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 significant 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 you have the right to decide into which fund your superannuation contributions are paid. Each fund has different fees, investment options and benefits, and will produce a different return on your money. Most Australians are free to choose a fund that best suits their needs, unless they are employed under an enterprise agreement made before 1 January 2021 that specifies a particular super fund, or if they are a member of particular defined benefit funds.
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 may be required to pay a penalty if this is not offered to you.
However, there are some people - including employees covered by industrial agreements made before 1 January 2021 and members of certain defined benefit funds - who are not able to choose their super fund for their employer contributions.
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 are changing jobs up to 31 October 2021 and you don’t want to choose a super fund, you can just go with the fund your employer uses as a ‘default fund’ for its employees. This will be a MySuper account and will be named on the ‘choice form’ given to you by your employer.
If you start a new job from 1 November 2021 and you don’t want to choose a super fund, your employer will contribute to your existing, ‘stapled’, super fund. If you do not have an existing ‘stapled’ fund, or it is unable to accept contributions from your employer, you can just go with the fund your employer uses as a ‘default fund’ for its employees. This will be a MySuper account and will be named on the ‘choice form’ given to you by your employer.
Many super funds 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 Disability (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 criteria. They are meant to make sure people do not pay for any features they don’t want or use. Only super funds with a MySuper license are able to accept ‘default’ super contributions into a MySuper product. This happens when you don’t choose a super fund yourself (and, if you start a new job from 1 November 2021, you don’t have an existing ‘stapled’ super fund or it is unable to accept contributions for you) and you just go with the super fund your employer choses for you.
If you didn’t nominate your super fund to your employer (and, if you start a new job from 1 November 2021, you don’t have an existing ‘stapled’ super funds, or it is unable to accept contributions for you), and you just went with the fund your employer chose for you, your future super contributions will automatically be paid into a MySuper account.
Is MySuper right for me? MySuper is designed for fund members who aren’t actively 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 would like? What are the fees? For people who want their superannuation to be more tailored to their needs, a non-MySuper , or ‘choice’, account may be better for them. To see if MySuper is right for you or to find out more about MySuper and other options, contact your super fund.
What does my employer have to do?
To choose a new superannuation fund for your employer to contribute to, 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 after any of these events happen:
- you begin a job with a new employer
- your employer becomes aware that the super fund currently receiving your compulsory Superannuation Guarantee contributions can no longer receive them
- your employer changes their default fund (if your Superannuation Guarantee contributions are currently being paid into this fund)
- you ask your employer for a form (your request must be in writing) and you haven’t already received one in the last 12 months,
There is no deadline by which you have to make a choice, but depending when you give your completed choice form back to your employer, they may have to pay some contributions for you to their default fund before they have to start paying to your chosen fund. You don’t ever have to make a choice if you don’t want to.
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.