SUPER CHANGES: WHAT THEY MEAN FOR YOU 

1 July 2021

There are two significant changes to super that will alter how much your employer pays into your fund and what happens when you change jobs.

As part of the Federal Government’s ‘Your Future, Your Super’ legislation that was recently passed by Parliament, Australians will now be “stapled” to a single default superannuation account as they move from job to job.

From 1 November 2021, any future employer will pay super contributions to your 'stapled' fund unless told otherwise. 

As an Active Super member, it means we will follow you to your new role and continue to receive your contributions, unless you are stapled to another fund or you tell your employer to pay your contributions to another fund.

Fewer funds, fewer fees

It’s a significant change from the current scenario. At the moment, if you don’t tell your employer where you’d like your contributions paid, a new membership will be set up for you with the new employer’s default fund. 

Often new employees opt for the default fund because it seems easier or involves less paperwork. This can create a situation where Australians have multiple super funds which all incur fees, eroding your retirement savings. 

According to the Australian Taxation Office, more than four million Australians – or 20 per cent of individuals - had more than one super fund in June 2020. While it has become easier to consolidate super, fund members may risk losing insurance if the wrong fund is chosen as the primary fund.

How will stapling work?

Under the rules, new employees will still be asked about their choice of super fund. This means if you have friends who would like to join Active Super or another fund, they can do so when they start a new role or at any another time.

If no choice is made, an employer will be required to find out via the ATO if a fund membership exists, and if it does, they will channel super payments into that fund. 

If the employee is new to the workforce and doesn’t have a super fund set up, they can choose a fund or go with the employer’s default fund. This may be relevant if you have children or friends who are starting work for the first time.

SG increase

In addition to the stapling changes, some workers may notice a little bit extra in their retirement account in the next financial year due to a scheduled Superannuation Guarantee (SG) increase. 

The minimum SG payment rose from 9.5 per cent to 10 per cent on 1 July 2021.  The SG is legislated to increase gradually and is scheduled to reach 12 per cent by July 2025.  

(Depending on their employment terms, some workers may receive a pay cut with employers dipping into their base salary to make up the difference.)

The scheduled increases over the next four years are designed to make sure Australians have enough super savings for their retirement. While it may not sound like much initially, incremental increases can make a big difference over the longer term due to compounding. 

If you’d like to top up your super balance further, you can also make voluntary contributions to your Active Super fund. 

Contact us to find out more about the stapling or SG changes.