The budget fulfilled a promise by Prime Minister Scott Morrison at the last federal election that there would be no changes to superannuation taxes.
There were no wide-ranging changes to the superannuation system announced and no mention at all of the scheduled increase in the superannuation guarantee contribution rate which is legislated to rise to 10% from 1 July 2021.
The following announcements were made in relation to reforms to default superannuation accounts:
Effective 1 July 2021
Stapling superannuation members to existing superannuation accounts
When a person starts a new job and does not nominate a super fund, the employer will be required to pay into the employee’s existing super account rather than the employer’s default super fund. The existing super account will be ‘stapled’ to the employee so that they retain their current super fund when they change jobs.
This aims reduce unintended multiple accounts that result in unnecessary fees and insurance premiums.
Employers will be able to obtain the new employee’s existing super details from the ATO’s online services.
Annual benchmark reviews, starting with MySuper products
- A new online YourSuper comparison tool will be available to more readily compare MySuper superannuation products. The online tool will:
- Rank MySuper products by fees and investment returns
- Provide links to super fund websites
- Show the member’s current super accounts and prompt members to consolidate.
- The Government will legislate additional requirements to ensure Trustees Act in the best financial interests of members. Trustees will need to provide members with key information regarding how Trustees manage and spend money prior to Annual Members’ meetings.
- MySuper products will be subject to an annual performance test. Where funds fail two consecutive annual underperformance tests, they will not be permitted to accept new members. These funds will need to disclose this underperformance and will not be able to re-open to new members unless their performance improves. By 1 July 2022, annual performance tests will be extended to other superannuation products.