Superannuation rule changes from 1 July 2021

ESSSuper - 06 Aug 2021

It's true; the rules of our super system always seem to be changing, and this year is no different.

If all the recent reforms have left you wondering what it all means for your super and retirement plans, this article's a quick guide to the main legislative changes that may impact ESSSuper members.

Your first super fund is 'stapled' to you

The Federal Government will introduce a mechanism to 'staple' members to their existing super fund when they change jobs from 1 November 2021.

If a new employee doesn't choose a super fund, the employer is required to pay the new employee's super into the new employee's current stapled fund. Employers will obtain information about a new employee's stapled fund by logging onto

Australian Taxation Office (ATO) online services. If a new employee does not have a stapled fund and they do not choose a fund, the employee's super can be paid into the employer's default fund.

Important note: ESSSuper is currently working with the Victorian Government and the ATO to understand how this proposal will interact with the Emergency Services Superannuation Act 1986 (Vic). The Act prescribes the default superannuation fund for Victorian emergency services employees.

Increasing accountability and transparency

From 1 July 2021, the Federal Government will ensure all super fund trustees are more accountable and transparent about how they manage their members' retirement savings. Trustees have a new duty to act in the best financial interests of their members, they are required to:

• Comply with a new duty to act in the best financial interests of members
• Demonstrate that there was a reasonable basis to support their actions being consistent with members' best financial interests
• Provide members with prescribed key information ahead of Annual Member Meetings.

ESSSuper welcomes this new accountability as part of our mission is to help members achieve their super and retirement goals while meeting stakeholder responsibilities.

Treasury Laws Amendment (More Flexible Superannuation) Bill 2020

On 17 June 2020, Parliament passed the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. Broadly, it intends to make it easier for individuals (particularly older individuals) to make contributions into super through the following measures:

• Extending the age eligibility requirements of the bring-forward rule to age 67. i.e. Individuals aged under 67 at any time during a financial year will be eligible to trigger the non-concessional contributions cap bring-forward rule (effective 1 July 2020)
• Removing the excess concessional contributions charge. Individuals who make contributions on or after 1 July 2021 that exceed their excess concessional contributions cap will no longer be required to pay the excess concessional contributions charge
• Allowing re-contribution of COVID-19 early release amounts from 1 July 2021 to 30 June 2030 without the amount counting towards the non-concessional contributions cap. For the re-contribution to be exempt from the cap, it must not be more than the amount released. Individuals cannot claim a tax deduction on these contributions.

Superannuation Guarantee rate increase

For Accumulation Plan members, the minimum Superannuation Guarantee (SG) employer contribution rate is legislated to gradually rise over the next five years (see table below). From 1 July 2021, the prescribed SG rate has increased from 9.5% to 10% of your salary per financial year.

Other legislative changes

ESSSuper is currently working with the Victorian Government and the ATO to understand how the following changes will impact ESSSuper members in 2022:

• The ATO's YourSuper comparison tool
• Holding super fund trustees accountable for underperformance.

We will keep members updated on these when we have relevant details.

Need more information?

Our Superannuation Consultants know the intricacies of the fund and can provide information and general advice about ESSSuper's products and benefits.

You also have access to virtual one-on-one appointments with Member Education Consultants, who are the experts in your fund. We also run a series of webinars on a wide range of super topics.

Emergency Services Superannuation Board (ABN 28 161 296 741) (ESSB), the Trustee of the Emergency Services Superannuation Scheme (ABN 85 894 637 037) (ESSSuper).

Benefits in ESSSuper's Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority. ESSSuper comes under the jurisdiction of the Victorian Civil and Administrative Tribunal.

The information contained in this article is of a general nature only. It should not be considered as a substitute for reading ESSSuper's Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au/pds or by calling 1300 650 161.