Choice of fund

Since 1 July 2005 Choice of Super Fund legislation has given most employees the right to choose a super fund.

From 1 January 2014, unless your employee has chosen their own preferred compliant super fund, you will be required to make superannuation guarantee (SG) contributions to a fund offering an authorised 'MySuper' product, like our 'MySuper Balanced' (default) product.

As an employer you need to ensure that you comply with the choice of fund rules:

  1. Identify employees in your organisation who are eligible to choose a fund
  2. Provide eligible employees with a Standard Choice Form within 28 days of their employment commencing
  3. Select a default fund – for those employees who don’t make a choice or are not eligible to choose. All SG contributions should be paid into this fund unless your employees have chosen otherwise (and notify employee of default fund.)
  4. Action any choice of fund requests by paying SG contributions into  employees chosen fund, within two months of being notified of their choice, and
  5. Keep records of employee fund choices and records to prove that you have met your obligations. Ensure you keep your records for at least five years.

Identifying eligible employees

Under legislation, you are required to offer choice of fund to most employees. There are however, a number of exceptions. You will not need to offer choice of fund to employees who are employed under:

  • Registered Agreements (Certified Agreements, Australian Workplace Agreements and Enterprise Bargaining Agreements)
  • State Awards*
*Changes were made to the legislation effective from 1 July 2006. From this date employers have to offer their employees a choice of fund if they are making contributions under a State Award which has been brought into the Federal workplace relations system as a result of the WorkChoices reforms. These agreements are known as a Notional Agreement Preserving State Awards.

If you are an employer sponsor of a particular defined benefit fund, you may not have to offer a choice of superannuation fund to employees who are members. There are also some public servants and individuals working for government agencies who do not need to be offered choice.

If an employee is engaged under a Federal Award, you must offer choice whether or not that award requires contributions to be made to a specific superannuation fund. In doing so, you must still comply with the conditions of the Award.

Some state laws also provide for choice of fund under state-based arrangements. If you are not sure what award or industrial agreement your employees are covered by, please refer to the workplace relations department in your state or territory.

Choosing a default fund

When you select a default fund you will need to check that the superannuation fund is a complying fund and meets the insurance requirements for choice of superannuation fund. LUCRF Super is a complying fund and you can download a copy of our Notice of Compliance.

Where applicable, your choice of default fund needs to be made in accordance with any limitations made by the relevant award. When you give your employees a Choice of Fund Form (which has a Notice of Compliance on the back), you must nominate a default fund on the form. You do not need to nominate the same default fund for all of your employees. The Standard Choice Form nominates LUCRF Super as the default fund and includes all our necessary details.

Other things to consider

When you are investigating potential default super funds, there are a number questions you should consider:

  • Does the fund provide consistent long-term returns?
  • Is there an adequate range of investment options?
  • What are the fees and charges?
  • How flexible are the insurance options?
  • What services are provided to members?
  • What services are provided to employers?
  • How easy is it to make contributions?
  • Do profits go to shareholders or to members?