Compliance

Your Future is now: Superannuation reforms pass Parliament

BY , ,  |  

The passage of the Treasury Laws Amendment (Your Future, Your Super) Bill 2021 (YFYS Bill) in Parliament during June, marked one of the largest shake-ups to Australia's superannuation system in decades. The Your Future, Your Super (YFYS) reforms were designed to address a number of structural issues with the existing system by affording greater protection to superannuation account holders as well as improving the performance and accountability of superannuation funds.

Your Future, Your Super reforms 

In essence, the YFYS reforms:
• require employers to make contributions for employees commencing from 1 November 2021 to an employee's stapled fund, as distinct to an employer's default fund
• introduce a new annual performance test, which prohibits trustees from accepting new contributions for those products that underperform
for two consecutive years
• amend the best interests duty, such that trustees and directors are required to act in the 'best financial interests' of their beneficiaries
• remove an exemption for trustees regarding the disclosure of their portfolio holdings.

The purpose of this paper is to consider each of these reforms in greater detail.

Reducing the creation of multiple accounts
The YFYS Bill amends the 'choice of fund' rules in Part 3A of the Superannuation Guarantee (Administration) Act 1992 (SGAA). Previously, if an employee did not elect a superannuation fund into which an employer would pay their superannuation contributions within the relevant time period, an employer would be able to comply with the choice of fund rules by making contributions on behalf of the employee into the employer's chosen default fund.