Choice of superannuation fund - meeting your obligations

Choice of superannuation fund - meeting your obligations

Download Choice of superannuation fund – meeting your obligations (PDF, 464kb)
n13622-6-2005.pdf

Foreword

From 1 July 2005, the choice of superannuation fund initiative will allow many Australian employees to choose the fund into which their future superannuation guarantee contributions will be made. This change is expected to provide employees with a greater sense of ownership over their retirement savings.

This initiative will be jointly administered by the Tax Office, Australian Securities and Investments Commission and Australian Prudential Regulatory Authority. This booklet aims to help employers, superannuation fund trustees and financial advisers understand their obligations and our compliance approaches. Because we are committed to being open in our dealings with the community, it also explains what they can expect from us.

It’s important for employees to take time to carefully consider which superannuation fund will work best for them. We will provide assistance to help them make informed decisions.

We expect superannuation fund trustees and financial advisers to be ready to comply with their obligations so that they operate in the best interests of the community.

There will be a focus on compliance across this initiative. Where employers and the community make a genuine effort to comply, we will work with them to rectify any issues. However, a firm approach will be taken with those who set out to deliberately avoid meeting their obligations.

By publishing our compliance approaches, we hope to influence the decisions people make about meeting their obligations. We urge all employers, trustees, financial advisers and tax practitioners to read this booklet and ensure they fully understand their obligations and our compliance approaches to the choice of superannuation fund initiative.

Jeffrey Lucy AM

Chairman of Australian Securities and Investments Commission

Michael Carmody AO

Commissioner of Taxation



Introducing choice of superannuation fund
This booklet explains the obligations and penalties under the choice of superannuation fund initiative for employers, employees, superannuation funds and their trustees, and financial advisers.

It also outlines the compliance approaches the Tax Office, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) will use to ensure people comply with their choice of superannuation fund obligations.

In this guide, all references to superannuation funds include retirement savings accounts.

What is choice of superannuation fund?
Choice of superannuation fund is a new law that gives many employees the right to choose which superannuation fund will receive their employer superannuation contributions.
It starts on 1 July 2005.

Who does choice of superannuation fund affect?
Employers, employees, superannuation funds and their trustees, and financial advisers all have obligations under choice of superannuation fund. The Tax Office, ASIC and APRA will jointly ensure that people comply with their obligations.

Employers
Generally, from 1 July 2005, employers must offer choice of superannuation fund to all eligible employees. To meet this obligation, employers need to identify their eligible employees; provide a Standard choice form to their eligible employees; and act on an employee’s choice.

Employers also need to choose an employer fund to which they will make superannuation guarantee contributions if an employee does not make a choice.

Employees
Generally, from 1 July 2005, employees can choose the fund to receive their future superannuation contributions unless:

their superannuation contributions are made under a certified agreement or an Australian workplace agreement
their superannuation contributions are made under a state award or industrial agreement (visit www.superchoice.gov.au for more information), or
their employer is a sponsor of a particular defined benefit fund and certain conditions are met (for more information, see Choice of superannuation fund – guide for employers).
There will also be public servants and individuals working for government agencies who may not need to be offered choice of superannuation fund.

If an employee is engaged under a federal award, they must be offered choice of superannuation fund whether or not that award requires contributions to be made to a specific superannuation fund.

Some state laws also provide for choice of superannuation fund under state based arrangements.

Employees who aren’t sure what award or industrial agreement (if any) they are covered by can find out by:

asking their employer
visiting the website www.wagenet.gov.au (for federal awards and agreements and links to information on state awards and state industrial agreements), or
phoning the government agency responsible for workplace relations in their state or territory.
If an eligible employee wishes to choose a superannuation fund, they should provide their employer with all the required information. The employer does not have to make superannuation contributions to the employee’s chosen fund until all information is provided.