What is employer super?
Help your employees achieve their retirement goals
As an employer, you’re usually required to pay contributions into a default superannuation fund for your employees. You’ll pay the compulsory Superannuation Guarantee (SG) contributions into this fund, if an employee doesn’t (or isn’t able to) nominate a different fund.
It’s important to know exactly what you need to do so you can help your employees save for their retirement and meet your legislative responsibilities.
All of this can be complicated. It’s our job to make it as simple as possible for you.
Our superannuation plans can be tailored to suit the needs of your business and the needs of your employees.
Choosing the right super plan
When selecting a default super fund there are some things to consider:
- Is the fund able to receive MySuper contributions?
- The default fund may already be specified by industry requirements (eg an industrial award or enterprise agreement).
- Your default fund must meet certain ATO requirements.
- Your employees may nominate a super fund of their own choice to receive employer contributions.
We can help you
By knowing what to look for in a super fund you can be confident you’re making a suitable choice for your employees and help them avoid having to pay contributions, interest and administrative fees to the Australian Taxation Office (ATO).
Investment options in super
Choices to suit the needs of all your employees
As an employer, you know that no two employees are the same. What suits one employee may not suit the next.
That’s why it’s important to offer a wide range of investment choices so each employee can select one or more for their particular needs. And if your employees don’t choose an investment option, there’s always the MySuper investment option for them.
MySuper is a simple default investment option for your employees. It is intended by the government to make comparing superannuation products easier, based on key differences like cost and investment performance. ‘MySuper-authorised’ means it meets the specific standards set under legislation, including fee structures and generally a basic level of insurance coverage.
An employee’s super will be invested in the default MySuper investment option unless they make an investment choice.
How we can help your employees
AMP’s Workplace Education team offer a range of services, such as 1:1 super health checks, seminars on various topics and super booths to help employees understand their finances.
Employees can access help in person at various workplace events which can be organised by contacting us.
They can also speak with a financial adviser who can provide expert guidance on which investment option would be most suitable for them, based on their individual circumstances and goals. Associated fees will be discussed with the employee before proceeding with the service.
Insurance inside Super
Understanding insurance inside your employees’ super
Generally, under superannuation law, your default employee superannuation fund needs to have insurance, subject to some exceptions1 . MySuper-authorised funds automatically meet this requirement. Employees also have options to change the level of their insurance cover in their super.
What types of insurance are available through super?
The insurance type usually offered by a super fund includes:
- Life insurance (also known as death cover)
- Total and permanent disability (TPD) cover
- Temporary salary continuance cover (also known as income protection).
It’s MySuper authorised. What does that mean?
MySuper is a simple default investment option. It is intended by the government to make comparing super products easier based on key differences, like cost and investment performance. MySuper-authorised means it meets the specific standards set under legislation, including fee structures and a basic level of insurance coverage2 .
If your employee doesn’t select an investment option, their contributions will be paid into a MySuper investment option.
Employees can change their default insurance
As an employer, you must ensure your fund provides a default level of insurance cover3 . Your employee may then choose to increase, decrease or cancel that cover.
If your employee chooses to do this, they should refer to the relevant super fund’s product disclosure statement for more details on costs and applying for insurance changes.
Insurance changes may affect the cost of your employee’s insurance premiums.
What are the benefits of insurance through super?
It can be advantageous for your employee to take insurance through their super fund. This is because through super, insurance can be:
- easy-to-manage - premiums are automatically deducted from your employee’s super account balance
- cost-effective - premiums are generally cheaper
- simple to get - there’s often no medical assessment required to get cover.
What are the limitations of insurance through super?
When an employee chooses how much insurance to hold through super, there are some things for them to consider:
- A super fund may not offer the level of cover or the types of insurance that your employee prefers. The insurance options in super may be limited, compared to insurance held outside super. For example, trauma cover is not available inside super.
- There can be delays when it comes to life insurance benefits - money will first be paid to the super fund and then passed on to the beneficiaries.
- Insurance premiums reduce your employees’ overall super balances, affecting retirement savings.
Your employee should check the relevant super fund’s product disclosure statement to understand the full details of how insurance through their super works.
Services to help your employees
Insurance is a personal choice. The amount of cover and the type of cover an employee needs will depend on their own circumstances and what they feel will give them peace of mind.
If your employees would like to use our insurance calculator, they can go here <LINK>. If they’d like to get some advice from a financial adviser or if want information about insurance options to suit them, they can call us.
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1Not applicable where an employee’s super account has not received a rollover or contribution for 16 months, or reached a balance of $6,000 between 1 November 2019 and 1 April 2020, or if an employee who joins a default super account after 1 April 2020 is under the age of 25 years, unless the employee chooses to keep or take out insurance in these circumstances (PYS/PMIF 2019 reforms).
2This is subject to the same exceptions described in the footnote above.
3Unless the exceptions described in the footnote above apply.
All statements about insurance cover are general comments only and the specific terms and conditions of the relevant cover will need to be considered in the event of any claim.
It’s important to consider your particular circumstances and read the relevant product disclosure statement before deciding what’s right for you. This information hasn’t taken your circumstances into account.
This information is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.