Stapling has been saved
Another challenge for Superannuation
The ‘Your Future, Your Super’ package announced in October 2020 as part of the Government’s 2020-21 Budget is designed to “make your super work harder for you”.
Following the findings and recommendations of the recent Productivity and Royal Commissions, these reforms are aimed at improving retirement outcomes for all Australians. The Government undertook consultation in relation proposed legislation, with the Bill introduced into Parliament for a first reading on 17 February 2021. The measures are due to commence on 1 July 2021 provided that the Bill is passed by the Senate by this date.
An issue that this package tries to tackle is the unintended creation of multiple superannuation accounts, a common consequence of people changing jobs and not electing to have future superannuation contributions paid into an existing account. This can see a person paying duplicate fees and insurance premiums on multiple accounts, eroding their savings that have been accumulated over time.
To prevent Australians from facing a proliferation of unintended superannuation accounts, from 1 July 2021, a person’s existing superannuation account will follow them from job to job (referred to as ‘stapling’), unless they opt to select another fund. The Government estimates that stopping the creation of unintended multiple accounts will boost balances in super by about $2.8 billion over the next decade.1
While good in principle, there are a number of potential pitfalls that should be considered to ensure this reform achieves the outcomes intended.
Published: May 2021