More often than not, default super funds are chosen for employees according to which super fund the assigned manager is with.
Although generally employers and employees want the same things from a super fund, there are some key differences to take into account when choosing the default super fund for an organisation.
1. Which eligible default super funds are listed in your modern award?
Your choice of a default super fund for your employees is partly controlled by legislation. Currently, you must nominate one of the default funds that are named in the modern award which applies to your employees. For example, employers in the Horticulture Industry can nominate AustSafe Super, Prime Super, Tasplan, Sunsuper or Asset Limited. You can also retain a fund which was your default option prior to September 2008. For example, if your default super fund was ANZ Superannuation before September 2008, you can continue to use them.
2. Does your fund offer minimum life cover?
One of the legal requirements of default super funds is that they offer minimum life cover to members.
Check the fund’s basic features. For example:
- Are commissions paid to intermediaries?
- What fees are applicable to members?
- What are the contact and customer service options, and what are the service standards like?
- Doe the fund comply with relevant legislation and prudential regulatory standards?
3. Check fund returns
Every super fund listed as an eligible choice for default funds in Australia is listed in the Australian Prudential Regulatory Authority’s Fund Level Rates of Return Document. This is usually published yearly, and you can check the returns for the past year, the average over five years or eight years, to ensure that your employees will be getting good value.
4. Have you offered your employees a choice of fund if eligible?
In all the excitement of choosing an amazing default super provider, it is easy to forget that your employees may actually have the choice! If your staff are employed:
- Under a federal award
- Under a Notional agreement preserving state award
- Another award or agreement that doesn’t require superannuation support
- Under an Australian Workplace Agreement which provides for choice of super fund.
Don’t forget to offer every employee a Superannuation Choice of Fund form before making payments to your default provider.
Choosing a default super provider is now a relatively simple process, as long as you follow all the steps!