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Superannuation: MySuper deadline looms

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Cite as: December 2013 87 (12) LIJ, p.85

On 1 January 2014, employers need to be ready for more than just their new year’s resolutions. 

1 January 2014 is a key date for all employers who pay superannuation guarantee contributions on behalf of any of their employees. From that date, any superannuation guarantee contributions (SGC) must be paid to a super fund that has a MySuper licence.

Recent federal government reforms have created a new simple, low-cost default superannuation product, known as MySuper, which will replace existing default products. All MySuper products must have a simple set of product features, regardless of which super fund offers them.

The new MySuper regime began on a voluntary basis on 1 July 2013, affording super funds and employers a six-month transition period. During that time, many super funds, including legalsuper, have launched their MySuper product.

At the date of writing, less than half of “public offer” funds (i.e. open to the public) have been licensed to offer a MySuper product. Statistics from the regulator, the Australian Prudential Regulation Authority, indicate that only 75 MySuper products have been licensed out of the 160 public offer funds.

This suggests some super funds are not ready for the new regime and potentially may not apply for a MySuper licence. This means they will no longer be able to receive compulsory superannuation guarantee contributions. The federal government has indicated transitional arrangements will be developed for situations where funds are nominated in enterprise agreements.

Is your existing default super fund MySuper ready?

Where an employee does not advise a choice of super fund into which their SGC is to be paid, their super will be paid into a default super fund chosen by their employer.

From 1 January 2014, all default super funds must be licensed to provide a MySuper product. An employer cannot pay SGC to a fund that is not MySuper licensed.

Prior to 1 January 2014, it would be prudent for employers to confirm with their existing default fund that it is MySuper licensed and therefore able to continue to accept SGC payments. If it is established that the existing default fund is unlikely to be licensed before 1 January 2014, an employer would be well advised to appoint an alternate super fund that has a MySuper licence.

Questions to address to confirm you comply

If you’re not sure whether your default fund is MySuper compliant, or if you’re wondering about how the changes will affect your firm’s current super arrangements, here are some questions to consider asking your default super provider.

1. Are there differences between your fund’s current default product and its new MySuper product?

For example, will the new MySuper product:

  • charge the same fees?
  • apply the same fee discounts (if applicable)? The federal government has indicated that it will allow fee discounting for large employers (i.e. more than 500 employees at a particular workplace).
  • maintain employees’ entitlements even if they cease to work with your firm?
  • continue to offer the same insurance cover and premiums?

2. Are there any significant changes in investment strategy?

For example:

  • will the fund be altering the mix of active and passive management?
  • are there significant changes in the asset allocation?
  • have the fund’s members been informed of the impacts of any changes in investment strategy?

3. How will your fund be communicating the MySuper changes to its members?

Options could include workplace education programs, letters or emails. Depending on how engaged your employees are with their super, some combination of these various channels may be best.

4. Are there any other changes?

For example:

  • are there any new or increased fees?
  • have any changes been made to the other products available outside of the MySuper option?
  • how will financial advice be provided?

MySuper is an important change to the superannuation industry landscape, so it is crucial for all employers to understand how it works. If you need more information, contact your superannuation fund or the team at legalsuper.



ANDREW PROEBSTL is chief executive of legalsuper, Australia’s industry super fund for the legal profession. He can be contacted on ph 03 9602 0101 or via aproebstl@legalsuper.com.au.

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