The Government committed to their election promise that there will be no adverse tax changes to the superannuation system, and – for the first time in a number of years – there were no measures specifically relating to SMSFs in this year’s Budget.
The key superannuation reform however in the Budget was the introduction of a new default system where superannuation will follow an individual when they change jobs, reducing the number of duplicate accounts held by employees.
Superannuation accounts ‘stapled’ to an individual
| Date of effect | From 1 July 2021 |
This reform will ensure individuals continue to use their existing superannuation fund when they change jobs. The fund will be “stapled” to the individual to prevent the duplication of superannuation fund accounts when changing employers.
From 1 July 2021:
- If an employee does not nominate an account at the time they start a new job, employers will pay their superannuation contributions to their existing fund.
- Employers will obtain information about the employee’s existing superannuation fund from the ATO.
- The employer will do this by logging onto ATO online services and entering the employee’s details. Once an account has been selected, the employer will pay superannuation contributions into the employee’s account.
- If an employee does not have an existing superannuation account and does not make a decision regarding a fund, the employer will pay the employee’s superannuation into their nominated default superannuation fund.
The Government expects that future enhancements will enable payroll software developers to build systems to simplify the process of selecting a superannuation product for both employees and employers through automated provision of information to employers.
Accountability of underperforming funds
| Date of effect |
From July 2021 (MySuper products) From 1 July 2022 (non MySuper products) |
From July 2021, the Australian Prudential Regulation Authority will conduct benchmarking tests on the net investment performance of MySuper products, with products that have underperformed over two consecutive annual tests prohibited from receiving new members until a further annual test shows they are no longer underperforming.
If a fund is deemed to be underperforming in the first of these annual tests, it will need to inform its members of its underperformance by 1 October 2021. When funds inform their members about their underperformance, they will also be required to provide them with information about the YourSuper comparison tool. Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.
Non-MySuper accumulation products where the decisions of the trustee determine member outcomes will be added from 1 July 2022.
Performance transparency
| Date of effect | From July 2021 (MySuper products) |
A new interactive tool (YourSuper) will enable a comparison of simple super (MySuper) products ranked by fees and investment returns. The tool will also provide links to other MySuper products and show current super accounts if the individual has more than one.
The tool will be administered by the ATO.
Trustee accountability
| Date of effect | By 1 July 2021 |
The obligations on superannuation trustees will be strengthened to ensure their actions are consistent with members’ retirement savings being maximised. By 1 July 2021:
- Superannuation trustees will be required to comply with a new duty to act in the best financial interests of members.
- Trustees must demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
- Trustees will provide members with key information regarding how they manage and spend their money in advance of Annual Members’ Meetings.
