MySuper products are default superannuation products into which employers pay your compulsory SG contributions. But how does MySuper work?
Super choice has been operating in Australia since 2005, meaning that for many years now most employees have been free to choose which super fund they would like their employer-paid contributions sent to.
But because not all employees have a preferred super fund, employers are required to have in place a default super fund for employees who haven't made a fund choice or who aren't interested in making one.
These default funds are normally chosen by the employer, often in consultation with their employees, or they can use the fund endorsed by their employer industry association or nominated in the industrial awards that sets their employment terms and conditions.
Because many of the nation's employees who use their employer's default super fund keep most of their superannuation in the fund's default investment option, the government has integrated MySuper into these workplace arrangements by stipulating that only MySuper products will be allowed to be default super funds that can accept superannuation guarantee contributions.
In practice, this means super funds and wealth management groups that wish to compete in the workplace default superannuation market need to apply to the superannuation regulator, the Australian Prudential Regulation Authority (APRA), for authorisation to offer MySuper products.
MySuper in practice
For the majority of employers and employees who use their default super fund's default investment option and who have that fund's standard insurance cover, MySuper will not impact them much at all. They will simply become a member of that fund's MySuper option - which in most cases was the default investment option they were already using anyway.
All the usual provisions of super fund choice also apply. Because MySuper products are in most cases a specially designated investment option within a regular super fund they can also have their balance spread across the MySuper option and other investment options offered by the same super fund.
In these cases members will still receive a single annual account statement from their super fund each year. If they have money only in the MySuper product, the annual member statement and member information they receive will be simpler because it will only need to describe the MySuper product.
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