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There are some proposed reforms coming to superannuation in July 2021. See what they might mean for you.
The amount of super your employer is obliged to pay eligible workers is legislated to increase on 1 July 2021 along with a number of other changes announced in the 2020-21 Federal Budget under the Australian Government’s Your Future, Your Super package.
The Australian Government said the reforms to superannuation included in the package aimed to make it easier for you to keep track of your retirement savings, take your super fund with you if you are changing jobs, and help you compare the performance of different super funds.1 However, these changes have not yet been passed by Parliament at the time of writing of this article and may not become law.
These are the five main proposed changes to know about for your super in 2021.
The Superannuation Guarantee (SG) is the minimum amount that an employer must pay into an eligible employee’s super fund. It is currently 9.5% of gross salary. 2
The SG is currently legislated to increase from 9.5% to 10% on 1 July 2021 and rise an additional 0.5% each financial year until it reaches 12% in 2025.
However, continuing discussions are occurring over the legislated SG rise while the economy remains impacted by the economic impacts of COVID 19 and the Australian Government has stated it will consider this in the context of the May Budget.
Your superannuation account currently does not automatically follow you from job to job, but this is a proposed reform from 1 July 2021. Previously, eligible employees needed to provide their super account details to new employers. If not, the new employer would create a new super account for them.
The Australian Taxation Office (ATO) is proposing that if you change employers, your new employer would be able to find your existing super account through the ATO and not need to create any new account for you, unless you wanted them to do so. This will be called ‘stapling’ your super account to you.
While some people may intentionally have more than one super account, many people may have more than one super account without knowing. Stapling aims to reduce unintended multiple accounts.
The benefits of consolidating your super into one account may include:
Selecting a well-performing superannuation product rather than an underperforming one may significantly boost your retirement income.
To make it easier to compare your options, the ATO will provide you with access to a new, interactive, online YourSuper comparison tool to help you decide which super product best meets your needs.
The YourSuper comparison tool will provide a standardised comparison of MySuper products. It will also show which Australian Prudential Regulation Authority-regulated products a person has and allow any one of them to be included in a comparison.
According to the Australian Government, the comparison tool:
Or you can put yourself in control by comparing QSuper today.
Another of the 1 July 2021 super reforms is putting an onus on super fund trustees to provide more details about the fund’s investment decisions and to demonstrate how those decisions are in the best financial interests of members.
The super trustees will be required to:
Also proposed is that MySuper products will be subject to an annual performance test by July 2021.
The test will be based on a comparison to a benchmark set by the regulator. The new performance framework will become the primary method for measuring underperformance in the superannuation sector.
If a fund is found to be underperforming, it will need to inform its members by 1 October 2021.
Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.
Funds that fail two consecutive annual underperformance tests will not be permitted to accept new members and won’t be able to reopen to new members unless their performance improves.
The testing regime is set to begin with MySuper products from 1 July 2021 and expand to all super products from 1 July 2022.
As a QSuper member you have access to over-the-phone financial advice. Personal financial advice may help you save money right now, build a better future retirement, protect what you have and set strategic goals.
Find out more
Deciding what is best for you will depend on your personal circumstances and you may want to seek personal financial advice to get the most from your superannuation. You can find out more about financial advice options at qsuper.qld.gov.au/advice
1. Australian Treasury, 6 October 2020, Your Future, Your Super Factsheet, accessed 11 February 2021 at treasury.gov.au
2. If you earn $450 or more (before-tax) in a calendar month, your employer must pay super guarantee (SG) on top of your wage or salary. The standard SG rate is 9.5% of your ordinary time earnings (OTE) salary. Ordinary time earnings (OTE) salary is generally what you earn for your ordinary hours of work, including commissions, shift loadings and allowances, but not overtime payments. For more information, see ato.gov.au/super
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