As part of Super Reforms, the Treasury has confirmed that from November 1, Australian workers can expect their superannuation account to follow them when they change jobs. With hundreds of thousands of Australians changing employers every year, it has become common practice for new superannuation accounts to be opened.
According to a statement by Treasury’s Josh Frydenberg and Financial Services minister Jane Hume, this has resulted in the creation of unintended multiple accounts each time individuals change jobs. An estimated 850,000 duplicate accounts are consequently being created every year. These accounts generate duplicate fees and lost returns. Treasury estimates that the new law will boost the balance of the super by an estimated $2.8 billion and save Australian workers $17.9 billion over the next decade.
The new reforms will ensure that employers can now pay super contributions to their new employees existing super accounts that will be stapled to the individual. This will be the standard unless the new employee nominates a different account. Employers have been directed to find out more about their obligations under the new measure through the ATO website.
Super Consumers Australia has welcomed the new measure but is asking the government to ban occupational exclusions from default life insurance in super. The Financial Services Council (FSC) has said it will seek to address this concern by implementing an enforceable standard prohibiting super trustees and life insurance members from applying such exclusions on group life policies.
This stapling reform originated from a recommendation made by the banking royal commission and a series of proposed reforms under the Your Future, Your Super measure. Besides stapling super accounts to employees as they change jobs, the proposal also recommended a new YourSuper comparison tool individuals could use to assess MySuper products, changes to the duties of superannuation fund trustees to ensure they act in the best financial interest of members, and a new superannuation fund underperformance assessment that is to be carried out by the Australian Prudential Regulation Authority (APRA) and published on the ATO website. Having already been approved by royal assent, the measures are now law.
In further superannuation news, the government has presented a bill in parliament that is seeking to abolish the $450 minimum threshold for workers to qualify for the fund. This move is being seen to eliminate structural discrimination and ensure that no worker misses out on superannuation. It will be of helps to those working casual and multiple jobs. It is also expected to help close the gap in contributions between men and women. Women retire on average with half as much of super than men. Frydenberg expressed hope that this move will help increase the economic security of women in retirement.
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