Fans of Australia’s superannuation retirement scheme often love to complain about governments ‘fiddling with the rules’ when it comes to super. It’s not a good day for those fans.
The federal government announced a range of proposed changes to how superannuation works in the last federal budget, which was delivered last month. These changes have been subject to the usual massaging and tinkering that can be necessary for proposed laws to pass both houses of our Parliament. But today, we have news that the tinkering is over. We now have a new and imminent set of rules and regulations when it comes to super.
According to a report in the Australian Financial Review (AFR) today, the government’s Your Future, Your Super legislative package has just passed the Senate. The government was able to get One Nation and independent senators on board with a 34-30 vote in the Senate. This means it will almost certainly become the law of the land very shortly.
So what’s in these new rules and regs that we ought to know about?
New superannuation rules for Aussie workers
The bill’s flagship change (and that has seemingly attracted the most controversy) is a ‘stapling’ mechanism. Presently, an employee can be automatically enrolled in a workplace’s default superannuation fund. This process can potentially repeat for every new job said employee moves on to. No longer. This reform will require a worker’s first super fund to automatically ‘follow’ them when they change jobs. The workers can still choose to change out their superannuation fund if they wish.
The government says this is designed to reduce the prevalence of multiple super accounts for workers. This stapling mechanism will come into effect on 1 November this year. The Labor opposition has said that this stapling might risk locking Aussie workers into underperforming funds. But the government clearly thinks the potential benefits outweigh these risks.
Other measures in this super package include a super fund annual performance test. As well as a public ranking system of super funds to be run by the Australian Taxation Office (ATO). It also includes a requirement for super funds to act in the “best financial interests” of their members’ funds for all expenditures.
Other measures that were proposed by the government have been knocked back following the Senate negotiations. Most prominently was a regulation that would have allowed the government authority to prohibit investments by super funds that the government judged were against the national interest. That didn’t make the final cut.
With these new rules, it might be a good time to check your own super fund, and make sure everything is going to plan!