7 October 2020

Federal Treasurer, Mr Josh Frydenberg, handed down the 2020/ 21 Federal Budget at 7:30 pm (AEDT) on Tuesday, 6 October 2020.

Australia’s economic response to the COVID-19 pandemic in the form of the original and extended JobKeeper scheme, the cash flow boosts, and the enhanced JobSeeker payment has come at a significant cost, Mr Frydenberg said, resulting in a budget deficit of $213.7b, falling to $66.9b by 2023/ 24.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

The superannuation highlights are set out below.

 

Super will be paid to a new employee’s existing account

An existing superannuation account will be “stapled” to a member to avoid the creation of a new account when that person changes their employment.

By July 2021 if an employee does not nominate an account at the time they start a new job, employers will pay their superannuation contributions to their existing fund. Employers will obtain information about the employee’s existing superannuation fund from the ATO.

If an employee does not have an existing superannuation account and does not elect a fund, the employer will pay the employee’s superannuation into their nominated default superannuation fund.

Source: Budget Paper No 2, p 165; Glossy “Your Future, Your Super”, p 2.

 

New interactive online YourSuper comparison tool

An interactive online comparison tool will help individuals decide on the best superannuation product to meet their needs.

By 1 July 2021, the YourSuper online tool will:
• provide a table of simple superannuation products (MySuper) ranked by fees and investment returns
• link to superannuation fund websites where individuals can choose a MySuper product, and
• prompt individuals with multiple accounts to consider consolidating accounts.

Source: Budget Paper No 2, p 164; Glossy “Your Future, Your Super”, p 2.

 

Holding funds to account for underperformance

From July 2021, APRA will conduct benchmarking tests on the net investment performance of MySuper products. Products that have underperformed over two consecutive annual tests will be prohibited from receiving new members until a further annual test shows that they are no longer underperforming.

If a fund is deemed to be underperforming, it will need to inform its members by 1 October 2021 and also provide them with information about the YourSuper comparison tool.

Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.

Non-MySuper accumulation products where the decisions of the trustee determine member outcomes will be added from 1 July 2022.

This initiative will be funded through an increase in levies on regulated financial institutions.

Source: Budget Paper No 2, p 165; Glossy “Your Future, Your Super”, p 3.

 

Increasing trustee transparency and accountability

By July 2021 superannuation trustees will be required to comply with a new duty to act in the best financial interests of members. Trustees must demonstrate a reasonable basis to support their actions as being consistent with a members’ best financial interests.

Trustees will need to provide members with key information regarding how they manage and spend the fund’s money in advance of annual members’ meetings.

Source: Budget Paper No 2, p 165; Glossy “Your Future, Your Super”, p 3.

 

Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.