As part of the proposed ‘Your Future, Your Super’ changes announced in the 2020-21 Federal Budget, the government is implementing some new measures designed to enhance our superannuation system.
One of the changes will see Australians' super accounts being ‘stapled’ to them when they change jobs. This means when a new employee starts with an employer, if they don't nominate where their super is to be paid, then their employer will be required to pay super contributions into their existing super account.
Default arrangements will continue to be used where a new employee does not nominate a fund and they do not have an existing fund. New employees will also have the choice to nominate their new employer’s default fund over an existing fund.
From 1 July 2021, if a new employee doesn't nominate a fund for their super contributions to be paid into, then the employer needs to source information from the Australian Taxation Office (ATO) about their existing superannuation fund. They can then make payments into that account.
From 1 July 2022, the ATO is expected to automate the process by providing the ability for payroll systems to communicate directly with the ATO system.
If you have employees working in high risk occupations, you should also encourage them to check the insurance they have through their existing super fund covers them for the work they do in their new job, as not all default insurance arrangements will cover them.
This reform was created to reduce the number of duplicate super accounts and unnecessary fees paid by workers, and it’s expected to save Australians $17.9 billion over 10 years1. Once implemented people should be better off in retirement, as they will not be paying unnecessary fees for additional super accounts, so this money can be used, saved, or invested for the future.
1 Source: treasury.gov.au/publication/p2020-super
If you’d like more information about stapled super accounts, please contact your EISS Super Relationship Manager on 02 9046 1920 or to make an appointment click the button below.Make an appointment
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