When it comes to choosing a superannuation fund, many factors come into play. But did you know that your enterprise agreement can also affect your choice of super fund? In this article, we will dive into the relationship between superannuation funds and enterprise agreements and how it impacts your retirement savings.
Firstly, let`s define what an enterprise agreement is. An enterprise agreement is a legally binding agreement between an employer and their employees, outlining the terms and conditions of employment. This can include things like pay rates, working hours, leave entitlements, and superannuation contributions. In the context of superannuation, an enterprise agreement can specify which super fund employees must contribute to.
There are two main types of enterprise agreements that can impact super fund choice – employer-nominated funds (ENFs) and industry funds. ENFs are super funds selected by the employer to be the default fund for their employees. Industry funds, on the other hand, are funds that cover a specific industry, such as construction or hospitality.
So, why does your enterprise agreement matter when it comes to choosing a super fund? Well, if your enterprise agreement specifies an ENF, you may be limited in your choice of super fund. However, it`s important to note that you are not obligated to join the ENF and can choose to opt-out or choose a different fund altogether.
If your enterprise agreement specifies an industry fund, it`s worth considering whether this fund is suited to your individual needs. For example, if you work in a different industry in the future, you may no longer be eligible to contribute to that fund. It`s important to choose a fund that offers investment options and features that align with your investment goals and risk tolerance.
It`s also worth considering the fees associated with the super fund specified in your enterprise agreement. Different funds have different fee structures, and some may charge higher fees than others. Over time, these fees can make a significant impact on your retirement savings.
In summary, your choice of super fund can be impacted by your enterprise agreement, but it`s important to remember that you have the ability to opt-out or choose a different fund if you wish. When choosing a super fund, consider the investment options, features, and fees, and ensure that it aligns with your future retirement goals. By taking the time to choose the right super fund, you can set yourself up for a comfortable retirement.