Offering choice of fund
To meet your choice of fund obligations, you need to follow a set of procedures to offer your eligible new employees a choice of superannuation fund.
Choosing a default fund
You're required by legislation to choose a complying default (or employer) superannuation fund for your business. All SG payments should be made to this fund unless your employee chooses otherwise.
Contributions for employees who are covered by a Federal or Territory industrial award that names a super fund must be paid into the named fund. If more than one fund is named, you must choose one of these as the employee's default fund.
The default fund you choose must, as a minimum offer either:
- a minimum level of death cover, or
- for those less than age 56, death cover at a premium of at least 50 cents per week.
VicSuper offers more than the required minimum insurance cover to all VicSuper Scheme members.
Eligibility for choice of fund
There are several categories of employees which do not need to be offered choice of fund, most commonly:
- employees whose contributions are being made to exempt public sector schemes (eg Emergency Services & State Super - Revised, New, SERB and Transport Schemes)
- Commonwealth employees who are members of the CSS or PSS
- employees whose contributions are being made under, or in accordance with an Australian Workplace Agreement, a certified agreement or employment agreements that were in force under the Employee Relations Act 1992 (Vic) and continue to be in operation under the Workplace Relations Act 1996 (Cwlth).
You must generally offer choice to employees who fall outside these categories. Penalties will apply if you don't comply with the choice of fund legislation.
Providing standard choice forms
To comply with choice of fund legislation you will need to provide eligible employees with a 'standard choice form' either:
- within 28 days of new employees starting work with you, or
- within 28 days of employees requesting a form from you.
VicSuper can provide you with pre-populated standard choice forms for all employees. Simply contact your account consultant.
Employees are not obliged to complete or return the standard choice form. If they don't return it, you should pay their SG contributions to the default fund listed on their standard choice form.
You must also provide a standard choice form to employees if:
- you change your default fund
- you are not able to contribute to an employee's chosen fund
- your employee's chosen fund no longer meets the legislative requirements.
You do not need to provide employees with a standard choice form if:
- they stop working with you within 28 days of the day they start
- they are members of certain defined benefit funds
- it is part of the employee's conditions of employment that they must choose the fund to which you will make superannuation contributions on their behalf. This exemption only applies if this has always been required of all your employees and if you do not have an arrangement to contribute to any other fund.
Processing standard choice forms
If your employee chooses a different fund from your default fund, you need to check that it is a complying super fund that will accept your contributions.
In addition to a correctly completed standard choice form, your employee must provide:
- details of how you can make payments
- a letter from the trustee of the fund confirming it's a complying super fund. Alternatively you can use the Super Fund Lookup website to check if the fund is complying.
- evidence from the ATO that it's a regulated super fund (if the fund is a self-managed superannuation fund).
If your employee doesn't give you these details, their application isn't valid, so you should continue paying their SG to your default fund and provide them with a new standard choice form.
But once the form and required information is provided, you have two months until SG contributions must be made to the new fund.
In the meantime, you may still need to make SG contributions on their behalf to your default fund to meet the SG payment deadlines.
Keeping information records
You should keep records of the following information for at least five years:
- the original copy of an employee's correctly completed standard choice form
- the date you issued a standard choice form to each employee
- the date you received a correctly completed standard choice form
- the name and contact details of an employee's chosen super fund.
This information will help you establish the date you need to start paying into your employee's chosen fund if they have made a valid choice, and whether you need to accept an employee's choice.