MySuper – Employer Superannuation Guarantee Obligations Made Simpler
As part of Stronger Super, the Government has introduced a new default investment option called ‘MySuper’. Currently, if an employee does not inform their employer of their choice of super fund, the employer must make contributions to their employer-nominated fund (default fund). These default funds will now be replaced with MySuper, which is a new superannuation product that is cost effective and simple. MySuper products will have a simple set of product features, regardless of which superannuation fund provides them. This will ensure members, employers and market analysts will be able to compare funds more easily based on a few key differences. It will also mean that members will not be paying for components that they do not need.
Superannuation funds will need to apply to APRA (Australian Prudential Regulation Authority) in order to offer a MySuper product. All existing super funds are able to apply.
Members will still be able to make choices in respect of other superannuation products or manage their own through a self managed super fund, as well as make the choice of a MySuper product. However, for those who do not make a choice, the fund to which their contributions are made by their employer will be a MySuper product. These products will meet minimum standards and offer cost-effective superannuation plans.
From 1 October 2013, if employers have staff whom have not made a choice of fund, then they must make contributions for those staff to a fund that offers a MySuper product in order to meet their superannuation guarantee obligations.
MYSUPER PRODUCT FEATURES
Any fund will only be able to offer one MySuper product. This product is to have a single, diversified investment strategy. The product must also have a standard set of fees available to all prospective members. Fees of a MySuper product will be limited to an administration fee, investment fee, buy and sell spreads (limited to cost recovery), exit fee (limited to cost recovery) and a switching fee (limited to cost recovery). Fees for certain member-specific costs initiated by the member or court, for example an account split on family law decision, may be charged by the Trustee. Fees must be able to be included under one of these standard descriptions in order to be charged to a MySuper product. There are to be no entry fees or commissions. This will make it easier and simpler for members to have an understanding of what they pay and to compare fees between MySuper products. A standard, default level of life and TPD insurance will also need to be offered by a MySuper product. Members will be able to increase or decrease their insurance cover (if offered by the Trustee) without having to leave the MySuper product. At the moment, a MySuper product will only cover the pre-retirement (accumulation) phase of superannuation.
For more detailed information, you can visit strongersuper.treasury.gov.au or contact our office on 07 4151 8898.