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When you start a new job, you will generally be handed a document asking you to nominate a superannuation fund.
This document is called the Superannuation Standard Choice Form. Issued by the Australian Taxation Office (ATO), it allows you to choose the fund your employer’s contributions will be paid into on your behalf, provided you meet eligibility conditions.
Under Australian super legislation, in 2022-23 your employer must pay 10.5% of your ordinary time earnings into a super fund if you are aged 18 or over. This is known as the Superannuation Guarantee (SG) and the rate is set to increase by 0.5% on 1 July each year until it reaches 12% in 2025.
Employees aged under 18, or those classified as a private or domestic worker (like a nanny), must work for their employer more than 30 hours per week to qualify for SG payments.
You’ll be eligible to choose the super fund your employer’s Super Guarantee will be paid into if you’re in one of the three categories below:
- You’re employed under a federal award
- You’re employed under a new Australian workplace determination or enterprise agreement made on or after 1 January 2021.
- You’re employed under another award or workplace agreement that doesn’t require superannuation support
- You’re not employed under an award or industrial agreement. This includes contractors who are primarily paid for their labour.
You’re not eligible to choose the super fund that your employer’s super guarantee will be paid into if you’re in one of the four categories below:
- You’re employed under a state award or agreement
- You’re employed under old Australian Workplace Agreements (AWAs) prior to 1 January 2021
- You’re a federal or state public service employee
- You’re in a defined benefit super fund.
Legislation to extend choice of super fund to a further 800,000 employees under enterprise agreements and workplace determinations was passed in August 2020 and came into force for new agreements made on or after 1 January 2021.
Choosing a super fund
If you are eligible to choose your super fund, there are five potential options (though not every option is available to everyone):
- Retail funds. These are funds run by financial institutions. They’re open to anyone.
- Industry funds. Although originally designed for people in a particular industry, many industry funds now allow anyone to join. Industry funds used to be known as not-for-profit funds, but now refer to themselves as profit-to-member funds.
- Public sector funds. These funds are generally only open to government employees.
- Corporate funds. These funds are usually only available to employees working for a specific employer.
- Self-managed super funds (SMSFs). These are funds where the member is also a trustee and therefore has more responsibility in terms of administration, compliance and investment decisions.
Most funds allow you to choose how your super contributions are invested. Most funds offer a menu of pre-mixed investment options and specialist options such as ethical or sustainable investments, while many also allow you to invest directly in shares, term deposits and exchange traded funds (ETFs).
In general, investment options offering the opportunity for higher potential investment returns have more risk, and vice versa. That’s because different types of investments have different levels of risk. For example, investments in fixed interest securities are generally lower risk and provide lower returns, compared to share-based investments which are higher risk but can provide greater returns.
Important considerations for comparing super funds include:
- Your investment goals
- The historical performance of each fund
- The fees charged by each fund
- Member services such as insurance and financial advice offerings.
At the end of this article we’ve added some links to other SuperGuide articles to help you assess your own super fund, compare super funds, and discover the best performing super funds.
The ATO’s Superannuation Standard Choice Form (and where to get it)
Your employer will likely provide you with the ATO’s Superannuation Standard Choice Form when you start working for them. Alternatively, you can download it from the ATO’s website.
There is a section of this form that must be completed by you, and two others that must be completed by your employer. It’s important that you provide your tax file number on the form to take advantage of the concessional treatment of super contributions.
Under Australian super law, super contributions (including the super guarantee) are taxed at 15%, up to a concessional contributions cap, instead of your marginal tax rate which may be much higher. If you don’t provide your tax file number, your contributions (and subsequent fund earnings) may not be taxed at the concessional rate.
Nominating an SMSF
If you’re nominating your SMSF as the fund you’d like your employer’s superannuation payments paid into, you must provide the following information on your form:
- Your SMSF’s Australian Business Number (ABN)
- Your SMSF’s bank account details
- Your SMSF’s electronic service address (ESA), which will facilitate your employer’s super guarantee payments via the ATO’s SuperStream service. This service is explained later in this article.
You must also provide an accompanying document confirming that your SMSF is regulated. This document can be obtained from the Super Fund Lookup.
If you’re nominating a super fund regulated by the Australian Prudential Regulation Authority (APRA) or a retirement savings account offered by a financial institution, you must:
- Include the fund’s Unique Superannuation Identifier (USI) on your form. This identifier can be obtained by contacting the fund, via superfundlookup.gov.au or through SuperGuide’s super fund profiles.
- Attach a letter from your fund’s trustee confirming that:
- The fund or retirement savings account is compliant with Australian super legislation
- The fund is willing to accept super guarantee payments from your employer.
Your employer must provide you with the details of their default super fund on the ATO’s Superannuation Standard Choice Form. This is the fund your employer’s Super Guarantee payments will be paid into if you don’t choose another fund.
However, provided you’re eligible, you can choose another super fund by indicating your preference on the form. Before doing so, it’s important to compare your employer’s default fund with other funds you are interested in, especially if this is your first experience of superannuation. The super fund you nominate must be compliant with Australian super legislation.
Whatever fund you choose, your employer must make four super guarantee payments on your behalf each financial year, provided you remain employed with them. The quarterly due dates for these employer super guarantee payments are:
- 28 January
- 28 April
- 28 July
- 28 October
Employers who fail to make their Super Guarantee payments by the quarterly due dates are charged a penalty by the ATO. Your employer is liable for paying any penalty, not you.
Your employer must make these payments using the ATO’s SuperStream service. This allows Super Guarantee payments and associated information to be securely transferred electronically between your employer, your super fund and the ATO.
What happens when the Superannuation Standard Choice Form is completed?
Once you and your employer have both completed and signed the form, your employer keeps it for their records so they can demonstrate their compliance with super legislation if and when necessary. The completed form is not sent to the ATO or your nominated super fund, though that fund is contacted as part of the process of completing the form (to confirm that they are prepared to accept the super guarantee payments that your employer is legally required to make).
Your employer will then arrange to make their super guarantee payments via the ATO’s SuperStream service. All relevant information will be reported via SuperStream, including the details of all payments made and the fund they have been paid into.
What happens if you don’t complete the form?
If you don’t complete the ATO’s Superannuation Standard Choice Form, your employer will choose a super fund for you. This will most likely be the default super fund they use for all employees who don’t request contributions be made to a specific fund.
If you meet the eligibility requirements, you can choose the fund your employer’s Super Guarantee payments are paid into on your behalf. To do this, you and your employer must complete the ATO’s Superannuation Standard Choice Form.
The information contained in this article is general in nature.