MySuper - How does it work
Most of the legislation needed for MySuper has now been passed. From 1 January 2014 most employers will have to make contributions into a default fund which offers MySuper. Default fund contributions are contributions for employees who have not specified a chosen fund1.
1. What is MySuper?
MySuper is a “no frills” low cost superannuation product with few add-on services and a single diversified investment portfolio. Funds offering a MySuper product have increased responsibilities to the members with accounts in that product. Funds will have to obtain authorisation from the Australian Prudential Regulation Authority to offer a MySuper product and this should occur during the first half of 2013.
2. Awards and MySuper
From 1 January 2014 modern awards will only be able to name funds which offer MySuper. Modern awards will be varied to remove the names of any funds which do not offer MySuper. Most modern awards which name superannuation funds currently allow an employer to continue contributing into a fund which they contributed into before 12 September 2008 even if it is not named in the award. This term will also be removed from modern awards.
3. How does MySuper impact employers?
In many cases an employer’s existing default fund will be authorised to offer MySuper, remain named in the award and nothing will change for the employer from 1 January 2014.
There are two exceptions. In some cases a current default fund will not be authorised to offer MySuper and the employer will have to contribute into a new default fund from 1 January 2014. The new default fund needs to be selected from the list in the award. Second, an employer who is contributing into a default fund which is not named in the award (because the employer was using the fund before 12 September 2008) will also have to contribute into one of the default funds named in the award from 1 January 2014.