Choice of Fund is your opportunity to take control of one of the biggest investments you will ever have – your superannuation.

What is Choice?

The Government's Choice of Fund legislation, introduced on 1 July 2005, allows most Australian employees to choose the super fund that their employer's contributions go into (that is, the 9% Superannuation Guarantee contributions that your employer is required to make to your super fund on your behalf).

Choice of Fund gives you two main options:

1. Your first option is to do nothing. In this case, your super contributions will go into the fund that your employer has nominated as the ‘default fund'.
   
   
2. Your other option under Choice is to choose a new super fund for your future employer contributions.

Does everyone get to choose?

Choice of Fund does not apply to everyone. Employees who are covered by an Australian Workplace Agreement (AWA) or Enterprise Bargaining Agreement (EBA), that already stipulates where employer super will be paid, may not have access to Choice. You may also be exempt if your super is paid under a State award or industrial agreement. If you're not sure, check with your employer to see whether Choice applies to you.

Do you want to choose?

Changing funds is not a decision that should be taken lightly. Indeed, one of the major risks that any of us face when it comes to Choice is simply making an ill-informed decision about our super that could cost us dearly over the long term. Lots of superannuation funds are competing for our superannuation dollar. Some, of course, may have very good products to promote; others, however, may not.

So if you're thinking of making a choice, don't rush into it – take your time and be choosey about your super.

1. Think about what you need from a super fund
   
   Before you look at the different funds on offer, have a think about what you need from a super fund. For example:
   
   

   Do you need to have a variety of investment options so that you can pick one that will suit your risk and return profile now, and maybe switch to a different option as your needs change in future years?
   Do you need to ensure that you're paying the lowest possible fees, or are you prepared to pay a premium for certain services or certain investment options? If you've never given much thought to fees, it's worth considering the impact that fees can have on your investment over time.
   Can you handle short-term ups and downs in fund performance as long as the long-term returns are reasonable? Or, do you need reliable, consistent returns from your fund at all times, without the risk of your capital being depleted by negative returns, even in the short term? What are your needs when it comes to insurance? Do you need a super fund that offers these options? And what about the premiums – what level of cover can you afford? What other options do you need from a super fund? For example the ability to rollover money from other funds, or the ability to switch investment options? And what about other extras that a lot of super funds now offer – like reduced-rate home loans, cheaper banking products and credit cards? Do you need to be able to access these options specifically through your super fund provider, or would you be better off getting them elsewhere?	Fido helps you find out more about fees and fund returns The Super Calculator on ASIC's consumer website, fido (www.fido.asic.gov.au), can show you the impact that different levels of fees can have on your investment over time. While a slight difference in fees may not seem like much right now, after 30 years of investing the difference can be substantial. Fido also provides long-term performance data for typical super fund investment options – useful information if you want to compare the performance of different funds and see how returns can differ depending on the mix of investments in a fund.

2. Get to know the super you've already got
   
   Once you've got a better understanding of what you need from your super fund, familiarise yourself with the fund (or funds) that you're in already.

   Read your benefit statement to find out:
   

   • your current balance
     
     
   • what your employer has contributed for the year
     
     
   • what you have contributed for the year (if anything)
     
     
   • any tax that has been deducted
     
     
   • any fees that have been charged
     
     
   • what investment strategy you are currently invested in.
     
     
   Also look out for other important information from your fund, such as the annual report, fund newsletters and information on the website, and especially the product disclosure statements that is relevant to your investments.
   
   
3. Weigh up your options
   
   So, you've thought about the sorts of things you need from your super fund, and you've got to know a bit more about your existing super. Now it's time to have a look at the other options that are out there and start making comparisons.
   
   Make a list of some funds you'd like to investigate. Make sure they are "retail" or "public offer" funds. This is important as some types of funds are not open to everyone. In addition, check to see whether you are eligible for any industry funds offered exclusively to people in your industry, or whether your employer offers a corporate fund. Visit the funds' websites and gather product disclosure statements for their products in order to find out as much as you can about the products on offer.
   
   Download the Choice checklist (PDF, 138kb).
   
   We've prepared the Choice checklist (PDF, 138kb) to help guide you through your research process. It lists some of the important things to take note of, such as the flexibility of the fund and its investments, fees, performance, insurance, and the range of extras the funds may be offering.
   
   
4. Making your choice
   
   If you are eligible for Choice of Fund and you would like to make a change, talk to your employer about making your choice of fund. Your employer can provide you with a Standard Choice Form and other necessary information to help you make the change.
   
   
5. Help is at hand
   
   As with all super and investment matters, there are lots of places you can turn to for help and more information.
   
   
   • Visit the ASIC consumer website, 'Fido', at www.fido.asic.gov.au to learn more about super in general, your rights as a super fund member, and other independent information that will help you make informed choices about your super.
     
     
   • Visit www.infochoice.com.au for the latest news and developments in superannuation and Choice of Fund, and a range of online financial tools and tips.
     
     
   • If you would like some professional guidance, talk to a financial planner. The Financial Planning Association website (www.fpa.asn.au) can help you find a qualified financial planner in your area who is a member of the Association. Be sure to ask any financial planner you talk to for an explanation of their fee structure, as well as any commissions they may receive for recommending certain products.
     
     

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