Federal Budget 2020

Federal Budget 2020: What it means for super

Despite describing COVID-19 and the economic hardship it has brought as “the greatest challenge of our time”, the Treasurer Josh Frydenberg last night delivered an encouraging message. 

Australia, he said, is faring better than other countries and now is the time to secure our future. 

The budget was unashamedly devoted to rebuilding social and economic damage brought by the pandemic, through increasing funding for jobs stimulus, infrastructure and health. 

It might appear that superannuation was not a major focus, but two important measures announced last night are significant for the industry and its members – you.

1. Your super follows you 

At the moment, every time you start or move jobs, a new super account may be created. The result is too many people with multiple super accounts. The Treasurer said Australians now have more than six million multiple accounts paying $450 million each year in unnecessary fees.  

Under the new arrangements, if you move job, your super will automatically remain with your fund. Under the guidelines signalled last night, your new employer will contribute to your existing fund, rather than creating a new account for you with their chosen fund. People starting their first job will be able to choose their super fund. If they don’t, they will be put in the employer’s default fund.

Either way, when they start their next job, they will remain with their existing fund, unless they make a deliberate choice to change funds.

Mercer Retirement Senior Partner, David Knox says this is a good thing for super members, as it means people will have a single, combined super balance, pay fewer fees and have potentially improved member outcomes. 

2. Empowering members

Also flagged in the Budget is a YourSuper comparison tool that aims to give members transparent information starting with MySuper funds. The Australian Tax Office will publicly compare the performance of these funds. If a fund fails the annual performance test, it will be required to write to members, to give them an option to move to another fund. 

We see this as a good way for members to receive additional information about super as we continue to provide support to help you make the best decisions for your personal circumstances. 

In coming months, the Government will be looking to write the legislation to bring these initiatives into effect, and we look forward to working with them to ensure a smooth transition. 

In the meantime, combining your super in one place means you could pay less fees. It’s easy to search for other super accounts you might have and get your super sorted.

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