Federal Budget - 2020/21 Highlights

The Australian Government has announced reforms to the super system in the 2020/21 Budget, called ‘Your Future, Your Super’

The reforms, proposed to start 1 July 2021, are designed to prevent multiple super accounts being unintentionally created whenever people change jobs.

Members pay unnecessary fees, and possibly insurance premiums, on unintended multiple accounts – and these can compound to significantly reduce members’ ultimate retirement savings.

Right now, you don’t have to do anything. If passed into law, this is how it will work.

Item 1

Your super stays with you

From 1 July 2021, your super account will be ‘stapled’ to you. This means you’ll keep your existing account whenever when you change jobs and your new employer will automatically pay your super into that account, unless you select another fund.

Currently, a new super account is created whenever you start a new job, unless you tell your employer where you want your super to go.

Item 2

A new tool to help you choose your fund

The Government has also announced an online ‘YourSuper’ comparison tool to help you decide.

The YourSuper tool will provide you with a table of simple super products, called ‘MySuper’ products, ranked by fees and investment returns. The tool will also provide links to join these products.

It will also show all your current super accounts, and prompt you to consider consolidating accounts if you have more than one.

With these measures, the Government estimates a typical young Australian entering the workforce in their 20s could be around $87,000 better off at retirement.

For more information read the Government’s factsheet

Questions & Answers

The following answers will help you from 1 July 2021 when the proposed reforms come into effect.

What do I do if I’m starting a new job?

When you start a new job, your employer will search for your existing super account details through the ATO. They will pay your super into this existing account, unless you tell them otherwise.

If you want to nominate a new account with your employer, you’ll be able to use the YourSuper tool to help choose a fund.

What if I don’t have any existing super accounts?

If you don’t have an existing super fund (for example, you’re starting your first job) and you don’t choose a fund, your employer will pay your super into their nominated default super fund. For example, Rest is the nominated default fund for many retail industry workers.

You can also use the YourSuper tool to compare super funds and tell employers which one you’d like your super to be paid to.

How will I know how my fund is performing?

The Government has announced that all super funds with a simple MySuper product will be subject to an annual performance test from 1 July 2021.

Underperforming products will be identified on the YourSuper comparison tool until their performance improves.

By 1 July 2022, annual performance tests are proposed to be applicable to other non-MySuper products as well.

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