• What exactly is Choice?
• Do all employers have to offer Choice to their employees?
• Does Choice apply to all super contributions?
• What should I do for Choice?
• Is the Government going to tell me what I need to do for Choice?
• How do I choose a default fund?
• What’s the age-based scale for the minimum death cover required for default funds?
• What are the exemptions to the minimum insurance cover requirements for the default fund?
• Does an employee have to choose a fund?
• How often can an employee change their choice?
• How do I get a standard choice form?
• What must I do with the standard choice form?
• Do I have any obligation to educate employees about Choice?
• What’s a clearing house?
• What happens if I do not comply with Choice?
• For members of my employer fund – what benefits and services are currently available to them?
• Where can I get further information on Choice?

On 1 July 2005 the Federal Government’s Choice of Superannuation Fund legislation (Choice) came into effect.

This means that after 1 July 2005 employers are obligated to offer eligible employees the option to choose the super fund into which their SG contributions are paid.

An amendment on 1 July 2006 opened Choice of fund to some state award employees who may have previously been excluded.
Q: Do all employers have to offer Choice to their employees?

No, not all employers are required to offer their employees Choice.

Those currently excluded from Choice are mainly public sector employees. Although changes may be made in the future to allow Choice for some of these groups, the following individuals, at the time of writing, don't have access:

• 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 or registered industrial agreement (ie not employed by a corporation subject to Commonwealth jurisdiction)
• 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.

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%, then you can decide which super fund these additional contributions are paid into. Of course, you can agree to pay these contributions into the funds chosen by your employees, but you are not obliged to do so.

This also applies to salary sacrifice, voluntary and spouse contributions.

Q: What should I do for Choice?

• 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 of commencement.

Yes, a special website that deals with Choice has been set up by the Government – www.superchoice.gov.au

Q: How do I choose a default fund?

Ideally you should 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.

The following exemptions to the minimum insurance cover apply:

Exceptions
Scenario A	RSAs - usually set up by employers with a high-turnover of casual staff, therefore small account balances that would eroded by insurance premiums
Scenario B	Defined benefit funds – already meet the insurance requirements where they provide a death benefit with a future service component at least equal to the above scales
Scenario C	3 year transition period – for employers who (as at 1 July 2005) contribute to a fund that does not meet the insurance requirements (to 30 June 2008)
Scenario D	Employers covered by a Federal Award – default fund contributions will meet the insurance requirements
Scenario E	Insurance cover outside of super – provided by an employer that is at least equal to the minimum level
Scenario F	Ineligible employees – due to ill-health, high-risk occupation, hours worked, or circumstances determined by the insurer – employer is not expected to find coverage through an alternative fund
Scenario G	$50,000 employee super death benefit – (insurance plus account balance) as at 11 March 2005 – then minimum level does not apply

Q: Does an employee have to choose a fund?

No, your employees do not have to make a choice.

If they do not choose a super fund for their SG contributions, you must pay their SG contributions into the default fund. The details of the default fund must be stipulated on the standard choice forms you provide to employees.

Q: How often can an employee change their choice?

An employee can ask you to contribute to a new fund on their behalf at any time. However, you are only obliged to act on an employee’s request once every 12 months.

Q: How do I get a standard choice form?

AXA has pre-populated the standard choice form with the relevant fund details depending on whether the employee is a member of Business Super Directions, Simple Super or Tailored Super. Click here for each version:

Standard choice form – pre-populated Simple Super
Standard choice form – pre-populated Tailored Super
Standard choice form – pre-populated Business Super Directions

Q: What must I do with the standard choice form?

In summary, the standard choice form:

• must be provided to new employees within 28 days of their commencement date.
• must be provided within 28 days of receiving a written request.
• must be provided to employees if you can no longer contribute to a fund or the default fund changes.
• when completed by the employee, it must be accompanied by:
  • a letter from the chosen fund’s trustee (or if an SMSF, the ATO) confirming its complying status and details on how contributions can be paid into the fund.
  • must be acted upon by you, the employer, within two months of receipt.
  • should be retained by you, the employer, once complete.
  • if an employee nominates a fund that is not a complying fund, you have 28 days to provide the employee with another standard choice form.

We recommend you review certain policies and procedures to allow for Choice (ie providing standard choice forms), such as payroll systems etc.

Q: Do I have any obligation to educate employees about Choice?

No, but there are advantages to educating your employees about Choice.

There is information that employees should be made aware of including:

• the eligible default fund available to them
• the features and benefits of the default fund
• how often they can change funds under Choice (ie once every 12 months)
• whether all contribution types (or just SG payments) will be paid into their chosen fund
• where staff can get additional information, and
• the contact details of the company's financial adviser or super fund representative.

A clearing house is a facility that enables you to pay contributions to multiple superannuation funds.

Talk to your financial adviser about AXA's FREE clearing house facility, be available through AXA's web-based contribution system, Super On-line.

If you are not already registered for Super On-Line, click here.

Q: What happens if I do not comply with Choice?

Put simply, penalties will apply.

If you fail to comply with Choice of Fund requirements, you may be charged penalties, including $500 plus interest and administration charges per quarter per employee, which could mean potential penalties of up to $2000 per year per employee.

Q: For members of my employer fund – what benefits and services are currently available to them?

If you are a member of one of AXA’s business super funds your employees have access to a range of competitive benefits and services including:

• a comprehensive suite of investment options
  • Nine multi-manager diversified portfolios
  • Six multi-manager sector portfolios and 16 individual manager portfolios
  • Six free investment switches per year
  • The ability to make additional personal or salary sacrifice contributions.
• a range of insurance options:
  • Death
  • Death and total and permanent disability
  • Death, total and permanent disability and salary continuance, and
  • Death and salary continuance.
• highly competitive insurance premiums – due to the group cover status
• in some cases, automatic acceptance levels for insurance cover
• a dedicated superannuation education program
• access to a professional financial adviser, and
• discounts on selected AXA products and financial services.

• Your financial adviser
• The Government’s Choice website at: www.superchoice.gov.au
• ATO at: www.ato.gov.au