|
|
The Facts
Fact 1 - Not all employers are required to offer their employees Choice.
In summary, those currently excluded from Choice are mainly public sector employees, and some employees under some state awards. Although changes may be made in the future to allow Choice for some of these groups, the following won't have access to it (as at 7 April 2005):
- Employees whose 'contributions' are made to unfunded public arrangements;
- Commonwealth employees who are members of the CSS, PSS and employees receiving productivity benefit payments;
- Individuals for whom contributions are being made in accordance with certain Workplace Agreements or certified agreements under the Industrial Relations Act or Workplace Relations Act;
- Individuals for whom contributions are being made in accordance with a state industrial award. This means that where the award requires payment of contributions at less than the 9 per cent SG rate to the award fund, all the employer contributions can be made to that fund;
- People for whom contributions are being made under a prescribed law (such as where the contributions are made to an unfunded public sector scheme or under a State industrial award; and
- Defined benefit fund members who would still get retrenchment and retirement benefits if their employer paid future contributions to another fund.
If you are unsure of the awards that your employees are covered by, seek assistance from your employer association, www.wagenet.gov.au or your lawyer.
Fact 2 - Choice does not apply to all super contributions.
Choice only applies to the SG contributions paid by you on behalf of employees.
If you contribute an amount above the SG requirement, which is currently 9% of an employee’s salary, then you can decide which super fund these additional contributions are paid into. Of course, you can agree to pay these contributions into the fund chosen by your employee, but you are not required to do so.
Fact 3 – There are a number of activities employers can undertake to prepare for Choice.
Before 1 July 2005 – together with your financial adviser – we recommend you:
- Identify whether you are affected by Choice.
- Understand the impact Choice will have on your business.
- Develop an action plan of what has to be done and when for Choice.
- Understand the range of AXA products and business solutions available.
- Nominate a complying default fund.
- Review existing payroll and contribution remittance systems to see if they can manage Choice.
- Review internal policies, procedures and processes to allow for Choice.
- Decide whether you wish to implement Choice or an Industrial Agreement.
- Decide whether to offer Choice to employees for all contributions or just SG contributions.
- Develop a communication plan for employees.
After 1 July 2005 – together with your financial adviser – we recommend you:
- Obtain a pre-populated standard choice form (featuring your default fund details) and provide to all existing eligible employees before 29 July 2005;
- Ensure you have processes in place to action each completed form within two months of receipt.
- Pay super contributions into ‘eligible’ funds chosen by employees or into the default fund, if no choice is made.
- Provide a standard choice form to all new employees within 28 days.
- Ensure existing employees are aware of their super options in the Choice environment.
- Be aware the Government intends to amend the Choice legislation to override state laws to give Choice to employees on state awards from 1 July 2006.
Your dedicated AXA business super financial adviser can assist you with each of these steps.
A detailed action plan is provided in ‘AXA’s response to Choice’ brochure.
Fact 4 – Not all super funds can be default funds–minimum insurance requirements have been set by the Government.
The insurance offered by your chosen default fund must cost at least $0.50 per employee per week or at least a minimum death cover on an age-based scale as shown below:
| Age | Level of insurance cover |
| 20-34 | $50,000 |
| 35-39 | $35,000 |
| 40-44 | $20,000 |
| 45-49 | $14,000 |
| 50-55 | $7,000 |
| 56+ | $0 |
There are some exemptions to the minimum insurance cover requirement.
Ideally we recommend you choose a fund that:
Is complying;
- Offers a wide range of investment options;
- Has competitive fees and a history of competitive returns;
- Provides a suite of associated products and services;
- Offers dedicated member services such as adviser assistance, online information, telephone support, direct mailouts etc.;
- Has Automatic Acceptance Levels (AALs) for insurance;
- Provides Group Insurance rates
- Offers appropriate insurance options;* and
- Provides an efficient contribution payment service ie a clearing house facility.
*Under Choice, default funds must provide 'death only' cover at a minimum. The insurance must cost at least $0.50 per employee per week or provide minimum death cover on an age-based benefit level (refer next question for age-based scale).
All of AXA’s business super products (Business Super Directions, Simple Super and Tailored Super) are eligible default funds, and offer all of the above features, benefits and services.
Fact 5 – The Federal Government will be undertaking a comprehensive education campaign on Choice.
You will soon receive an information pack containing copies of the standard choice form.
Employees will also be targeted via the general media and an intensive advertising campaign.
| |
|
