The 2020-21 Federal Budget was recently announced. Here is a summary of the changes that will impact your super.
The Government has announced a series of reforms for superannuation, called Your Future, Your Super. These changes will take effect on 1 July 2021.*
Four key changes have been announced:
- Your superannuation will automatically follow you from job to job;
- A new, interactive, online YourSuper comparison tool will be launched;
- All super funds will be subject to an annual performance test; and
- Superannuation trustees are required to be more accountable and transparent about how they are managing the retirement savings of their members.
1. Your super will follow you
At the moment, a new super account is created automatically every time you start a new job, unless you provide your employer with the details of your existing super fund.
From 1 July 2021, your super account will automatically follow you when you change jobs. This is intended to prevent you from unintentionally ending up with multiple superannuation accounts on which you are paying multiple sets of fees, which may affect your retirement savings.
If you do not have an existing super account and you do not make a decision regarding a fund, your employer will pay your super into their nominated default superannuation fund.
2. YourSuper comparison tool
A new, interactive, online YourSuper comparison tool will help you decide which super product best meets your needs. The comparison tool will:
- Provide a table of MySuper products ranked by fees and investment returns.
- Link you to super fund websites where you can choose a MySuper product.
- Show your current super accounts and prompt you to consider combining your accounts if you have more than one.
3. Annual performance test for super funds
MySuper products will be subject to an annual performance test, starting on 1 July 2021.
If a super fund’s MySuper product is deemed to be underperforming, the fund will need to inform its members of this underperformance and provide them with information about the YourSuper comparison tool. Underperformance will be publicised on the YourSuper comparison tool until performance improves. Funds that fail two consecutive annual underperformance tests will not be able to accept new members unless their performance improves.
By 1 July 2022, annual performance tests will be extended to other superannuation products.
4. Increased accountability and transparency by super funds
From 1 July 2021, superannuation trustees (i.e. organisations that hold and administer assets for the benefit of others) will need to be more accountable and transparent about how they are managing the retirement savings of their members. Trustees must:
- Comply with a new duty to act in the best financial interests of members.
- Demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
- Provide members with key information regarding how they manage and spend their money in advance of Annual Members’ Meetings.
Source: Your Future, Your Super factsheet available here.
* Federal Budget announcements above are proposed changes only. These proposals won’t become law until they are passed in Parliament. If you ’re unsure about how these proposed changes may affect you, please speak with your financial planner.