Your fund will follow you from job to job
While most of the YFYS package commenced this month, one of the most significant changes, fund stapling, won’t go live until November 1st. Chiefly, the stapling rules are designed to prevent the creation of duplicate accounts and they mean that if you start a new job, your employer is required to pay super into your existing ‘stapled’ account unless you explicitly request otherwise.
While instances of people with multiple super accounts have been declining over the past few years, ATO data shows that around a quarter of Australian super members had more than one account as at 30 June 2020. Unintended duplication of super accounts can result in members being charged extra fees and insurance premiums, unnecessarily so, which, over time, can lead to erosion of their retirement savings.
Stapling is designed to assist in preventing you from getting into this situation, but it could also leave you stuck in a fund that’s not suited to your retirement goals or where better-performing options are available. This is where the next big change comes in.
Super fund performance tests and comparisons
At the end of each financial year, the Australian Prudential Regulation Authority (APRA) will now conduct a performance test on MySuper products to determine how they’re tracking against their benchmark. Should a fund’s product fail this test over two consecutive years, the fund will be unable to accept new members into the product until such time that APRA advises otherwise.
These results (positive or negative) will be published online through the ATO’s new YourSuper comparison tool. If you’d like to know how your fund is performing relative to the fees you’re paying (and compare it to other options in the market) this will hopefully provide you with the information you need.
It’s important to remember, though, that choice super products – that is, those that aren’t the default MySuper products each fund offers – won’t be included in this metric.
Of course, there are often other criteria (beyond performance) involved in selecting the super fund that may be appropriate for you: insurance, for example.
What about my insurance?
Like many Australians, you may have insurance through super, and it may be a group insurance policy that’s designed to suit the field you’re currently working in.
Due to the new stapling rules, though, it’s important to carefully consider whether your existing insurance arrangements through a fund you become stapled to remain appropriate if you decide to move into a new field.
Is there anything else I need to know?
Finally, the YFYS rules require super funds to comply with a Best Financial Interests Duty, which is aimed at ensuring that anything your fund spends money on carries a material (financial) benefit to you and other members.
This could theoretically have an impact on you if you’re currently enjoying the use of some service or benefit provided to you by your fund which fails the Best Financial Interests test.
Next steps
- Check to see that you only have one superannuation account and if you have multiple accounts, merge them into one. You can check through your myGov account
- If you have insurance through your super, review with your super fund to check that it is still appropriate for how you are now working
