What do Commonwealth legislation reforms mean for employers?

The Commonwealth Government's Your Future, Your Super reform package and changes to the compulsory Superannuation Guarantee (SG) payment came into effect in 2021.

What are the reforms?

The Your Future, Your Super reform package was announced in October 2020 and aims to make it easier for Australians to keep track of their retirement savings, avoid unintended multiple accounts and compare performance of super funds.

There are four key elements to the reforms:

• Super is now 'stapled' to most Australians when changing jobs, unless they select another fund when starting with a new employer
• A new online comparison tool makes it easier for members to compare fees and fund performance
• Super funds are be required to comply with new accountability and transparency regulations
• Super funds now undergo annual performance tests

What is 'stapling' and what does it mean for me?

'Stapling' intends to stop the creation of unintended multiple super accounts and the erosion of super balances.

Super is now 'stapled' to employees, requiring employers to pay the compulsory SG to a new employee's existing fund if they have one, unless they select another fund.

If a new starter doesn't choose a fund, employers must apply to the Australian Taxation Office (ATO) to see if that employee has an existing fund. If they do, you will be required to pay into this fund.

However, as a WA public sector employer, your default super fund is GESB. We work a bit differently to other funds.

Under legislation, we are currently restricted from accepting employer contributions from non-public sector employers. This means that 'stapling' cannot apply to us or our members without an amendment to both the State Superannuation Act 2000 and Regulations.

As such, you need to continue to offer a Choice form to new starters to capture their superannuation preferences.

Superannuation Guarantee (SG): what's changing?

The compulsory SG of 9.5% of an employee's ordinary time earnings (and additional items, if eligible) was in place for seven years, until it increased to 10% on 1 July 2021.

The compulsory SG is legislated to increase to 10.5% from 1 July 2022 and rise 0.5% per year until 2025, when it will reach 12%.

What can I do to prepare for the SG increase?

There are some steps you can take now to make sure your agency is prepared for the increase.

You could consider taking the following actions:

• Check with your payroll provider to review how the SG increase will be implemented and what costs may be associated with the change
• Review your Human Resources systems to determine if any changes are needed to these platforms and how much time would be required to implement them
• Identify key employee documents that reference the current SG rate, and which may need to be updated following the SG increase

Where can I find more information?

More information about the super reform package can be found in the Your Future, Your Super factsheet.

Read more about the SG percentage increase.

If you have any questions about your contributions, contact your Key Account Manager.