Australia’s superannuation system is considered one of the best in the world. It is ranked 4th by the 2020 Global Pension Index, coming behind Israel, The Netherlands and Denmark. There is still so much that we can do.
We have six million superannuation accounts for 4.4 million people; we have seen an increase of 13.4% in fees across MySuper products since 2014 and have paid a total of $30 billion in fees during the course of 2019.
As part of the reforms for super, part of ‘Your Future, Your Super,’ we have seen a number of changes to super that have already been implemented, however there are another two around the corner.
Stapling- what is it? Why is this good and why is it bad?
From the 1 November 2021, employees will automatically keep their super fund when they change jobs, ‘stapling’ the super account to them as they move from job to job. The idea is that it will cut down on paperwork, remove duplication and will try to ensure that employees are not paying fees on multiple accounts.
Every time an employee changes jobs, they have access to the new super fund that companies would have negotiated on their behalf. Employer groups are able to negotiate fees, offer tailored insurance benefits that take into account not only age, but earnings as well.
So from the 1 November 2021, it’s even more important to ensure that employees are aware of what you offer as an employer. There are comparison tools that are being made available to help employees decide YourSuper comparison tool
Greater transparency on retirement savings and super fund performance
Another part of the 2021 super reforms includes a requirement for super fund administrators to provide more details on the decisions made to MySuper investment options and how they work in the best financial interests of its members.
In addition to the above, superannuation products will face an annual performance test under the government’s reform where the results will be made public on a government website. Funds that fail two tests consecutively will be blocked from accepting new members.
The move is designed to bolster the obligation that super fund trustees act in the best interest of their members, requiring funds to disclose how they are spending members’ money. The testing regime has begun with MySuper products from July 2021 and will expand to all super products from July 2022.
Any advice included in this post has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.
 ‘Your Future, Your Super’ report October 2020. treasury.gov.au