On Thursday 17 June 2021, Parliament passed legislation to reform the superannuation system. According to Treasurer Josh Frydenberg the changes “will drive lower fees, improve fund performance and prevent the creation of millions of unintended accounts.”
The main changes fall into 3 areas:
Measuring performance of super funds
- Super funds will be subject to a new performance test administered by APRA
- Funds deemed to be underperforming will have to notify their members within 28 days
- Funds that fail the performance test twice in a row may be blocked from accepting new members
- The ATO will provide a new super fund comparison tool to be called YourSuper
This means you can expect a bit more correspondence from your super fund, especially if they are underperforming. You’ll then be able to review the performance of other funds and consider switching to a better performing fund, though we all know that past performance is not always a good predictor of future performance.
Preventing duplicate accounts
- From 1 November if you change jobs you will keep your existing fund and account rather than have a new created by your employer (which seems to happen a lot).
This means you should keep your existing account, people will have fewer accounts, pay less in fees and insurance premiums and be less likely to “lose” their super. Of course you can still switch your super to another fund if you want to – but you’ll have to initiate that.
More scrutiny on super fund expenditure
- Super funds will have to disclose spending on advertising and ensure that expenditure is in the best interests of members
The extra scrutiny might reduce super fund expenditure and result in better returns for members.
This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office.