Choosing a fund
Choosing a fund is one of the biggest decisions you can make to do with your superannuation. Which fund, or funds, hold your savings can have a massive impact on how much money you have for retirement, so it’s a good idea to do some research before deciding on a super fund.
What is Choice?
Choice in superannuation means that you have the right to decide into which fund your superannuation is paid. Each fund has different fees, investment options and benefits, and offers a different return on your money. Most Australians are free to choose a fund that best suits their needs.
Do I have Choice?
Generally you will be entitled to Choice and must be offered access to choice of fund by your employer for your SG contributions. Your employer will be required to pay a penalty if this is not offered.
However, there are some people, usually those who are covered by industrial agreements and members of certain defined benefit funds, who are not able to choose their super fund.
If you’re unsure whether you should be entitled to Choice, check with your employer or the Australian Taxation Office (ATO).
What if I don’t want to choose a fund?
If you don’t want to choose a super fund, you can just go with the fund your employer has chosen. There is now also a new type of super fund for people who don’t want to choose an account. This is called a MySuper account.
Some super funds have started to offer MySuper accounts. These are accounts that have: simple features – basic, comparable fees (and restrictions on the type of fees you can be charged); a single investment option or investment options based on the stage in life you are at; and, a minimum level of insurance (basic Death and Total and Permanent Disablement (TPD) insurance cover).
MySuper accounts are designed to be simple for people to understand and to help people compare funds more easily, based on a few important differences. They are meant to make sure people do not pay for any features they don’t want or use. As of 1 January 2014, only super funds with a MySuper license are able to accept default super contributions (this happens when you don’t choose a super fund yourself and just go with the super fund your employer choses for you).
If you didn’t nominate your super fund to your employer and just went with the fund your employer chose for you, your future super contributions will automatically be paid into a MySuper account. If you have nominated your super fund, then you won’t be affected.
Is MySuper right for me? MySuper is designed for fund members who aren’t involved with their super. It is a ‘one-size fits all’, ‘no-frills’ account and therefore may not be the best solution for everyone. Things to think about are: What is the right level of insurance for you? What is the level of investment risk you want? What are the investment returns you want? What are the fees? For people who want their superannuation to be more tailored to their needs, a non-MySuper account may be the best for them. To see if MySuper is right for you or to find out more about MySuper, contact your super fund.
What does my employer have to do?
To choose a superannuation fund, you must complete a standard choice form, which is issued by the ATO.
Your employer is required to give you a standard choice form:
- Within 28 days of beginning a new job.
- Within 28 days of your employer becoming aware that the super fund currently receiving your SG contributions becomes ineligible to receive them.
- Within 28 days of your employer switching their default fund if your SG contributions are currently being paid into this fund.
There is no deadline by which you have to make a choice and you don’t ever have to make one if you don’t want to. The default fund is the superannuation fund an employer pays your superannuation guarantee into if you decide not to make a choice. Default funds vary from employer to employer.
Did you know? You can decide to choose, or change, your fund at any time but your employer is only obliged to act on your choice once a year.