‘Your Future, Your Super’ – what does it mean?

The Your Future, Your Super reforms (YFYS Reforms) were passed in June 2021. The YFYS Reforms aim to make the super system better for members in four key ways:

• Stapling – preventing the creation of multiple unintended super accounts;
• YourSuper – empowering members by making it easier to compare products through a new Government comparison website called ‘YourSuper’;
• Performance test – holding funds to account for product performance through an annual performance test conducted by the Australian Prudential Regulation Authority (APRA);
• Best Financial Interests – increasing transparency and accountability for how super funds use members’ savings.

Now, let’s explain the YFYS Reforms and what they might mean for you.

Stapling

Stapling has been designed to help prevent the creation of multiple unintended super accounts. It means that a new super account won’t automatically be created every time you start a new job, helping you avoid multiple accounts with fees, insurance arrangements and insurance premiums.

Stapling means that your super follows you. You can start a new job knowing your employer and the Australian Tax Office (ATO) will ensure your super contributions will be paid into your ‘stapled’ account.

Stapling does not impact your ability to change funds at any time.

What stapling means for you

Stapling means you will keep your existing super account if you change jobs, unless you decide to change where your super is invested. This makes it easier for you and removes potential hassles associated with having unintended multiple super funds.

Just as importantly, it means you won’t unintentionally accrue multiple insurance policies and associated insurance premiums (with each super fund you’re in).

YourSuper comparison tool

As part of the YFYS Reforms the Government has launched a comparison website called ‘YourSuper’ to make it easier for members to compare product performance. YourSuper is provided by the ATO and accessible from MyGov. The Government says this tool “is focused on providing members with simple, clear and trusted information about their retirement savings”.

What YourSuper means for you

The YourSuper comparison website went live on 1 July 2021. It has some helpful features – you can access a personalised version via MyGov featuring your super balance and age. Alternatively if you don’t access via MyGov, the generic version will enable you to see how MySuper products have performed based on a nominal $50,000 investment. YourSuper includes information on product performance and fees.

Performance Test

APRA will assess the performance of specified products within the super fund on an annual basis. The assessment is based on comparing a product’s net investment returns (including fees and taxes) with a benchmark return and fees. The results of the annual performance test will be reflected on the YourSuper website from 1 September each year. The results will be expressed as ‘performing’, ‘underperforming’ or ‘not assessed’. For the 2021 year, only MySuper products are subject to the annual performance test, and from 2022 other superannuation products and specified investment options will be included.

What the Performance Test means for you

Whilst performance has always been in focus, super funds are now on notice to ensure they are providing the best value for their members, aiming to protect members from poor outcomes.

Best Financial Interests

The Best Financial Interest requirements are designed to “sharpen the focus” of super trustees, ensuring decisions, such as those on expenses, are in the best financial interests of members. There are also additional requirements for Trustees to make additional information available to members as part of the Annual Member Meeting.

Better informed, more engaged

The YFYS Reforms assist in improving performance and transparency within the super sector.

The Government’s own analysis suggests the YFYS Reforms will have a number of benefits for members. As noted above the YFYS Reforms make it easier for members to engage with their super savings and make better decisions. As always, keeping a close eye on your super – and getting expert advice from someone who understands your unique retirement plans – is invaluable.