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MySuper and super choice

Section: 3.2

Super choice has been operating in Australia since 2005, meaning that for many years now most employees have been free to choose which super fund they would like their employer-paid contributions sent to.

Not employees will have a preferred super fund, employers are required to have in place a default super fund for employees who haven't made a fund choice or who aren't interested in making one.

These default funds are normally chosen by the employee, often in consultant with their employees, or they can use the fund endorsed by their employer industry association or nominated in the industrial awards that sets their employment terms and conditions.

Because many of the nation's employees who use their employer's default super fund keep most of their superannuation in the fund's default investment option, the government has integrated MySuper into these workplace arrangements by stipulating that only MySuper products will be allowed to be default super funds that can accept superannuation guarantee contributions.

In practice, this means super funds and wealth management groups that wish to compete in the workplace default superannuation market need to apply to the superannuation regulator, the Australian Prudential Regulation Authority (APRA), for authorisation to offer MySuper products.

Tip: MySuper is what we now call the default super product an employer uses for compulsory superannuation contributions. They are simplified superannuation products containing:
  • just one investment choice;
  • one standard insurance arrangement

As a simpler super products they usually have lower fees and are easier to compare.

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Friday, November 13, 2020