The Government has not made a change to the legislated increase to the superannuation guarantee.
Instead, the much-awaited Government response to the Productivity Commission review and Royal Commission recommendations has been announced resulting in a focus on efficiency, competition and accountability. There is significant spending on aged care.
No change to superannuation guarantee
- There was no change to the legislated increase to the superannuation guarantee, which remains set to rise from 9.5 per cent to 12 per cent, with the first increase of 0.5 per cent due in July 2021.
APRA underperformance assessments
- There will be a new annual (investment) performance assessment for MySuper products and trustee-directed products (ie those products and options where the trustee has control over the investment strategy which covers more than one asset class). The first assessment is to be completed by APRA in September 2021. The assessments will be based on APRA's 'heat map' methodology.
- A fund which underperforms for one year must notify members. A fund which underperforms for two consecutive years will be prohibited from receiving new members until it ceases to be underperforming.
Stapling super accounts to employees and new transparency measures
- From 1 July 2021, there will be a new measure designed to reduce duplication of accounts involving the "stapling" of an existing super account to an employee, so that the account automatically follows the employee to a new employer. Of course, any product that the employee's account is transferred to on cessation of employment must pass the underperformance test. The Government also anticipates improving payroll software to support the stapling of accounts.
- An Australian Taxation Office tool will be introduced to help new employees to compare superannuation products.
Higher best interest standards for superannuation trustees
- The Government will clarify that from 1 July 2021 the best interests test applies to members' financial interests. Trustees will also be required to establish that there was a reasonable basis to support their actions being consistent with members' best financial interests.
Changes to ERF rules
- The Government will defer by 12 months the start date of the measure that prevents superannuation funds transferred amounts to ERFs.
- The Government will also allow all superannuation funds to voluntarily transfer amounts to the ATO where the trustee believes it to be in the best interests of members and the amount would otherwise have been transferred to an ERF.
Extension of early access application period
- The Government has extended the application period for the $10,000 drawdown amount in 2020-2021 to 31 December 2020.
Spending on aged care
- $1.6 billion is allocated across four years from 2020-2021 to the release of an additional 23,000 home care places.
- In response to the COVID-19 pandemic, there is $245 million for the supplement to Commonwealth-funded providers, the viability supplement and the residential care homeless supplement; $205.1 million for the extension of the Aged Care Workforce Retention Bonus Payment; $81 million for an additional surge workforce and increased training for aged care workers; and a number of other measures.
- The Government will also spend in response to issues raised at the Royal Commission into Quality and Safety in Aged Care, including $29.8 million for a Serious Incident Response Scheme and $11.3 million for specialist counselling teams.
Other significant spending includes $125.3 million to replace the Commonwealth Continuity of Support Programme to ensure support for older Australians with a disability; $91.6 million to continue to implement the Australian National Aged Care Classification system; and $35.6 million for the Business Improvement Fund.