What is Choice of Fund?
Choice of Superannuation Fund is recent law which allows eligible employees to choose an eligible superannuation fund into which their employer Superannuation Guarantee (SG) contributions are paid. Choice of Fund was introduced to provide employees with the freedom to select their own superannuation fund and encourage them to take control of, what for many will be, their biggest source of retirement savings.
The legislation only applies to those making or receiving SG contributions after
What do I need to do under Choice of Fund?
Under Choice of Fund, you can do one of two things:
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Do nothing. This means you will remain in the fund your employer has chosen for its employees (called the nominated default fund).
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Choose an alternative fund into which your employer will need to commence paying SG contributions. To make this choice, you will need to complete a ‘Standard Choice form’, which your employer will be able to provide.
How do I choose a fund?
Prior to making a new fund choice, you should gather information about the superannuation options that are available to you. Comparing the features and benefits of each fund, including investment choice and performance and fees is vital.
If you are thinking about moving funds you should consider the impact on the level and cost of insurance cover, as well as the amount of health evidence you may need to provide to obtain insurance cover through another superannuation arrangement. Your financial adviser can assist you with this.
If you cease to be a member of your employer plan, your cover will cease (unless you have the option of moving to the personal division of your super fund, where the same or similar coverage can often be maintained). To establish cover within an entirely new fund, you should be aware that you may be required to go through an application process to obtain the same level of cover. This may involve providing health evidence prior to cover being issued. If you have a health condition that you are not aware of, you could be ineligible for insurance cover or may have to pay an increased premium.
Further information to assist you to make an informed fund choice can be found by reading the ‘Super Choices’ booklet available from www.superchoice.gov.au, or by seeking financial advice.
Your employer must contribute any SG benefit that becomes payable to your chosen fund after two months from when you provide them notice of your chosen fund. Your employer may choose to contribute to your chosen fund before the expiration of this two month period.
Further information to assist you to make an informed fund choice can be found by:
- phoning the ATO Information Line on 13 28 64
- reading the 'Super Choices' booklet available from www.superchoice.gov.au
- reading the relevant Product Disclosure Statement
- seeking financial advice from a financial adviser
Click here to learn about insurance within your fund, or use the menu on the left to navigate through other super educational information.