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It was a Budget like no other, in a year like no other. The Federal Government’s 2020-21 Federal Budget contained an unprecedented package of big spending initiatives intended to provide a pathway to economic recovery from the impact of the global COVID-19 pandemic. 

Alongside the tax cuts, infrastructure spending and job boosting initiatives was an announcement to introduce reforms to the superannuation system to “make your super work harder for you.” 

Labelled “Your Future, Your Super” these reforms are targeted at: 

  • Reducing unintended multiple accounts – and the unnecessary fees and insurance premiums paid on these accounts 
  • Improving transparency and accountability within the industry, highlighting and holding to account underperforming super funds 

Super that follows you 

In a major change to the current “default” fund system, from 1 July 2021 new mechanism will be introduced to ‘staple’ members to their existing super fund when they change jobs: 

  • If a new employee at a workplace doesn’t make a choice of fund the employer will pay into the new employee’s existing fund – employers will obtain this information by logging onto ATO online services 
  • If a new employee does not have an existing super fund (new entrants to the workforce), and they do not choose a fund, the employee’s super will be paid into the employer’s default fund 

Empowering members 

A new online comparison tool, YourSuper, will be developed to help individuals compare and decide on appropriate super products. This new tool will provide: 

  • Details of simple super products (MySuper) ranked by fees and investment performance 
  • Links to super fund websites to choose a MySuper product 
  • Details of an individual’s  current super accounts and prompt them to consider consolidating accounts 

Holding underperforming funds to account 

Super funds will be required to undergo an annual performance test against benchmarks set by the regulator. Funds identified as underperforming will need to notify their members and will also be marked as underperforming on the new YourSuper comparison tool. 

Funds that fail two performance tests in a row will not be able to accept new members until their performance improves.  

Increased accountability and transparency 

Super fund trustees will be required to comply with a new duty to act in the best financial interests of members, and provide information to members on how they manage and spend members’ money before the Annual Members’ Meetings. 

Mercy Super welcomes these performance and accountability measures as we believe funds should always act in the best interests of their members. 

Implications for members 

These measures significantly change the way members access superannuation through their workplace. Many of these changes result from recommendations made in Productivity Commission reviews and findings from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.  

There is still a lot of detail to be worked out to understand precisely how this will work and significant data and systems to be developed by the Government to enable these measures to become a reality. In the end, individual members will be more accountable for making sure their current super account is right for them. This includes responding to  changes in their circumstances (career, life, age, etc.) as their first super fund may not necessarily always be the best option for all time. 

You can access the Federal Governments Your Future, Your Super fact sheet here.