LEGAL ALERT: Changes to Superannuation Legislation
Employers should be aware that new legislation passed recently will impact how they make superannuation contributions to their employees.
Under the Treasury Laws Amendment Act (Your Future, Your Super) Bill 2021, the Superannuation Guarantee (Administration) Act 1992 has undergone two major amendments, being:
- An increase the compulsory contributions made to employees; and
- A change in choice fund requirements.
The increase to compulsory contributions came into force on 1 July 2021, with the current rate of 9.5% being increased to 10%. This is part of a greater scheme to increase contributions to 12% by 2026, with contributions now scheduled to increase by 0.5% each new financial year.
The provision regarding choice fund requirements will come into force on 1 November 2021, and has been implemented with the goal of simplifying employee’s superannuation by preventing multiple funds being opened for one person. Currently, if an employee does not nominate a choice fund, the employer may open a new super account for them under a default chosen fund. Under the new rules, an employee will have a single super fund which carries over from one employer to the next, known as a ‘stapled’ fund. If an employee does not nominate a super fund at the commencement of employment, employers will now be required to make superannuation payments into the stapled fund, if one exists, rather than their own chosen fund.
Employers should note that they will be responsible for contacting the ATO to determine whether a stapled fund exists for an employee. If no stapled fund exists, employers can then look to opening one under their default choice fund.
EMA Legal can assist employers with any enquiries related to superannuation.
This Newsletter is made available to our clients and interested parties to provide immediate access to information about important changes and developments relevant to employers. The information contained in this publication should not be relied on as legal advice and should not be treated as a substitute for detailed advice that takes into account particular situations and the particular circumstances of your business.