?
|Generally eligible to choose your own super fund for SG contributions if:||Generally NOT eligible to choose your own super fund for SG contributions if:|
|Your super is paid under a federal award or a former state award (now known as a notional agreement preserving state award NAPSA)||You super is paid under a state award, workplace determination or enterprise agreement made before 1 January 2021 that specifies which super fund your SG contributions are paid into|
|You are employed under another award or agreement that does not require super support||You are a federal or state public sector employee who is excluded from super choice by law or regulations|
|You are not employed under any award or industrial agreement (including contractors paid principally for their labour)||You are a member of certain defined benefit funds|
|You are employed under a workplace determination or enterprise agreement made on or after 1 January 2021||You are a member of a super fund that undergoes a merger or acquisition (from 1 July 2015). You still retain the right to request a standard choice form.|
|You are working on a temporary working visa (from 1 July 2015). You still retain the right to request a standard choice form.|
Source: Table based on information from the ATO website.
If you are not sure what award or enterprise 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 website for information about the award or industrial agreement that applies in your workplace.
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 super 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 your employer does not give you a Standard Choice Form so you can choose your 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 Superannuation Standard Choice Form here.
On the form you will need to include details such as your super fund’s name and address, Unique Superannuation Identifier (USI) and Australian Business Number (ABN). This information should be in the welcome pack your super fund sends to you, or it can usually be found on the 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.
What if my employer refuses to allow me to choose?
In most cases (other than those listed in the table), your employer must allow you to choose your own super fund to receive your SG contributions.
If your employer 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.