New superannuation reforms

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10th June, 2021

Your Future, Your Super: Time to update your onboarding process

Australia’s superannuation system is set to change again from 1 July 2021, with a set of reforms that aim to increase retirement savings and target unnecessary fees.

The ‘Your Future, Your Super’ reforms are just around the corner, and employers will need to get their heads around how this impacts the way they set up super accounts for new employees.

In last year’s Federal Budget, Treasurer Josh Frydenberg introduced a package of super changes to deliver better outcomes for Australians.

Key points:

  • To prevent unnecessary multiple super accounts, new accounts won’t be automatically created when people change jobs
  • This impacts how businesses onboard new employees, depending on whether they make a choice of super fund
  • An online performance tool ‘YourSuper’ will be created to help members compare super fees and products
  • There are six million multiple super accounts held by 4.4 million people – this equates to $450 million in unnecessary fees as a result of these multiple accounts

These changes are in addition to the upcoming increase to the super guarantee, which soon moves from 9.5 to ten percent.

Update: This article has been updated to reflect the fact the Your Future, Your Super reforms have been passed into law, and that stapled super will take effect from 1 November 2021.

READ: Changes to superannuation that employers should know


Improving the super system for members


The reforms are designed to save Australians $17.9 billion over the next decade.

It follows a 2019 report by the Productivity Commission that found a third of super accounts, or roughly 10 million, are not needed by members who already have a primary super fund.

And these additional accounts come at a cost – members end up paying more in insurance premiums and administration fees, and end up with less income when they retire.

This package implements a number of recommendations from the Productivity Commission review into superannuation and is structured around these four elements:

  • Superannuation follows members to prevent the creation of unintended multiple super accounts
  • Empowering members to choose well-performing products that meet their needs
  • Holding funds to account for underperformance
  • Greater transparency and accountability for how super funds use members’ savings

Super will be ‘stapled’ to employees


Superannuation is most often a priority to people as they approach retirement or start a new job.

Currently, employees can nominate which super fund they want their employer to pay their contributions into, although when they start a new job, many choose to go with a super fund that is chosen by their employer.

And if they don’t nominate a super fund? Then employers are obligated to make regular super payments for eligible employees into the employer-nominated fund (or default fund).

From 1 November, and for the first time, employees will keep their super fund when they change jobs.

Having their super fund ‘stapled to them’, means their account will follow them. And a new super account will only be created if they actively choose another super fund.

This is designed for the benefit of members, but it also represents a change in process for employers.


Prepare to look for stapled funds


Existing employees are unlikely to be affected by these changes. Employers will continue making compulsory Super Guarantee payments (SG) into the same super fund accounts.

But it will change what businesses need to do when hiring new employees from 1 July 2021, as detailed below.

New employee – nominates a super fund

If a new employee notifies their preferred super fund (using the Superannuation Standard Choice Form), employers must make payments into this account.

And, due to a new partnership between MYOB and fintech startup, Flare, employees are now able to quickly and easily self-select their super fund when onboarding via the MYOB Team app.

With MYOB Team employees can port in a pre-existing superannuation account from any fund, or to select a new one.

They will also be able to submit or update superannuation, tax and bank details through the same app, and have it automatically verified by the ATO, taking the hassle out of onboarding for both staff and HR.

New employee – doesn’t nominate a fund

Employers will need to contact the Australian Taxation Office (ATO) to see if the employee has an existing super fund (a stapled fund). This can be done by logging onto ATO online services and entering in the employee’s details.

Once an account has been selected, employers are required to pay super contributions into the employee’s account.

If they don’t have an existing super account, and don’t choose a fund, then employers are required to create a new account on the employee’s behalf, and pay super into the nominated default superannuation fund.

New employee – no super account and new to the workforce

In this scenario, if the employee doesn’t make a decision regarding a super fund, the employer needs to pay super into their nominated default superannuation fund.

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Automated service coming in 2022


In the second phase of the reforms, scheduled for 1 July 2022, the ATO will provide a new service to help out employers that don’t have access to tech like MYOB Team.

The ATO will enable digital software providers to give businesses the option to automate communications between their payroll system and the ATO.

This will reduce administration costs, and removes the need for employers to manually enter employee superannuation fund details into their payroll systems.

Want to get ahead of the Your Future, Your Super reforms? Using MYOB Team takes the guesswork out of onboarding and super for staff and management alike. Find out more today.