Anyone’s who’s been paying attention to their super and the rules surrounding it for a few years will have noticed that there’s usually a few changes now and then, and 2021 is no different. The Federal Government outlined a raft of measures in the 2020-21 budget. Here we outline what’s to come in 2021.
Increased employer contributions
The compulsory employer contribution rate (Super Guarantee rate) has long been scheduled to increase from 9.5% to 10% from 1 July 2021. The Federal Government is holding off an official commitment to this increase, with the Treasurer saying that a decision will be made in the May 2021 Budget.
Your super will follow you
One change that the government has committed to is the concept of “stapling” super accounts to members, with the intention of reducing the number of multiple superannuation accounts held by Australian workers. The idea is that each Australian will have a primary superannuation account “stapled” to them courtesy of their Tax File Number, and that on commencement of a new job, this stapled account would be their default superannuation account rather than their new employer’s default provider.
Employers will be required to find out from the Australian Taxation Office (ATO) whether new employees have an existing fund, and contribute to that fund unless the employee notifies otherwise. If the new employee doesn’t have an account, and does not let their new employer know which fund they have chosen, only then will the employer be allowed to create an account with its nominated default superannuation fund.
Under the 2021 super reforms, superannuation trustees will be required to provide more details about their investment decisions, and how they serve the best interests of members. This includes key information about how they managed and spend money (to be provided prior to Annual Members’ Meetings).
The government proposes to conduct an annual performance test on all superannuation products, and publish the results. Funds that fail two tests consecutively will be blocked from accepting new members. In addition, the government’s online portal will rank MySuper products by fees and investment returns, as well as showing individuals where their super currently sits. People will be actively encouraged to consolidate their accounts if they have more than one superannuation fund.
The testing regime is set to begin with MySuper products from July and expand to all super products from July 2022.
While points 2-4 above are intended to reduce costs and improve performance outcomes, we still believe it’s vitally important for individuals to take an active interest in their retirement savings and broader financial plans. Quality investments and competitive fees are important, however education, setting retirement goals, and actively contributing to achieve them are also required in order to build a lasting, secure retirement. Contact us here at AGS Financial Group if you would like assistance with this.
Published : 11 Apr 2021