New hire not returned their super choice form? What to do

Here’s the scenario: 

You’ve hired a new employee. The contract is signed. The tax file declaration has been returned. They’ve supplied their personal details. But one thing is still missing: their completed superannuation choice form. 

It isn’t uncommon for new employees to drag their feet when it comes to nominating a super fund. Sometimes, people don’t fully understand the importance of it, are undecided on a fund or are simply overwhelmed by all the forms. 

But while they might not priortise it, as an employer, you need to as you’re obligated to make their super payments from the get-go—decision or no decision. So what should you do? 

Your super guarantee (SG) obligations

First, let’s just quickly recap your super obligations.

If you have employees, you generally need to pay super contributions no matter how much they’re paid. 

The super guarantee (SG) is the minimum amount you need to pay employees to avoid the super guarantee charge. This is currently 11.5% of your employee’s base earnings (ordinary time earnings). It’s planned to progress to 12% by July 2025. 

As an employer, you need to:

• Offer new eligible employees a choice of super fund by providing a Choice of Fund form. 
• Tell employees about your company default super fund
• Make super contributions at least quarterly by the due dates
• Ensure contributions are made and reported electronically
• Pay contributions into compliant super funds
• Provide their tax file number to their super fund (within 14 days of receiving the TFN form)
• Keep records of all payments and proof you offered a choice of super fund

Related: Everything you need to know about paying superannuation 

The super choice form

Employees have a right to choose where their super contributions are paid. The standard Choice of Fund form offers new employees three options for where they can pay their super contributions:

• An existing/stapled super fund 
• Your company default super fund
• A private self-managed super fund (SMSF)

Stapled super funds

Staple funds are traditional existing super accounts that are linked or ‘stapled’ to an individual employee and follow them between places of employment. 

Stapling was only introduced in November 2021. It’s designed to stop employees from opening a new account every time they change jobs.

Company default super fund

Having an employer’s default fund is a legal requirement. The super fund you nominate as your default super fund must:

• Adhere to the requirements and obligations outlined in superannuation law.
• Be approved by the Australian Prudential Regulation Authority (APRA) and provide a MySuper product, which is a low-cost option with essential features.

Private self-managed super fund (SMSF)

If a new employee has an SMSF, they should know about it and be able to get their details for it from their accountant or financial advisor. 

Super form not returned?

So, what do you need to do if a new employee fails to give you a completed form? You can’t blame the employee if you miss the deadline, it’s down to you. 

Instead, follow these two steps:

1. Request the employee’s ‘stapled super fund’ details from the ATO and pay super contributions into their stapled fund. 
2. If the employee doesn’t have a stapled super fund, you must make contributions into your company default super fund. 

Follow the steps to avoid SG charge

Where a new employee has failed to return their Choice of Fund form to you, as an employer, you’re still obligated to pay their super on time. Keep this in mind when new starters come on board. 

By following the steps outlined, you can ensure you make contributions by the deadline and avoid the super guarantee charge. 

Need more advice on staying compliant with your super obligations? Reach out to your Maxim advisor or contact our team today.