Created to boost the efficiency, transparency and accountability of the superannuation industry, the government’s Your Future, Your Super reforms came into effect on 1 July 2021. This article unpacks the main features of the reforms, roll-out dates, purpose and impact for workers and employers.
1. YourSuper comparison tool
(1 July 2021)
With currently over 50 per cent of all super accounts in a MySuper product, the YourSuper comparison tool empowers the worker by increasing individual financial freedom and setting the tone for the worker wellbeing-focused reforms to come.
Hosted by the ATO, the YourSuper comparison tool allows workers to understand their fund’s relative performance, compare what each fund charges in fees against the performance over time, and monitor insurances and other member benefits that can have a long-term impact on a worker’s overall wealth position at retirement.
A worker’s financial wellbeing can impact a business throughout each stage of the worker life cycle. Studies have shown that a lack of financial wellness causes billions of dollars in lost revenue and productivity, as financial anxiety can lead to absenteeism and reduced worker focus.
Onboarding is an integral event for workers in their life cycle, with employers playing a key role in determining financial wellness from the beginning, particularly at the superannuation choice moment. Traditionally this is where an employer would offer access to the company’s default fund. Knowing the performance of this default fund will impact the financial health of the worker in time.
The quality of the super fund an organisation associates with is crucial, not only for achieving worker financial wellbeing but also for employer efficiencies throughout their worker’s life cycle.
2. Annual objective performance
(1 October 2021)
Continuing the reform roll-out, the introduction of annual objective performance seeks to support the increased visibility granted through the YourSuper comparison tool, providing a framework to model desired performance.
An extension of the impacts to the worker and employer outlined in the first reform roll-out above, this second reform requires that superannuation products meet an annual objective performance test.
Designed to lower fees and protect members from poor outcomes, those that fail are now required to inform members – and if underperformance persists – products will be prevented from taking on new members.
3. Fund stapling
(1 November 2021)
Stapling essentially means super accounts follow the worker, ostensibly to limit the risk of multiple accounts and unnecessary fee duplication.
It requires employers to search for a worker’s stapled fund through the ATO’s online portal if they do not choose a fund of their own. Key persons involved (resource manager/recruiters/payroll) must possess the relevant ATO relationship access manager (RAM) permissions under this reform.
As employers re-engineer their internal processes and systems to search for each new worker’s existing fund, they will need to shoulder the additional administrative burden. To ensure preparation for super stapling, employers should contact their payroll provider or default super fund to discuss how they will support compliance by 1 November 2021 and save time and money in the process.
4. Digital services live
(1 July 2022 – or before)
At the commencement of the financial year 2023 (1 July 2022), digital services will facilitate an automation of the stapling process, allowing an employer’s payroll system to be linked to the ATO.
Providing visibility of workers’ most recent funds and the ability to find other super amounts sitting with other funds, workers may roll them all into one from this time, saving on fees.
For employers, finding a worker’s existing fund can be digitised and automated at the onboarding stage through the right authorised technology partner. Technology solutions that will be available to create a better worker experience and highlight informed choice on superannuation.
5. Removal of $450 monthly income threshold
(1 July 2022)
The start of FY23 will also see workers no longer required to meet the monthly minimum income threshold ($450) to be eligible to receive superannuation guarantee payments from their employers. This means an expanded workforce receiving super contributions.
For employers, this reform adds compliance pressures, seeing that they must obtain super details of current employees, much in the same way as onboarding new
workers, who previously were not eligible under the threshold.
Digitising the process will ensure there is no productivity loss, especially for businesses that use a high number of casual or transient workers.
Conclusion
Seeking to respond to the need for greater efficiency, transparency and accountability of the superannuation industry, demanded by its increasing size and growing complexity, these reforms seek to benefit both employers and workers in the long-term.
The implementation dates and relative complexity of compliance, indicate a growing need for technology to simplify the good intentions of the government’s new rules, manage the multiple “compliance moment” headaches for employers, and ideally create a seamless digital hire to retire experience for all parties involved.
Jean-Paul Seow is a commercial director at wrkr. Prior to this role, he was a director in PwC Australia’s strategy and ventures team and was responsible for driving development and commercialisation of new ventures in the Australian market.
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