HOW SUPER CHOICE WORKS?

The trick to understanding super choice is knowing what it is, and what it isn't.

Key Points:

  • Super choice means most employees can choose the super fund they want.
  • Employers should let their employees choose their fund at least once a year. Super choice forms can be downloaded from the ATO website.
  • There are no rules for how employers should choose their company's default fund.
  • Employers should only send superannuation contributions to funds registered as complying with the superannuation regulator, the Australian Prudential Regulation Authority (APRA).

Super choice is when your employer allows employees to choose the MySuper product or super fund they want. You don't have to use the one chosen by someone else like your employer, industrial award or workplace agreement.

Super choice gives employees the option to swap out of the default MySuper product or fund that was chosen for them and go to another MySuper product or fund. But only if you want to. The point is you have a choice. But equally it doesn't mean employees can choose any super fund you want either. You have to already be a member of the super fund you choose, and it has to be willing to accept your super contributions from your employer. And if an employee decides to exercise their rights under super choice and join a different fund, those super funds aren't allowed to force the employer to become a 'participating' or registered employer of that fund.

Does super choice apply to you?

If you or your employer are not in the following categories, then you should be free to choose your own MySuper product or super fund:

  • Most members of government-run or private defined benefit super funds.
  • People who are employed under state awards, although this exemption doesn't always apply. It used to be the case that employees under enterprise agreements and workplace determinations were not able to choose their super fund for SG contributions, but new laws have extended choice of fund to employees covered under agreements made on or after 1 July 2020.

How companies choose their default MySuper product

Under super choice, employers have to ask their employees at least once a year what MySuper product or super fund they would like to have their super contributions sent to. The ATO has designed a form for employers to hand to employees so they can nominate their preferred super fund. A copy of this form is available on the ATO website.

Employers - if an employee wants super choice

Employees who want to make a super choice have to fill in a super choice form and provide the following information to their employer:

  • a letter from the product or fund confirming that it is a complying fund;

  • proof that you are a member of that product or fund; and

  • details about how the employer can or should send the superannuation contributions.

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When comparing super funds and considering what is right for you, look for funds displaying the AAA Quality Assessment and Rainmaker SelectingSuper Award logos.

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