Super for employers
Choosing a super fund for your
As an employer you have to select a default super fund to make
super guarantee payments for your employees who have not chosen
their own fund.
Here we explain how to choose a super fund for your
What the super fund you choose
The fund you choose needs to be a fund that is authorised to
offer a MySuper product - these are known as 'employer-nominated'
or 'default funds'.
For more detail on your super obligations as an employer see the
Australian Taxation Office's article on
setting up super.
Comparing super funds
for your employees
When selecting a super fund start by checking the industrial
awards applicable to your employees. There may be particular funds
listed as default funds for your industry under an award.
Check the fees your employees will be charged by the fund. Low
fees are generally good, but you should look at what your employees
will get for their money.
MySuper products must have a diversified investment strategy.
Risks, returns and fees can vary. For example, a MySuper product
that has high fees and high performance might offer a very
aggressive asset allocation and take risks to get those
Consider the types of employees you have in the business. For
example, if the average age of your employees is under 30 you might
look for a more aggressive fund.
A fund that offers a MySuper product may also offer a range of
other different investment options, such as cash or shares. Your
employees may find it helpful to have access to these options if
they want to change their investment mix at a later
stage. Some MySuper products provide a lifecycle approach to
super where the investment mix changes as members get older.
See our MySuper
webpage to understand the difference between a single
diversified investment strategy and a lifecycle approach.
Pick a fund that has performed well over (at least) the last 5
years. Do not chase last year's best performer. The fund may have
higher fees but strong performance might justify the expense.
MySuper products must offer insurance on an 'opt -out' basis.
Consider the cost and what your employees get for their money.
Cheap insurance cover may have significant exclusions. For example,
casual or part-time workers may not be adequately covered.
Conversely, paying more for insurance can affect super balances.
You need to weigh up the pros and cons.
What else does the fund offer? Some super funds offer
educational seminars and advice. Does the super fund have a good
website that helps you find information easily?
Beware super funds offering
Superannuation legislation prohibits incentives being offered to
employers on condition that their employees join that fund.
Inducements may take any form, and include corporate hospitality,
holidays, or discounted rates on products or services.
For example, a super fund cannot offer you tickets to a sporting
event or discounted rates on loans on the condition you sign up new
employees to their fund.
Case study: Jane's super fund offers tickets to events
Jane has just started a
small business and is considering what default
fund is appropriate for her staff. Jane makes some enquiries with
an industry fund about what they offer. The fund tells Jane
they will send her tickets to a major sporting event if she agrees
to sign up new employees to their default fund.
Jane is worried that she shouldn't be accepting
these gifts and selects another fund for her sales
Case study: Michael's super fund offers discounts
Michael runs a small manufacturing business. He is
considering selecting a new default super fund for his staff.
Michael is a long term customer of ABC Bank that also offers a
super fund. In conversations with the bank, they tell Michael that
if he signs up some of his employees to their super fund, the bank
will reduce the interest rate on Michael's business loan and offer
him a new overdraft facility.
This raises alarm bells for Michael because even though he has a
good relationship with the bank, he knows the bank is not allowed
to offer him this type of inducement. Michael decides not to go
with ABC Bank's super fund.
If you think you've been offered unlawful inducements by a super
fund you can
report it to ASIC.
Make sure any incentives do not distract you from making an
informed decision. Focus on what's best for your employees.
You may also be contacted by funds telling you about their
MySuper product. Some advertising from super funds say that one
fund is better with insurance, returns or fees than another. Be
wary about these comparisons as they may not be comparing like with
Always take time to carefully consider information from super
funds and seek a professional opinion if you need to.
Picking a super fund for your staff is an
important decision. Take the time to do your research and seek help
if you need it.
Last updated: 30 Oct 2018