Choice of Superannuation Fund in the State IR System
A Western Australian employee covered by a WA award or industrial agreement requiring superannuation contributions to be paid into a fund is entitled to ‘choice of fund’ under the Industrial Relations Act 1979 (WA) (the IR Act).
Other employees eligible for superannuation may be entitled to choice of fund under the Superannuation Guarantee (Administration) Act 1992 (Cth) (the SG Act).
As soon as possible after commencing work, employers must provide all new employees with either:
- a notification of a standard choice form.
- a written notice setting out all the information contained in the standard choice form.
The standard choice form is available on the Australian Taxation Office website.
Employees who initially choose not to nominate a superannuation fund retain a right to do so later on. Once employees have notified their employer about their chosen fund, the compulsory superannuation guarantee contributions must be paid into the nominated fund.
Employees should consult an accountant or financial adviser before nominating a superannuation fund for their contributions. Once it has been selected it can on be changed with the employers consent, although employers cannot unreasonable refuse an employee's request to change their superannuation fund.
It is an offence for any person (including employers) to persuade or attempt to persuade another person to nominate a particular superannuation fund by threats or intimidation. Employers who fail to pay contributions into the nominated fund may be in breach of the IR Act, award or industrial agreement and could face penalties.
Where employees do not nominate a superannuation fund, employers must pay contributions into a fund which satisfies the SG Act’s ‘choice of fund’ requirements until a choice has been made. If a State award specifies a complying fund, then it must be paid into that fund.
Employees who are considering changing superannuation funds with the consent of their employer should be aware that some funds may charge a transaction fee or require contributions to be held for a specified time, or may refuse to roll over existing contributions altogether.
As long as employers comply with the requirement to provide employees with a choice of superannuation fund, they will not be liable if the chosen fund underperforms. Employers should also refrain from advising employees on how their superannuation should be managed as it could amount to unlicensed financial advice with possible legal implications.
Find out more
- For information on superannuation entitlements and the calculation of superannuation contributions and other related matters, please contact the Superannuation Infoline on 13 10 20 or visit www.ato.gov.au.
- For further information on compliant superannuation funds, the Australian Prudential Regulation Authority can be contacted on 1300 131 060.
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