Proposed changes to super in Federal Budget 2020
The Federal Budget was handed down on 6 October 2020 and included several proposed changes to the superannuation system. While these changes are not yet legislated, we wanted to let you know what could affect you.
Members will be ‘stapled’ to their first super fund
The Government has proposed that a super account will follow a member when they change jobs if they do not make a choice.
You might hear this referred to as ‘stapling’, the idea of stapling a super fund to a member so that it stays with them throughout their working life. If it is your first job and you don’t make a choice, your super will go to your employer’s default super fund.
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.
- Employers will obtain information about the employee’s existing superannuation fund from the ATO.
- The employer will do this by logging onto 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.
New YourSuper comparison tool
A new, interactive, online comparison tool, YourSuper, will be developed to help you compare super products.
YourSuper will provide you with information about super fund fees and returns to help you choose a super product that best suits your needs.
By 1 July 2021, the YourSuper tool will:
- Provide a table of simple super products (MySuper) ranked by fees and investment returns.
- Link to super fund websites where a member can choose a MySuper product.
- Show current super accounts and prompt members to consider consolidating accounts if you have more than one.
Annual performance test for MySuper products
Another change proposed in the Federal Budget 2020 is to require funds offering MySuper products to pass an annual performance test.
A MySuper product is a simple, cost-effective default investment option designed for those who don’t want to make a choice about their super. Most Australian workers are in a MySuper product.
Funds that fail two consecutive annual underperformance tests will not be permitted to accept new members. These funds will not be able to re-open to new members unless their performance improves. They will also need to inform their members of their underperformance.
If a fund is deemed to be underperforming, it will need to inform its members of its underperformance by 1 October 2021 and provide information on the YourSuper comparison tool.
Underperforming funds will be listed as underperforming on YourSuper until their performance improves.
By 1 July 2022, annual performance tests will be extended to other superannuation products.
Stimulus payments for Age Pension recipients
The Federal Government announced two $250 economic support payments.
These tax-free, cash payments are to be made from November 2020 with the second part to follow in March 2021. Eligible recipients include aged, carer, family and disability welfare recipients, and health care cardholders.
The information in this article is also available as a Federal Budget 2020 fact sheet.
The full 2020-21 budget is available at budget.gov.au.
If you have any questions about your super or pension, or how the proposed budget changes could affect you, our team is here to help. Call our Helpline on 1800 640 886 (available between 8.00am – 7.00pm AEDT on weekdays) to find out more or to make an appointment with a financial planner.
Please note, the changes mentioned above are yet to be legislated and have the mechanics ironed out. Media Super will let its members know once any changes are made to the legislation that could affect them.