How super savvy are you?
Tuesday, 9 February 2021
More super from your employer.
It’s not 100% official but the Government is expected to lift the Superannuation Guarantee (SG), the proportion of money employers are required to divert to employees’ super, from 9.5% to 10.0% on 1 July 2021. The SG has been frozen at 9.5% since 2014 – lifting the rate is aimed at channelling more savings into super, which is one of the three key pillars of retirement savings.
A new job no longer means a new super account.
Happy with your existing super account? Instead of being diverted into a new employer’s default super fund, as of 1 July 2021, workers will automatically retain their super account unless they notify their employer otherwise. This change gives people a greater voice in their choice of super account and will reduce the number of super accounts people have, which will help minimise fees and grow balances. It’s known as ‘stapling’ and means that your super account moves with you as you change jobs.
Employers will need to take these steps when hiring a new employee:
1. An employer must find out from the Australian Taxation Office (ATO) if a new employee has an existing super fund. Employers will be required to make payments to that account if the employee does not notify them otherwise.
2. Alternatively, a new employee can inform their employer of their preferred fund using the standard choice form.
3. If the new employee doesn’t have an account, and does not let their new employer know which fund they have chosen, the employer will then be allowed to create, on the new employee’s behalf, an account with its nominated default superannuation fund.
Greater scrutiny on super fund decision making and performance.
There is a greater requirement for transparency under the latest super reforms. Super fund administrators will need to communicate why investment decisions have been made and how these were done with the best interests of members in mind. Fund performance will be monitored through an annual performance test and the results will be publicly available. Funds that fail two tests will be closed to new members. Testing will begin with MySuper products in July 2021 and rolled out to all super products from July 2022. In this context it pays to be on top of your fund’s performance.
This information is current as at February 2021. This article is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs (‘circumstances’). Before acting on such information, you should consider its appropriateness, taking into account your circumstances and obtain your own independent financial, legal or tax advice. You should read the relevant Product Disclosure Statement (PDS) before making any decision about a product. While all care has been taken to ensure the information is accurate and reliable, to the maximum extent the law permits, ClearView and its related bodies corporate, or each of their directors, officers, employees, contractors or agents, will not assume liability to any person for any error or omission in this material however caused, nor be responsible for any loss or damage suffered, sustained or incurred by any person who either does, or omits to do, anything in reliance on the information contained herein.
This web site has been prepared by FinNest Financial Pty Ltd. Finnest Financial Pty Ltd ACN 163 390 547 is a Corporate Authorised Representative No. 440812 of Matrix Planning Solutions Limited ABN 45 087 470 200, AFSL & ACL 238256.
The information provided on this website is intended to provide general information only and the information has been prepared without taking into account any particular person’s objectives, financial situation or needs. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs. In particular, you should obtain professional advice before acting on the information contained on this website and review the relevant Product Disclosure Statement (PDS).