Our step by step Super Choice guide
Super Choice was introduced in 2005 to give eligible employees the ability to choose which fund their super contributions are paid to.
These four steps outline your obligations under Super Choice law as an employer.
Step 1: Choose a default fund
If your employees do not choose a fund, you must pay their super contributions into your default fund - sometimes called your employer fund – which needs to meet the statutory death benefit insurance requirements set out by Super Choice legislation.
Find out more about choosing your default fund
Step 2: Understand which employees are eligible to choose a super fund
Your employees can generally choose their super fund if they are:
- Employed under a federal award or 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).
Your employees may not be eligible to choose a super fund if:
- You pay superannuation for them under a state industrial award, preserved state agreement, federal industrial agreement such as an Australian workplace agreement (AWA), pre-reform AWA, pre-reform certified agreement, collective agreement, old Industrial Relations agreement, individual transitional employment agreement (ITEA), workplace determination, or enterprise agreement (these are defined terms in Federal industrial relations law).
- They are in a particular type of defined benefit fund or they have already reached a certain level in a defined benefit fund.
Some federal and state public sector employees are also excluded from choice of superannuation.
If you are not sure what award or industrial agreement, if any, an employee is covered by visit fairwork.gov.au or phone the workplace relations department in your state or territory.
Step 3: Meet your Super choice obligations
If your employees are eligible for Super Choice, to meet your legal obligations, you’ll need to keep records showing that:
- You offered a choice of super funds to eligible employees and provided them with a standard choice form within 28 days of the commencement of their employment.
- If an employee asked for a choice form, you provided one within 28 days of their request.
- You’ve acted on your employees’ choice of super fund and included the date that the employee nominated their fund.
- You have information about your chosen default fund.
Find out more about choosing your default fund
Create your own tailored choice form for employees
Step 4: Avoid penalties
If you fail to meet your Super Choice obligations you will be liable for the choice shortfall.
The choice shortfall is part of the SG Charge and is applied when you have paid SG contributions to a complying super fund for your employee, but not to the Fund chosen by your employee.
The choice shortfall is not tax deductible and is 25% of the contributions that are paid to the wrong fund limited to $500 for a notice period per employee.
This penalty also applies if you haven’t given your employee a standard choice form within 28 days of the commencement of their employment.
For more information about super choice visit ato.gov.au