Australia’s delayed Federal Budget 2020/21 includes several superannuation (super) reforms under the banner of “Your Future, Your Super.” The measures are expected to take effect from 1 Jul 2021
Super accounts to follow the employee.
Employees that already have a super account as at 1 Jul 2021, will have their existing account ”stapled” to them until they decide otherwise. This measure aims to avoid the duplication of super accounts that can occur when a fund member changes employment. An employer’s nominated default fund will only apply if a new employee does not have an existing super fund account — typically this would affect individuals starting their first job — and only if the employee does not select a fund.
Comparison and selection of funds based on their performance.
The Australian Taxation Office (ATO) will develop comparison and ranking tools that enable consumers to compare MySuper products by fees and investment returns.
Underperforming super funds
- An annual performance test will apply to MySuper products from 1 Jul 2021, and to trustee-directed products (multi-asset class options) from 1 Jul 2022. The test will be based on a comparison of the product’s annual investment return over the previous eight years against a passive return benchmark calculated and published by the Australia Prudential Regulatory Authority.
- Products that underperform their benchmark return by a minimum of 0.5% per annum for two consecutive years will be barred from accepting new members until their performance improves.
- Products that underperform the benchmark return by a minimum of 0.5% per annum over the most recent eight-year period will be classified as “underperforming” on the ATO YourSuper comparison tool. Trustees must inform members about the underperformance and notify them about the YourSuper comparison tool.
Improving the transparency and accountability of superannuation funds.
- New laws will strengthen the obligation of super trustees to act in the best financial interests of members.
- Trustees must provide members with “key information about how they manage and spend their money” in advance of annual member meetings.
- ’Your future, your super’ (Australian government, 6 Oct 2020)
- Budget 2020-21 (Australian government, 6 Oct 2020)