What the latest super changes mean for you

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The government lulled everyone into a false sense of security before the Budget, promising it would only tinker with superannuation in its major financial recovery plan.

However, there were some major announcements. Here’s how they will affect you.

Stapling super
The government announced that your superannuation fund will follow you around when you change jobs or careers.

While it will still be possible to change funds whenever you want, if you pay no attention to your super fund, it will stop the creation of multiple accounts, which often leads to people losing money in retirement.

Some of the detail around how this proposal will work still has to be ironed out and there are major concerns about what would happen to insurance policies if people switched to different industries.

The plan means that by 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.

It will also allow employers to obtain information about the employee’s existing superannuation fund from the Australian Taxation Office (ATO).

The employer will do this by logging on to 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 estimates that there are six million multiple accounts held by 4.4 million people and that these multiple accounts mean that $450 million in unnecessary fees are drained from these super accounts.

It is believed that the implementation of this measure will result in 2.1 million fewer unintended multiple accounts over 10 years and save workers $2.8 billion in duplicate fees, insurance and lost earnings.

YourSuper comparison tool
The government also committed to a new, interactive YourSuper comparison tool.

Once this measure was announced, it was immediately attacked by Labor, which announced plans to block it in the belief that it had a “massive design fault” built into it.

That is because the new tool only measures investment fees and does not measure administration fees, rendering it somewhat useless.

The government said that by 1 July 2021, the YourSuper tool will provide a table of simple super products (MySuper) ranked by fees and investment returns and link workers to super fund websites where they can choose a MySuper product.

The tool will also show your current super accounts and prompt you to consider consolidating accounts if you have more than one.

Annual performance test
By 1 July 2021, MySuper products will be subject to an annual performance test.

If a fund is deemed to be underperforming, 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.

Funds that fail two consecutive annual underperformance tests will not be permitted to accept new members. These funds will not be able to reopen to new members unless their performance improves.

By 1 July 2022, annual performance tests will be extended to other superannuation products.

What do you think of the government’s proposed superannuation changes? Should any measurement tool take all fees and charges into consideration?

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Written by Ben

7 Comments

Total Comments: 7
  1. 0
    0

    Joe Hockey said the same and look what happened,you are just about to be screwed people.

  2. 0
    0

    What do you think of the government’s proposed superannuation changes? Should any measurement tool take all fees and charges into consideration?

    Yes otherwise it is a useless comparison..

    $125 a month my super fund takes out in fees and charges……ridiculous amount…

  3. 0
    0

    Like most changes to super, I am always ambivolent, but suspicious…
    Wait till the media get hold of it and tell us what it really means…
    I like the idea of your super following you. The old prefered super was way too open to graft.
    Not happy with the intentional loophole (admin fees) though.

  4. 0
    0

    Yes of course the My Super Tool should take all costs into consideration. I’m 59 & going thru the process of collecting info in the event that I may need all of this info very soon (stood down at work with possibility of being sacked) & after a phone call to my super fund have been very daunted & confused by the multitude of important info regarding what any decision of mine will cost me & it would be fantastic to have this info (& the other proposed info) at the click of a button to help with decision making around whether to access all of my super, or only some of it or as an allocated pension or to just get Newstart/Job seeker until I’m 60 & then cash super (less tax) or whether 2 keep getting Job seeker til I’m 67 (old age pension age) or if i should do volunteer work 15hrs per week & collect 10% of my super, or to roll existing super into a cheaper to access fund (which would be easier to identify with the new tool, if i had the correct info)! So many options & I av no idea what to do but I’m told that if I do nothing my super balance gets transferred to another account within my fund & it will cost even MORE in admin & investment fees etc than it does while I still have a job & there’s nothing I can do about it!
    And the kicker- a Strategic Avisor (within this fund) to help me with these decisions would cost me about $4000 (can you believe it?) up front as well as ongoing charges if i decide to enlist them to manage it for me!! Im guessing an external Independant Advisor would charge similar!

    So a warning to all those paying in to super, be aware of how much all the rogues take from YOUR money/super. Makes me wonder if it’s all been worthwhile (not so bad if ya get really high return interest rate on a regular basis, but with all the unpredictable dips, crashes, etc it’s a big con that they force you to consider by making tax advantages in salary sacrifices but you can only salary sacrifice $25,000 per year now or you get penalized for that as well!
    My old super fund 20yrs ago allowed me to freeze most all the charges when i was unemployed & the super just sat, not costing me much, but it’s so very different now! Not meant to survive in this country any more whatever you do with the high cost just to exist, no wonder suicides are so high!

  5. 0
    0

    I welcome the idea of naming and shaming underperforming funds, but will it motivate them to do better or to market standards/averages??


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