As an employer in Australia, you’re responsible for choosing a default superannuation fund for your employees if they don’t nominate their own. This decision plays a significant role in their retirement savings, so it’s important to get it right. Here’s a guide to help you navigate the process:
Understanding the Options:
- Employee Choice: Your employees have the right to choose their preferred super fund. You’re required to provide them with a Standard Choice Form within 28 days of their start date https://www.ato.gov.au/businesses-and-organisations/super-for-employers/setting-up-super-for-your-business/offer-employees-a-choice-of-super-fund.
- Stapled Super Funds: Introduced in November 2021, stapled super funds are linked to an individual employee and follow them across jobs. If an employee has a stapled fund and doesn’t choose another option, you should prioritize contributions there, even if it’s not on your default list https://www.fairwork.gov.au/tools-and-resources/library/K600658_Determining-a-new-employee-s-superannuation-fund.
- Default Fund: This is the fund you nominate for employees who don’t choose their own or have a stapled fund.
Choosing Your Default Fund:
There are key criteria to consider when selecting your default super fund:
- Compliance: The fund must be a registered MySuper product with the Australian Prudential Regulation Authority (APRA) https://www.ato.gov.au/businesses-and-organisations/super-for-employers/setting-up-super-for-your-business/select-your-default-super-fund. MySuper products are designed to be low-cost and easy to understand.
- Investment Performance: Research the fund’s historical performance and investment strategy. Look for a fund with a strong track record of delivering returns for its members.
- Fees and Charges: Compare the fees charged by different funds, including administration fees, investment fees, and insurance premiums. Lower fees can significantly impact your employees’ long-term savings.
- Investment Options: Consider the range of investment options offered by the fund. This allows employees to choose an investment strategy that aligns with their risk tolerance and retirement goals.
- Industry Focus: If yours is a specific industry, some super funds might cater to your sector and understand its unique needs.
Additional Considerations:
- Modern Awards and Enterprise Agreements: These agreements may specify a list of compliant super funds you can choose from for your default option https://www.fairwork.gov.au/tools-and-resources/library/K600658_Determining-a-new-employee-s-superannuation-fund.
- Employee Education: Provide your employees with resources to understand superannuation and the importance of choosing the right fund.
By following these guidelines and conducting thorough research, you can choose a default superannuation fund that benefits your employees and helps them achieve a secure retirement. Remember, consulting with a financial advisor can offer further guidance tailored to your specific circumstances.
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