Yet to receive final government approval and Royal Assent, the Your Future, Your Super package remains a comprehensive package of reforms designed to ensure the superannuation system delivers better outcomes for members.
On 29 April 2021, the Government released the Exposure Draft Regulations and Explanatory Statement for YFYS and associated measures for public consultation, inviting submissions until 25 May 2021.
Key elements of these exposure drafts are as follows:
- Single default account (“Stapling”) – employers will no longer automatically create a new super account in their default fund for new employees who do not choose a super fund. Instead, employers will be required to search for an employee’s existing (‘stapled’) fund via the ATO’s online services and direct contributions to it. Where there is no stapled fund and no other fund nominated, super contributions can be made into the default fund. Prescription on the definition of a ‘stapled fund’, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where they have multiple existing funds, is also included in the exposure drafts.
For employers with enterprise bargaining agreements (EBAs), if a new employee has no chosen fund but has an existing ‘stapled’ fund, the employer cannot comply with the choice of fund rules by making contributions to their default fund or a fund specified under a workplace determination or EBA. If the new employee does not have a ‘stapled’ fund, the employer can comply with choice of fund rules by contributing to a fund specified under a workplace determination or an EBA, provided the determination or agreement was made before 1 January 2021.
- Addressing underperformance in superannuation – the Australian Prudential Regulation Authority (APRA) will conduct annual benchmarking tests on the net investment performance of MySuper products. Products that underperform over two consecutive annual tests will be prohibited from receiving new members until a further annual test shows they are no longer underperforming. Specifications of the formulas as a basis for ranking products on the YourSuper comparison tool are also included in these drafts.
- Improving accountability and member outcomes – to improve transparency and accountability of super funds, the government will legislate to compel super trustees to also act in the best “financial” interests of their members. Trustees will be required to establish a “reasonable basis” to support their actions being consistent with the duty. Prescribed information that must be included in the notice of an Annual Members’ meeting and strengthened prohibition on funds offering inducements to employers is also covered in these drafts.
We understand that detailed information, particularly how ‘stapled’ funds will work in practice, is of importance to many of our employers. We will continue to work closely with you in the coming months in order to minimise the impact of this ‘stapling legislation’ on your new employee onboarding and payroll processes.
We will also continue to provide updates on this key package and its passage through Parliament as more detail becomes available.
To view the Draft Regulations and Explanatory Statements, visit the Treasury Your Super, Your Future consultation site.
This article has been prepared and issued by Sunsuper Pty Ltd, (ABN 88 010 720 840, AFSL No. 228975) the trustee and issuer of the Sunsuper Superannuation Fund (ABN 98 503 137 921, USI 98 503 137 921 001). It contains general advice and does not take into account the investment objectives, financial situation or needs of any particular individual. You should consider if the advice is appropriate to your own circumstances before acting on it. Outcomes are not guaranteed. Sunsuper employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) which is wholly owned by the Sunsuper Superannuation Fund. Visit sunsuper.com.au or call 13 11 84 for a copy of the PDS.