Many Australians have multiple superannuation funds, and with retirement usually a distant thought, the consequences of having more than one superannuation fund are rarely considered.

It’s common for people not to nominate a superannuation fund when they start with an employer which results in them defaulting to the employer’s choice of fund. This can mean being hit with unnecessary fees and insurance premiums, which ultimately reduces their savings for retirement.

The Australian Government has found that Australians pay $30 bn a year in superannuation fees, which rates among the highest in the OECD.

There are many funds that underperform and a lack of accountability and transparency in how members’ contributions are being spent is a common theme. As a result of this, and among other reforms already implemented, the Australian Government has proposed the introduction of ‘Your Future, Your Super’ on 1 July 2021.There are many superannuation funds that under perform and a lack of accountability and transparency in how members’ contributions are being spent is a common theme.

Your Future, Your Super

The introduction of ‘Your Future, Your Super’ means that you will retain your superannuation fund when you change jobs. This will be known as your “stapled fund”, which ensures multiple superannuation accounts are not created as you move on in the future.

Employees can still choose to nominate a fund as they have done in the past, however, if there is no fund nominated, the employer is responsible for tracking down the existing superannuation fund information from the ATO’s Online Services portal.

What does this mean for employers?

As an employer, you will need to log into the ATO’s Online Services and enter the employee’s details, select the account (there will be some sort of tie-breaker rules if the employee has multiple funds) and pay contributions into this account.

As per in the past, if an employee does not have an existing superannuation fund, you can then pay their superannuation into your nominated default fund. More information will be available on the ATO’s website if this legislation is passed.

The 'YourSuper' tool

The Government has also developed a new ‘YourSuper’ comparison tool, helping you decide what superannuation product is best for you by ranking simple ‘MySuper’ products based on fees and returns against your current superannuation fund.There are huge savings to be had from choosing the right products and consolidating your super.

‘MySuper’ originated in 2012 by the Government and has the same overall goal as the current reforms - i.e. to increase competition between funds to ultimately benefit the customer.

There are huge savings to be had from choosing the right products and consolidating your superannuation.

According to government research, a typical Australian could be up to $98,000 worse off at retirement if they have chosen the worst-performing ‘MySuper’ product.

Additionally, if legislation is passed, these ‘MySuper’ products will now be subject to an annual performance test, and if found to be substandard, will need to inform members of their underperformance.

They will also be listed as underperforming on the ‘YourSuper’ tool until they improve, otherwise after two years they will no longer be able to take on new members.As individuals, our super needs to work for us, and it’s worthwhile to consciously consider our decisions regarding this investment into our futures.

How can RSM help?

As individuals, our superannuation needs to work for us, and it’s worthwhile to consciously consider our decisions regarding this investment into our futures.

For employers, processes will most likely need to be adapted and it is important that you are aware of the changes that are coming.

If you have any questions as both an employee or an employer, please reach out to your local RSM office today.