Choosing a default fund

If any of your employees are eligible for choice, you are required to select a default fund for those employees who do not choose their own fund. This is an important decision, and could make thousands of dollars difference to your employees' retirement savings.

Your default fund may be one of the following:

An Industry Fund run by employer associations and industry groups representing your industry. As there are no shareholders, industry funds are run only to benefit members with any profits going back into the fund. Some Industry funds are open only to employers and their workers within a certain industry but most are public offer – anyone can join, regardless of their type of work.

A Retail fund run by a financial institution such as a bank, investment or insurance company. Unlike industry funds, the company that owns the fund aims to retain some profit. Retail funds are open to all members and industries, and most have personal divisions for members who joined as your employees but have since left your employment.

A Corporate fund established by you specifically for your employees. The fund may be operated by you under a board of trustees or run under an employer-sponsored arrangement with an industry or retail fund. Membership is usually restricted to your current and former employees but may include their spouses.

From 1 January 2014, your default fund must offer a low-cost ‘MySuper’ product for employees who do not make an active choice about where their super contributions are paid. Media Super is MySuper authorised.

Things you might consider when choosing a default fund include:

  • ease of administration
  • fees for members
  • insurance options and premiums for your employees
  • long-term investment performance
  • education and service.

Changing your default fund may only affect new employees joining your business or you may opt to pay all future contributions to your new default fund. You can provide current employees with information and assistance to transfer their existing accounts to your new superannuation provider.