General / Oct 26, 2020

Common Sense Prevails in Budget Changes

Alicia Thomson
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by Alicia Thomson

We are pleased the recent budget left SMSFs alone for once, although there were significant changes for the broader Superannuation industry. We can expect some of these changes to lead to increased member movements within superannuation, which may be positive for SMSF practitioners.

  • The following superannuation announcements were made:
    New default superannuation system: from the 1st of July 2021, existing superannuation accounts will be “stapled” to a member to avoid the duplication of accounts when a person changes employers. Employers will be required to pay super contributions into their employees existing super fund (if they have one), unless the employee selects another fund.
  • Development of “Yoursuper” portal: The ATO is creating a system for those entering the workforce. They will have the ability to compare super products (MySuper) ranked by fees and investment returns.
  • Increased benchmarking of APRA funds: Benchmarking will be undertaken on the net investment performance of MySuper products, with products that have underperformed facing stringent requirements. Products that have underperformed over two consecutive annual tests will be prohibited from receiving new members until a further annual test shows they are no longer underperforming.
  • Start date for Retirement Income Covenant pushed to 1 July 2022: After announcing earlier this year that the Retirement Income Covenant would be deferred, the government has announced the new start date will be moved to 1 July 2022. The Retirement Income Covenant will require trustees to formulate a retirement income strategy for their members.

The government also announced that it will undertake a public consultation to make permanent changes to the Corporations act 2001 that will allow companies to call and conduct meetings electronically with a quorum achievable through virtual attendance of shareholders and officers and provide certainty that company officers can electronically execute a document.

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