The Government is introducing a series of reforms for superannuation, called Your Future, Your Super. These changes will take effect from 1 July 2021.
There will be four key changes:
- Your superannuation will automatically follow you from job to job;
- An online YourSuper comparison tool will be launched;
- All super funds will be subject to an annual performance test; and
- Super funds need to be more accountable and transparent about how they are managing the retirement savings of their members.
Your super will follow you
At the moment, a new super account is created automatically every time someone starts a new job, unless the new employee provides their employer with the details of an existing super fund account.
From 1 November 2021, your super account will automatically follow you when you change jobs. This is intended to prevent people from unintentionally ending up with multiple superannuation accounts, and paying multiple sets of fees, which may affect their retirement savings.
People who do not have an existing super account and do not make a decision regarding a fund, will have their super paid into their employer’s default superannuation fund.
YourSuper comparison tool
An interactive, online YourSuper comparison tool will be launched to help people decide which MySuper product best meets their needs. The comparison tool will:
- Provide a table of MySuper products ranked by fees and investment returns.
- Provide links to super fund websites where people can choose a MySuper product.
- Show people their current super accounts and prompt them to consider combining their accounts if they have more than one.
While there are similarities between the MySuper products offered by super funds, there can also be some differences that are worth being aware of (e.g. different MySuper products have varied levels of investment risk and different MySuper products have different levels of insurance cover and costs included) – read the MySuper Explained blogpost on our website for more information.
Note that the comparison tool will only provide details of MySuper products, and not any of the other super fund investment options that are collectively known as Choice products.
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.
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.