MySuper is one of the biggest changes to happen to superannuation in Australia. And over the next few months, you’re likely to hear much more about it – with a key deadline looming at the end of the year.
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Who does it affect?
MySuper effects super fund members who are invested in their super fund’s ‘default’ investment option. This includes:
- people who haven’t made an active decision about how their super is invested, and
- people who have actively chosen their fund’s default option.
This is expected to include around 80% of the 12 million Australians who currently hold a superannuation account.
If you have actively chosen an investment option that’s not the default option, your super arrangements will stay as they are.
What is changing for default members?
By 1 January 2014, default members will be given a new super account (i.e. by their current super provider in most cases) that is compatible with the MySuper legislation.
This super account will be required to have:
- a single diversified investment strategy
- low fees, and
- no commissions to financial advisers.
The aim of MySuper is to provide a low-cost option for members who aren’t using the investment choice, or the financial advice, available to them in most large super funds.
The changes are also intended to make super funds simpler and easier to compare – with standard fees across the industry.
What happens to my existing super balance?
Super funds will have until 1 July 2017 to transfer your existing super balance to your MySuper account. That means default members will have two accounts (one MySuper account and one non-My Super account) until that transfer happens.
What if I want to make an investment choice?
MySuper is designed to lower costs for people who are not taking an active interest in their super.
If you want to make an investment choice and invest in something other than the ‘default’ option, MySuper will not be available to you.
Of course, you may be entitled to give up your investment choice and transfer your super into a MySuper product with a default investment option. However, you should be careful that a default option is suitable for your retirement goals.
Do I need to make an investment choice?
One of the reasons most super funds offer a variety of investment options is that everyone has different needs and attitudes when it comes to investing.
While a low-cost default option may be suitable for some, others may be better off paying higher fees to access investment options with greater growth potential – knowing they need to take on more risk to achieve their long-term goals.
Source: Stronger Super OverView 2nd July 2013