From today, over 5 million Australians will have the right to choose their own superannuation fund.
The Coalition made a commitment before the 1996 election to give Australian employees this important right. After 9 years of opposition from the Labor Party, that promise has been delivered.
"July 1 is just the beginning of super choice. For many, it will be their first opportunity to consider their superannuation options. They can do that in their own time, without any obligations," Federal Assistant Treasurer, Mal Brough, said today.
For most people, superannuation is their second largest asset after the family home. Choice of fund not only gives employees control over their own asset, but it will also allow them to have a better connection with their superannuation savings throughout their life.
The advent of super choice has already resulted in downward pressure on fees and improved services for consumers.
Over the next 28 days employers will be handing out the 'standard choice form' to eligible employees. Employees should take the time to read the form carefully and consider what they want from their superannuation before they make a choice.
Employees do not have to choose a fund. If they choose to do nothing, their superannuation contributions will be paid into the employer fund, also known as the "default fund". Employees can choose a different fund later if they like.
The Government has already announced that it will move to extend super choice to workers under state awards by July 1 2006.
Employees who are looking for further information about superannuation are encouraged to get a copy of the free booklet Super Choices. Super Choices can be downloaded from the Government's super choice website www.superchoice.gov.au, or a copy can be obtained by phoning 13 28 64.
Attachment
Choice of funds fact sheet
What is choice?
The Government's choice of superannuation fund policy gives eligible employees the right to choose the fund to which their employer makes compulsory contributions on their behalf.
Choice applies to employees covered by a federal award, or no award at all.
Employers will not have to offer choice to their employer if superannuation contributions for that employee are made under a:
- Certified Agreement;
- an Australian Workplace Agreement, or
- a state award or industrial agreement.
There will also be public servants and some members of defined benefit schemes who will not be offered choice.
Eligible employees will be able to change their fund once in a 12 month period, or more frequently if their employer agrees. If an employee does not choose a fund, their superannuation contributions will be made to a fund chosen by their employer, which may be the fund specified in an industrial award or agreement.
What will it mean for Australians?
The choice of funds policy will encourage Australians to take greater ownership of their superannuation and their retirement future.
Choice will allow those employees not satisfied with the fund chosen by their
employer to have their contributions made to a fund of their choice.
Choice will also be an advantage to people who change jobs on a regular basis
or are involved in casual work. Instead of having superannuation contributions
paid into a different fund each time they change jobs, these people can choose
a fund that suits their needs and ask each new employer to contribute to that
fund.
What will it mean for the superannuation industry?
Choice of funds will mean that the superannuation industry will need to be more competitive and responsive to the needs of their members and prospective members. There is already evidence that superannuation funds are reducing fees and improving services.
Key features of the legislation
Employers must provide eligible employees with the standard choice form. The form must contain the name of the fund that the employer will make contributions to on behalf of employees if an employee does not choose a fund (the default fund).
There is no limit on the time employees can take to choose a fund. The fund chosen by an employee must be one that their employer can contribute to. Employees need to provide their employer with sufficient details to allow contributions to be made.
More information
More information on the Government's choice of funds policy can be found on the web at www.superchoice.gov.au or by calling the Australian Taxation Office on 13 28 64.