What is Choice of Fund?
The Federal Government introduced choice of fund (choice) legislation on 1 July 2005. This means that most employees have the ability to choose the super fund into which their employer’s compulsory superannuation guarantee (SG) contributions are paid. Choice of fund is not available to everyone. Your employer will be able to confirm whether choice applies to you. The benefit of choice of fund is that you will have more control of where your employer’s SG contributions are paid. However, you should be aware of the risks associated with having choice. Perhaps the greatest risk is not understanding the benefits and services that your existing super fund offers you. You should also have a clear understanding of the impact to your existing super if you exercise choice. It is recommended that you seek professional financial advice before making any decision about changing your super fund. To speak with a Mercer financial adviser about your options, call 1800 633 403.
The Super Choice legislation that became effective in July 2005 made two important changes to superannuation law: • Most employees now have the right to choose which fund their superannuation guarantee contributions will be paid into. • Most employers are required to nominate a ‘default fund’ for super contributions where their employees do not make a choice.
Many Australian employees are able to choose which fund their employer’s Superannuation Guarantee (SG) contributions are paid into. You do not have to choose your own superannuation fund. If you don’t, your superannuation contributions will be paid into a fund chosen by your employer (known as the default fund). While you can choose a fund at anytime, your employer has to accept only one choice from you in a 12 month period.
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 1 July 2005 and does not affect contributions paid before this time, existing super account balances or other super contributions. Choice of Fund applies to your ongoing SG payments so please consult your existing super provider should you wish to roll over your existing super benefits into your chosen fund. What do I need to do under Choice of Fund?
