Employer obligations re: Superannuation Guarantee payments

Posted by Malcolm Campbell, Luke Mitchell on 04 February 2016
Employer obligations re:  Superannuation Guarantee payments

A recent article in the Sydney Morning Herald highlighted the commonly held belief that all Australian workers could choose the fund their superannuation contributions would be paid into by their employer.  The change from a fund dictated by employer to individual employees choice of fund was introduced to the Australian employment landscape on 1 July 2005.  For the majority of Australian workers, this then meant they could choose the fund to which their superannuation payments would be made.


In an educational booklet released at the time by the Australian Taxation Office, the change was seen as a promotion of ownership for employees over funds which would eventually become their retirement savings.

As at 30 September 2015, the Australian Bureau of Statistics recorded total funds managed by the Australian superannuation industry as totalling $2,590.6 billion. (ABS Managed Funds, Australia, September 2015).  This growing total is swelled quarterly by employers contributing on behalf of their employees a minimum 9.5% of their gross earnings.  The burgeoning superannuation funds are jointly administered by the Australian Taxation Office, the Australian Securities and Investments Commission and the Australian Prudential Regulatory Authority.  Members are mostly free to choose their fund or move to another fund if preferred. 

However, for some employers, their employees are bound to specific superannuation funds related to their industry.  Under Section 6 of the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004, where “employment is governed by an industrial instrument such as a workplace agreement which specifies the fund or funds into which payments must be made, where the employee is a member of a “defined benefit fund” that meets certain conditions or for some public sector employees of the state and federal governments” the fund applicable to their employment is noted in the agreement and hence, no choice exists. (Employer super rules.)

Employers should ensure they are well versed in their responsibility to their employees as far as superannuation contributions are concerned.  Business.gov sets out the following guideline for business owners and employers to ensure they meet their obligations:

  • Pay super contributions for eligible employees by the cup off dates each quarter;

  • Pay at least the minimum 9.5% contribution amount of the earnings base (generally ordinary time earnings);

  • Check if any employees are eligible for a choice of super fund;

  • Provide eligible employees with a Standard choice form within 14 days of receiving a TFN declaration form;

  • Pay super contributions for any eligible contractors;

  • Keep records of super contribution payments and that a choice of super fund has been offered to eligible employees;and

  • Note, if you are a sole trader or in a partnership with no employees, there is no super payment obligation.

Following the change of Prime Minister in August 2015, the new PM, Mr Malcolm Turnbull instigated a probe by the Productivity Commission into choice and efficiency of the superannuation industry.  Treasurer Scott Morrison said “(Australians) shouldn’t be stopped, prevented as they currently are, under various agreements and awards from having their own money going to the fund where they want it to go to”.  Any change to the eligibility of workers currently restricted by the industrial instrument which governs their sector may still be a way off, but employers should continue to remain up to date with all aspects of employee salaries and entitlements.