Managing risk

Changes to superannuation: what it means to your business?

2021 has been another challenging year for business, and a lot has changed in superannuation.

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We've seen the federal government’s major Your Future, Your Super (YFYS) reforms introduced along with an increase to the Superannuation Guarantee (SG) rate and the final rollout of the Single Touch Payroll (STP) program.

While these changes are generally positive for workers and will help make the super process more efficient, they’ve also created some new actions for employers.

Let’s look at the changes and what they could mean for your business.

On 1 July 2021, the compulsory SG rate increased from 9.5% to 10%. This is the first in a series of slated increases that will see the rate rise by 0.5% every year until it reaches 12% by 2025.

What this means to you is dependent on how you package your salaries:

  • If you pay a base salary plus super – your employees’ take-home pay will stay the same and their superannuation payments will increase.
  • If you pay a package including super – your employees’ take-home pay may need to decrease for you to pay the extra super, or future pay increases might need to be offset.
  • For senior employees, you may need to factor in that the concessional contribution cap was also raised from $25,000 per annum to $27,500. This change may mean you should recalculate package arrangements at certain levels.

On 1 July 2021, STP came into effect for most businesses, including organisations with 19 or fewer team members and those with closely held employees (e.g. directors of family companies).

STP was first introduced by the government in 2018 to streamline employers’ reporting obligations. Using STP enabled software, you provide information such as your employees’ salaries, super and tax at the same time as you process your payroll.

If you haven't started reporting through STP, you need to start as soon as possible to avoid penalties that may apply. Visit the ATO website for more information. 

Introduced as part of the YFYS reforms, from 1 July 2021 super funds will need to meet an annual performance test. Failing in any year will require the fund to write to members in underperforming investment options advising them to consider moving. If the fund fails two consecutive tests, it won’t be allowed to accept new members until its performance improves.

If your default fund is underperforming, you may want to consider the reputational risks and note that in the second year of underperforming, you won’t be able to provide it as an option for new employees.

You can check the performance of your default fund by using YourSuper, a new, interactive online comparison tool that enables users to rank super funds by fees and investment returns as well as fund name.

Also as part of the YFYS reforms, from 1 November 2021, when a new employee joins your business, if they have not nominated a chosen fund, you’ll need to pay super into their stapled fund. You’ll be able to find out their stapled fund from the ATO.

This initiative is designed to reduce duplicate accounts in the super system, saving people multiple fees. However, it’s important for workers to make sure they’re happy with their fund over time as a lot can change since their first job. Different funds also offer different levels of insurance that might not suit a worker over their entire career. 

Find out more

To help your staff select a super fund that’s aligned with their needs, consider offering a default super fund which they can select through the Choice of Fund process.

If you need help navigating any of these changes, from the employer contribution increase to making sure you’re compliant with YFYS reforms, contact CareSuper or visit the YFYS hub and FAQs for employers.  

* SuperRatings Fund Crediting Rate survey SR50 Balanced (60-76) Index – June 2021. Past performance is not a reliable indicator of future performance and you should consider other factors before choosing a fund or changing your investments. The information provided in this article is general advice only and has been prepared without taking into account your particular financial needs, circumstances or objectives. You should consider your own investment objectives, financial situation and needs and read the appropriate product disclosure statement before making an investment decision. You may also wish to consult a licensed financial adviser.

CARE Super Pty Ltd (Trustee) ABN 91 006 670 060 AFSL 235226 CARE Super (Fund) ABN 98 172 275 725


2021 has been a year of change for businesses. Now comes some of the biggest superannuation reforms since 1992. New legislative changes to ‘Your Future, Your Super’ and 'stapling' will commence from 1 November 2021.

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