Superannuation application

f A new comparison tool is being introduced which allows workers to be able to compare key data on MySuper (default) products across different funds.

“Your Future, Your Super” reforms came into effect on 22June2021.

BY STEPHEN FARRELL INDUSTRIAL RELATIONS CONSULTANT, VEGETABLESWA

As a part of the 2021–22 budget, the Australian Government introduced its “Your Future, Your Super” reforms. These reforms were passed by parliament and the legislation came into effect on 22 June 2021.

The Government’s intent in introducing these reforms is to make superannuation funds more transparent and efficient, which in turn, provides accountability within the superannuation industry as a whole. The reforms being introduced include: • A new comparison tool being introduced which allows workers to be able to compare key data on

MySuper (default) products across different funds. • A change to the duties of trustees of superannuation funds to act in the best financial interest of their members. • A new super fund underperformance assessment to be conducted by APRA and published on the ATO website.

Finally, and more relevantly to growers, as of 1 November 2021, where a new employee commences employment and does not choose a superannuation fund, employers will have to check with the ATO if the new employee has an existing super account. If they do, the grower will need to pay the employee's superannuation guarantee contributions into that existing account, rather than the grower’s default superannuation fund. Prior to 1 November 2021, growers were obliged to offer new employees the choice of which superannuation fund the employee wanted the superannuation contributions owed to them paid into. If the employee chose a superannuation fund, the grower was obliged to make the contributions into that fund. If the employee didn’t choose a fund, the grower paid the superannuation contributions owed to the employee into the default superannuation fund that was in place. From now on, employees, unless they proactively choose otherwise, will have the same superannuation fund for the whole of their working careers. This is known as super stapling. In order to comply with their superannuation obligations, when onboarding new employees, growers will still need to offer new employees the choice of which superannuation fund the employee wanted the superannuation contributions owed to them paid into.

However, if the employee does not exercise that choice and nominate a superannuation fund, growers are now obliged to search the ATO’s online directory to check if the employee already is a member of a superannuation fund (known as a Stapled Super Fund). If the search returns a Stapled Super Fund, the grower must pay the superannuation contributions into that stapled fund and not the grower’s default fund. It is only if a search of the ATO directory does not result in a Stapled Super Fund that the grower may then start a superannuation account for the employee with their default fund. If the search results in more than one stapled fund (i.e. the employee is a member of multiple superannuation funds), the legislation is silent on what the grower will need to do. Therefore, it is advisable, in these circumstances, for the grower to ask the employee directly which of the superannuation funds the employee wants the contributions to be made to.

Growers should not be making the choice for the employee.

It is now a legal requirement for growers to comply with the above process. Whilst there will likely be transition period, growers who fail to comply are more than likely to face penalties. Furthermore, if a grower does not perform a search of the ATO directory and instead makes contributions to the default super fund, they may be liable for a choice shortfall penalty, which is additional to the penalties above. As such, it is highly recommended that growers ensure that this does not occur.

Conclusion

Superannuation is an From now on, employees will have the same superannuation fund forlife. entitlement that previously has often been overlooked and disregarded. However, with more and more people accessing their superannuation benefits and transitioning into retirement, this will no longer be the case. f GROWERS are now obliged to search the Whilst the new reforms do increase the ATO’s online directory to check if the employee already is a member of a superannuation fund. administrative burden on the onboarding of new employees, they do provide the opportunity for growers to engage with their employees on superannuation.

MORE INFORMATION

Contact Stephen Farrell on (08) 9460 3878, 0455 833 352 or

stephen.farrell@vegetableswa.com.au

The information provided above is general in nature and has been gathered from government publications and sources. Superannuation is regulated through the taxation system and the author is not qualified to provide specialist advice. If you have any queries in relation this article specific to your own situation, contact your tax advisor or accountant.