Tuesday, October 21, 2008

Are there alternative accounts to super?

There are no alternative accounts to super while an eligible employee works for you. You must pay the SG contribution into either the employee's choice of fund or into a default fund setup by you.

However, if you lose track of a former employee and still have funds that should have been paid into the employee's choice of super fund but no longer have the details of where the money should have been paid you can transfer the employee's accumulated super into an eligible rollover fund (ERF).

ERFs typically pay lower earnings rates than super funds and usually do not have other features, such as insurance cover. Some provide minimal investment choices.

ERFs offer some protection against benefits being eroded by administration fees, but fees may still be charged if the balance is over $1,000.

If you chose an ERF in which to put your former employee's super, your fund trustee will be required to formally review the nominated ERF at least every three years. ERFs charge employers nothing but do charge fund members whose money they hold.

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