Mercy Super - Always for you

From 1 July 2005 some working Australians are able to choose which fund their superannuation contributions are paid into.

 

The Choice of Fund legislation applies to 'Superannuation Guarantee' contributions made by employers on behalf of their employees.

 

If you employ staff under a federal award you must offer choice whether or not that award requires contributions to be made to a specific superannuation fund.  From 1 July 2006, employers that are corporations and were making superannuation contributions under a state award will have to offer choice to their employees.  These employees are now covered by the Federal workplace relations system under an agreement called a 'notional agreement preserving state awards'.

 

Some state laws also provide for choice of fund under state based arrangements.  For more information, you should refer to the specific information on each State and Territory.  For further information on awards and industrial agreements, please refer to www.workplaceauthority.gov.au or contact the workplace relations department in your state or territory.

 

Although changes may be made in the future, at the moment the following employees do not have access to choice of fund:

 

• People for whom contributions are being made in accordance with certain Workplace Agreements or certified agreements under the Industrial Relations Act or Workplace Relations Act.  This is likely to apply to many current and potential members of Mercy Super.

 

• Employees whose 'contributions' are made to unfunded public arrangements.

 

• Defined benefit fund members who would still get retrenchment and retirement benefits from that fund even if their employer paid future contributions to another fund.

 

Eligible employees are able to choose any complying superannuation fund (which includes Mercy Super) or retirement savings account. Such funds are known as 'eligible choice funds'.  If you have an employee that is eligible for Choice, and they do not choose a fund you must pay your Superannuation Guarantee contributions to a default fund of your choosing.

 

As Mercy Super is not a public offer superannuation fund, employers must apply to become an Associated Employer of the Fund.  Such applications will need to approved by the Fund Trustee and Principal Employer (the Corporation of the Trustee of the Order of the Sisters of Mercy in Queensland).

 

 

When did Choice of Fund start?

 

Choice commenced on 1 July 2005 with various changes made after this date.

 

 

Does Choice of Fund apply to me?

 

To determine if your employees are eligible to choose their super fund, you will need to review the terms and conditions of their employment.  In some organisations, you may need to consider this for different groups of employees or even for individual employees separately.

 

Generally, Choice of Fund legislation applies to:

 

• employees covered by a Federal Award;

 

• employees not covered by any award or registered agreement; and

 

• employees covered by State Awards whose employers are incorporated businesses (i.e. companies)

 

There are certain instances in which Choice of Funds does not apply, and these include:

 

• People for whom contributions are being made in accordance with certain Workplace Agreements or certified agreements under the Industrial Relations Act or Workplace Relations Act.  This is likely to apply to many current and potential members of Mercy Super.

 

• Employees whose 'contributions' are made to unfunded public arrangements.

 

• Defined benefit fund members who would still get retrenchment and retirement benefits from that fund even if their employer paid future contributions to another fund.

 

Choosing a default fund

 

It is important that you select a default (sometimes called an 'employer') fund for those employees that do not nominate their own fund.  In practise, in many workplaces, it is not uncommon for employees not to choose their own superannuation fund, even if they are eligible to do so.

 

Your default fund needs to be a complying fund within the meaning of the Superanuation (Industry) Supervision Act and complying fund offer at least the minimum level of insurance cover, which is outlined below.  Mercy Super meets these requirements.

 

Age Range	Level of life insurance
20 - 34 years	$50,000
35 - 39 years	$35,000
40 - 44 years	$20,000
45 - 49 years	$14,000
50 - 55 years	$7,000

 

• Or the premium for a person under 56 years of age is at least 50 cents per week or the equivalent.

 

If your employees are covered by a Federal Award, you should refer to the relevant Award as its provisions may determine the fund/s which you will need to nominate.  Mercy Super is nominated as a potential default fund in most health industry awards.

 

The Work Choices Act provides for the establishment of different types of workplace agreements, both collective and individual. If these apply in your business, it is possible to nominate a default fund via these agreements.

 

When choosing a default fund for your staff, the questions you should ask include:

 

• Is the fund named in any Awards that you employ staff under?

 

• Are you happy with the level of service you have access to?

 

• Does it provide the insurance cover your staff need?

 

• Is it delivering returns you are happy with?

 

• Does it offer an investment option that suits your employees?

 

• Do the fees represent value?

 

Take a few moments to make sure you read all available information such as Member Booklets (Product Disclosure Statements).

 

Be wary of sales people and financial planners offering you what seems to be a fantastic deal.  Check the small print relating to commissions and find out what's in it for them.  Remember - it is illegal for anyone to offer an employer any form of inducement to select a particular fund or product as your default fund.

 

 

Standard Choice Form

 

Employers are required to provide eligible employees with a Standard Choice Form within 28 days in the following circumstances:

 

• When an employee commences work with your organisation.

 

• Upon request by an employee.  While an employee can choose a fund at any time, you only have to accept one Standard Choice form from an employee in a 12 month period, although you can so more often if you wish.

 

• When you become aware that a chosen fund no longer meets the crietia to be an eligible choice fund.

 

• Where the employee is a member of the default fund and you change your chosen default fund.

 

If you have selected Mercy Super as your default fund, you can download a

Choice of Super Fund Nomination here or request a supply by calling 1300 368 891 or 07 3163 8867.

 

If an employee chooses a fund other than the default fund, you must commence paying into that fund, provided it is a complying eligible choice fund, within two months of receiving the notification.  Please note that the responsibility for transferring any existing funds into the new account rests with the employee.

 

 

Administration

 

As an employer you are required to maintain records for five years, showing their compliance with Choice of Fund laws. Records should include:

 

• Who is eligible and ineligible for Choice of Fund.

 

• Which default fund(s) apply to your employees or groups of employees.

 

• The dates Standard Choice forms were issued to each employees.

 

• Dates on which Standard Choice forms were returned.

 

• For each employee who makes a choice, the name of the fund nominated and confirmation that the funds nominated are complying funds.

 

• If the fund nominated by your emplyee is not a complying fund, the date on which you advised the relevant employee.

 

• The date on which the first contribution was paid in accordance with the employee's request.

 

 

Where can you get further assistance?

 

This section is only intended to provide an overview of the Choice of Fund requirements.  The Government has initiated an education program to help employees and their employers understand their obligations under Choice of Fund.

 

For further information, visit the Tax Office's Choice of fund website and search for 'Choosing a super fund' at http://www.ato.gov.au/businesses/content.asp?doc=/content/56761.htm or call the Super Choice Infoline on 132 864.  You can also look at the Super Decisions booklet produced ASIC.

 

Please also feel free to contact Mercy Super.