How members will benefit
The Australian super industry is large, and with so many choices available, it can be hard to make head or tail of it.
The Australian Government introduced the Your Future, Your Super reforms to improve the efficiency of the super system and help maximise the retirement savings of members. This includes increasing transparency and accountability from super providers while delivering lower fees for members.
The four sections to the YFYS reforms
- Annual performance test
- Your super comparison tool
- Best financial interests’ duty
Stapling basically means that one of your super accounts will follow you when you change jobs. This was developed to prevent the creation of unintended multiple super accounts.
- Australians are encouraged to make an informed choice about the super fund they’d like their contributions to go into.
- From 1 November 2021, if you start a new job and don’t choose your own super fund, your employer will ask the Australian Taxation Office (ATO) to let them know if you have an existing super account they can contribute to, on your behalf.
- If you have more than one super account, the ATO will use a set of rules that consider things like recent contributions and account balance, to let your employer know which one to use. This account will be known as your stapled fund, and you’ll take it with you each time you change jobs unless you choose a different super fund.
- If you don’t have an existing super account and don’t choose your own super fund, your employer will open an account for you in their nominated super plan. This will then probably become your stapled fund if you change jobs in the future.
In 2017, Arohi got her first job, and her employer opened a default super account for her. Two years later, she changed jobs and another super account was opened for her through a different super fund.
Recently, Arohi landed her dream job, starting in December 2021. Assuming that her employer did not request the ATO to identify any stapled fund, the new stapling rules state that the super account she had opened through her second job will ‘follow’ her to her new job as this is the fund that received the most recent contribution. This applies unless she tells her new employer that she wants her super to be paid to a different fund.
Arohi is a bit more clued up about super these days and has spent time researching which super account she’d like her contributions to go into. Here are some of the things she considered before deciding what to do:
- her insurance needs
- what benefits are available in her current super plans
- what benefits are on offer in her new employer’s super plan
- management fees and investment options
- what would happen to her existing insurance and other benefits if she closed her current accounts and rolled her super money across into a new account.
Arohi also spoke with an adviser to help her get the full picture. She decided on a new fund and let her employer know the details. She then asked her new super fund to roll the balances of her other super accounts across to her new super account – meaning she only had one account to worry about.
This example is illustrative only.
From 1 July 2021, the Australian Prudential Regulation Authority (APRA) will performance test MySuper products every year.
- MySuper is a simple, low cost investment option which members can choose for their super. It’s also used as the default investment option for members who have not made an active choice about their super investments. Learn more
- The annual performance test assesses MySuper products based on investment return and administration fees – comparing them against benchmarks provided by APRA.
- If a super fund fails this performance test, they must tell their members within 28 days, and let them know how to access the government’s YourSuper comparison tool where they can compare the fees and returns of all MySuper products to help them decide whether to keep their current product or choose a different one.
From 1 July 2022, this test will be extended to certain other types of super products.
- Learn more about super investments
Your super comparison tool
To help you compare super funds, the ATO has created an interactive online YourSuper comparison tool.
This tool compares all MySuper funds by annual fees and net returns – these figures are updated annually using APRA statistics. Here’s what information you can access:
- An annually updated table comparing all MySuper products in Australia – ranked by fees and net returns.
- A list of products, including ones that have failed their performance test which will be ranked at the bottom of the list.
- Product details for each super fund via their website
- Your current super accounts, allowing you to compare them against other accounts (if you’re using the authenticated version).
- Information about what to consider when making a choice about super funds, including considering consolidating your accounts.
Note: It’s important to understand all the benefits in your current account (beyond fees and returns), so you can make a fully informed decision. Here are a list of some of the things you might want to think about.
There are two ways you can access the tool.
|The authenticated version (personalised with your details)
||The unauthenticated version (generic – not personalised to you)
Best financial interests duty
The goal of this updated reform is to make sure super trustees are acting in the best ‘financial’ interests of their members.
Previously the requirement stated that super funds were to act in the best interests of members. Under the YFYS reforms, the word ‘financial’ has been added which intends to provide clarity about how super trustees should spend member’s money.
Super trustees (including those who are a trustee of a self-managed super fund) must be able to justify that their expenditure meets this duty. The ATO will audit super funds to make sure they’re compliant.
Want to understand your super better?
Frequently asked questions
Who works out which fund to staple to?
The ATO has a set of rules to figure out which fund to staple to a member, these include:
- it must be an existing fund and able to accept contributions from an employer
- it applies tie-breaker rules if a member has multiple funds that can be used.
- The stapled fund will be the fund most recently identified by ATO as the stapled fund.
- If 1 does not apply, the fund that received the most recent contribution during the selection period will become the stapled fund.
- If 1 and 2 do not apply, the fund with the largest account balance at the end of the prior financial year will become the stapled fund.
- If 1, 2 and 3 do not apply, then the ATO must be satisfied that the selected fund is the most appropriate.
How do I get independent financial advice?
A financial adviser works with you to set your financial goals and create a plan to help you achieve them. Visit Choosing a financial adviser on MoneySmart. You can also use AMP’s find an adviser tool.
What is MySuper?
MySuper was introduced by the government as a regulated, low cost investment option for people who don’t choose their own super investments.
Our MySuper option is called AMP MySuper Lifestage investments. Here, your super savings will be managed for you according to your age and time to retirement. In other words, younger investors will typically be invested into higher-growth investment strategies because they have more time until retirement to ride out volatility in the markets. Whereas those approaching retirement, will have their investments more focussed on preserving their money and reducing volatility risk.
Who is APRA?
The Australian Prudential Regulation Authority (APRA) is an independent government body that regulates financial institutions, including super funds. APRA monitors the performance of super funds and applies a performance test.
What you need to know
Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account.
It’s important to consider your particular circumstances and read the relevant product disclosure statement, or terms and conditions, available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you. Taxation issues are complex. You should seek professional advice before deciding to act on any information.
The super coaching session is a super health check and is provided by AWM Services and is general advice only. It does not consider your personal circumstances.
You can read our Financial Services Guide online for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. You can also ask us for a hardcopy. All information on this website is subject to change without notice. AWM Services is part of the AMP group.