Overview of Choice of Fund
What is Choice of Fund?
From 1 July 2005, certain employees are able to choose which superannuation fund or retirement savings account will receive their superannuation guarantee contributions. This is known as “Choice of Fund’.
Choice of fund means that these employees will be able to choose which fund they join and have the freedom to switch to another fund later if they choose. The Government believes that greater freedom of choice will increase competition between funds, which may reduce fund costs, increase returns, and so maximise members’ benefits. The Government also believes that having the right to choose their own fund will encourage employees to take more interest in saving for their retirement.
It is important to note that choice covers compulsory employer superannuation guarantee contributions only. Employer contributions over and above the amount required by the superannuation guarantee law are not covered by choice of fund. This means the employer could decide not to pay these additional contributions to the employee’s chosen fund.
When did it become effective?
For most employees, choice of fund became effective on 1 July 2005. For further information refer to the 'Frequently Asked Questions'.