7 December 2021
2021: A year in review
As the year wraps up, we look back on the major superannuation policy and market changes from the past 12 months and explain how they will affect members in the future.
While most of us will remember 2021 as the year of extended lockdowns and border closures, the year was also characterised by some major changes on the superannuation front.
From an increase in the Superannuation Guarantee to the recent introduction of stapling reforms, many of the changes were years in the making. Meanwhile, some of these changes may have a lasting impact on members’ balances, ranging from an increase in money going into super to reducing duplication in funds and fees.
Here are the key superannuation events that mark 2021 as a year of significant change for the industry.
In July 2021, the Superannuation Guarantee (SG) rose from 9.5 percent to 10 percent. Effectively, this means members whose employers were paying the base super rate will be paid a little bit extra. As many Active Super members know, a small increase in contributions can have a significant effect on balances over the long term.
As part of the Federal Government’s Your Future, Your Super reforms, super funds were put to the test this year to make sure their fees and returns for members stacked up. Pleasingly, Active Super passed the first APRA performance test and was ranked among the top performing super funds on the ATO’s YourSuper Comparison Tool. In fact, Active Super was the best-performing fund over seven years (assuming a 30-year-old with a $50,000 balance) returning 9.46 percent*.
* Past performance is not a reliable indicator of future performance.
Members who wish to add more in super each year can now do so, with the concessional (before tax) contributions cap lifted from $25,000 a year to $27,500 a year for members of all ages. Similarly, the non-concessional (after tax) contributions cap increased from $100,000 a year to $110,000. Age is a consideration when it comes to eligibility to contribute.
The changes were effective from July to allow Australians to build up their retirement nest egg more quickly. If you’d like to add more to your super or learn about your annual cap, you can always reach us here.
Share market surge
The pandemic did little to temper the S&P/ASX 200 this year. In fact, the local share market rocketed to a record high of 7632 points, although it has since come off the peak struck in August. Among the biggest movers this year have been the Big Four banks and the miners, with surging commodity prices also driving the upward trend. Overall, it’s been a good year for super balances.
Stapled to super
As the year drew to a close, new reforms were introduced to ‘staple’ members to their super fund whenever they change jobs. Under the new ‘stapling’ system introduced on 1 November, when a worker starts a new job and doesn’t choose a fund, the new employer will be required to look up the details of that person’s fund and direct contributions into it. Employees will still have the option to choose a fund at any time, which includes a new fund or the employer’s default fund.
The changes are designed to reduce the number of superannuation accounts Australians collect over their working lives. Previously, when someone started a new job, they would be placed into the employer’s default fund if they didn’t actively choose otherwise. According to Treasury, this system was costing billions of dollars in duplicate fees and unnecessary insurance. For Active Super members, the changes mean you will stick with us and we’ll stick with you, unless you choose otherwise.
If you would like any more information about any of the changes in 2021, please contact us.