Choosing your business' default fund

The nest egg superannuation builds up throughout your employees’ working lives may need to last them over 20 years, so choosing the right default fund for your business is important.

We've put together our top 6 things to consider when choosing your business’ default superannuation fund.

1. Easy administration
When choosing your business’ default fund, you may wish to consider what system the fund has in place to ensure you don’t spend too much time on administration.

Whether it be making contributions, updating your company information or adding employees, these days, managing your business’ default fund should be quick and easy.

2. Fees
Seemingly small differences in fees and costs can have a substantial impact on your employees’ savings when they retire. So when considering which superannuation fund to join, you may wish to read the fine print and compare fees and costs across a number of funds.

3. Investment options
When choosing a default super fund for your business it can also be important to look at what investment options are available for your employees. You may wish to consider the following questions:

• what level of risk would my employees be comfortable with?
• how hands on would my employees want to be with their superannuation?

4. Investment performance
Superannuation offers good potential to grow money over longer time periods. Since returns can rise and fall in shorter periods of time – sometimes in one day – you may wish to consider the investment performance in the bigger picture.

It's often useful to avoid looking at it in isolation – other factors such as fees, investment options and insurance benefits can all affect your employees’ investment growth.

5. Insurance options
Combining superannuation with insurance means your employees’ insurance payments come straight out of their superannuation account.

Because premiums are paid with after-tax dollars and superannuation funds have a group policy with insurance providers, insurance can be cheaper for your employees than if they were to pay for it separately.

So when choosing a fund, consider whether your employees would like their superannuation and insurance under the one roof.

6. Access and service
For those who prefer to be more hands on with their superannuation, easy account access and customer service can be crucial. For those who'd rather a ‘set and forget’ type approach, they're often things that aren't really missed…until they're needed.

So when choosing a super fund, you may wish to consider whether your employees can easily access their account and if a customer service team is available to them.

Your employees' choice of fund

Many employees can choose which super fund their employer superannuation contributions are paid into. This is commonly referred to as ‘choice of fund’.

As an employer, there are three steps you may wish to follow, in order to meet your obligations, when a new employee starts work.

1. Identify your new eligible employees
When you employ new staff it's recommended that you check their eligibility. You may wish to note that not everyone is eligible to choose a superannuation fund.

Employees who are eligible to choose a super fund
Generally, your employees can choose their super fund if they are:

• employed under a federal award
• employed under a former state award, now known as a ‘notional agreement preserving state award
• employed under another award or agreement that doesn’t require superannuation support
• not employed under any state award or industrial agreement (including contractors paid principally for their labour

If you are unsure if your employee is eligible for ‘choice of fund’ visit the ATO website.

2. Provide a ‘Standard Choice Form' to new employees who are eligible to choose a super fund
It's recommended to provide new employees who are eligible to choose a super fund with a Standard Choice Form within 28 days of them commencing work with you.

For more information visit the ATO website.

3. Act on your employee's choice
If a new or existing employee provides you with their completed choice of fund form, it's recommended that you act on this and commence paying into their new fund within two months of receiving the request.

You start paying superannuation contributions to your default fund if:

• an employee does not choose a fund within 28 days; or
• you have not accepted their choice of fund because they have not yet provided all the information you need.

It's also recommended that employers keep records of who they have given choice of fund forms to, as well as records of all superannuation transactions, for at least 5 years.