Can your boss legally force you into a certain super fund?


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Australian workers are fighting to have their superannuation paid into a fund of their choice.

Employees with some workplace agreements, public sector employees and members of certain defined benefit funds are being forced into forced into super funds that underperform industry benchmarks.

"We've seen some unions and super funds denying people choice," says Super Consumer Australia director Xavier O'Halloran.

can your employer force you into a super fund

This can have a "significant impact" on their retirement savings, he says.

"For example, the quality of the insurance that might not be appropriate for them or it might be an underperforming fund."

In a case before the workplace tribunal last year, Kmart employees fought and won against a union deal that would have left workers worse off because it locked staff into the union's industry super fund.

Legislation to extend choice of superannuation fund to more employees is currently before parliament.

The draft legislation amends the Superannuation Guarantee (Administration) Act 1992 to allow employees covered under workplace determinations or enterprise agreements made on or after July 1, 2020 to choose their super fund.

While you may not have a choice in where your employer pays your super guarantee, you can choose not to keep the bulk of your super in that fund.

For example, if your employer is contributing your super into fund A but you prefer fund B, then you can use fund A for the salary contributions but can transfer the balance into fund B at any time as long as fund A remains open for ongoing employer contributions.

Employees of faith-based organisations such as Christian and Catholic schools are often forced into corresponding funds.

A Sydney teacher, who preferred not to be named, says when he started full-time work at a Catholic school he was not given a choice of fund - it was paid into Australian Catholic Superannuation Retirement Fund.

While the fund performed under the benchmark, teachers who had asked to change funds were denied, he says.

"There are several people here who have other super accounts and they are continually moving their money into other accounts."

Evalesco director and financial adviser Jules Knox says while a mandated fund may come with perks such as bonus contributions or employer-paid insurance, there are often ways to retain the employer fund for these benefits while having a personal fund that allows greater choice, transparency and better performing investments.

"For example, the employee could have their employer contributions directed into their employer fund, while making personal contributions to their own fund," she says.

"Or, depending on their circumstances and any conditions of the fund, have all of their payroll contributions (such as SG, employer additional and any salary sacrifice) directed to the employer fund, and then periodically rollover the majority of the balance (while retaining the minimums to keep the account open, or to maintain insurance) into their own fund.

"By having more than one fund, there may be more fees payable as most super funds charge administration or account keeping fees regardless of the balance."

Knox says it's important to seek advice when comparing funds - although some funds may have low administration fees, they may be charging higher investment fees.

When reviewing clients' super funds, Knox says she also considers insurance and whether it offers good value for money, or are there better alternatives.

It's also important to know the conditions of the insurance- whether it is medically underwritten or automatically accepted, and if there are premiums being paid for or subsidised by the employer.

Employees should also find out if they need to maintain a minimum balance or ongoing contributions for the insurance to be maintained.


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Julia Newbould was editor-at-large and later managing editor of Money from November 2019 to February 2022. She was previously editor of Financial Planning and Super Review magazines; managing editor at InvestorInfo and at Morningstar Australia. Julia co-authored The Joy of Money, a book on women and personal finance. She holds a Bachelor of Economics from the University of Sydney where she serves on the alumni council.