What happens to an employee’s superannuation when they leave my employment?

When an employee moves on from your business, it’s natural to wonder what happens to their superannuation. Here’s a breakdown of what you need to know:

Employer Obligations Cease

Once an employee departs, you are no longer obligated to make superannuation contributions on their behalf. These contributions go towards their retirement savings, and since they’re no longer earning from you, the contributions stop.

Existing Superannuation Remains

The super guarantee contributions you’ve already made stay put in the employee’s chosen super fund. This amount continues to grow through investments even after they leave your company.

Employee Choices

The employee has options for their super upon leaving:

  • Stay with Current Fund: They can choose to keep their existing super fund, even if they have a new job with a different default fund.
  • Consolidate Funds: They might decide to consolidate their super into one fund for easier management.
  • Choose a New Fund: They have the freedom to pick a new super fund offered by their new employer.

Your Responsibility as Employer

  • Final Payment: When processing the employee’s final paycheck, superannuation is not typically included. However, any entitlements like accrued annual leave attract super contributions, so ensure those are factored in.
  • Super Fund Details: If the employee hasn’t nominated a preferred super fund, you should pay their contributions into your employer-nominated or default fund.

Resources for More Information

For a deeper dive into superannuation obligations and procedures, you can refer to the Australian Taxation Office (ATO) website: https://www.ato.gov.au/businesses-and-organisations/super-for-employers

By understanding these guidelines, you can ensure a smooth transition for your departing employee and fulfill your superannuation responsibilities as an employer.


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