Superannuation fund Rest is urging businesses to familiarise themselves with proposed changes detailed in the Treasury Laws Amendment (Your Future, Your Super) Bill 2021, as it sits before parliament.
The Bill proposes changes to the way businesses pay super contributions to new employees.
Instead of paying super into a pre-determined fund if no other alternative is provided, the Bill proposes that businesses will have to source out the existing fund of a new starter, to avoid multiple funds being created in one person's name.
Should the legislation pass in its current form, the new requirements will apply for new employees who commence employment from 1 July 2021.
Rest group executive of employer and industry engagement Deborah Potts said that businesses should begin work now to adapt their processes.
"Your Future, Your Super includes some welcome reforms to prevent the creation of unintended multiple super accounts.
"But it also places significant new requirements on employers, and many may not be aware of them.
"When a new starter joins a company and doesn’t nominate a super account, the employer will have to contact the ATO to find the employee’s existing super account and pay contributions into that.
"This will replace the current process of creating a new account with the default fund named in your employment agreement or award.
"The earliest the legislation could pass into law is mid-May, meaning there would be, at most, only seven weeks for businesses to adapt their onboarding processes and payroll functions.
"It’s possible there could be even less time than this.
"Given the tight timeframe, it’s critical that businesses take steps now to understand the proposal and closely follow the progress of this bill so they can act quickly once they have clear set of new requirements," she said.
However, the finer details of the legislation are yet to be finalised - such as how the ATO will determine which account the contributions should be paid to when an employee already has multiple accounts.
"Nevertheless, the ultimate outcome is likely to represent a significant change for employers," Potts added.
"They should consider without delay what preparations and resources they may need to meet their changing obligations," she said.
According to Rest, the Your Future, Your Super legislation has four key elements:
- Employees will have their super paid into an existing super account when they start new jobs, unless they choose a different fund.
- The ATO will create an online ‘YourSuper’ tool, designed to provide simple and clear information to help members choose a super product that meets their needs.
- Super funds will be required to meet a new annual performance test, and persistently underperforming funds will be prevented from taking on new members.
- Super funds will have increased accountability and disclosure requirements.