The introduction of MySuper


From the functional HR perspective, the MySuper regime introduces some new responsibilities.

“Many of these obligations involve amendments to payroll systems and these will need to be considered,” says Tim Furlan, director of superannuation at international consulting firm Russell Investments.

He believes HR needs to start planning for the changes and open a dialogue with senior management.

“This depends on the organisation and where the responsibility rests within it for super and payroll expenditure. They should also talk to their super fund to understand what its offer will be and to find out what any potential problems are likely to be,” Furlan says.

Mike Murphy, partner and head of Aon’s Australian financial and retirement management practice, believes that HR also needs to identify how many senior executives versus award employees they have and the implications of that in terms of superannuation.

“They will need to analyse their employee base, talk to their super providers and also consider whether they need to retest the market for their superannuation arrangements in light of the changes.”

A review of the on-boarding process, including the information being provided to employees about their super, will be a key HR task. “It is likely that product disclosure statements provided to employees will require updating and it will be important to ensure new employees get the updated MySuper version,” Garry Adams, Mercer’s talent business leader – Pacific, explains.

“The SuperStream changes mean you will need to be remitting data (such as contributions, etc.) electronically and there will be some changes to reporting requirements on payslips that need to be covered.”

Talking to employees

Another step will be for HR professionals to ensure employees understand what the new MySuper regime means for their superannuation savings.

“If a decision is taken to change the current arrangements, such as adding a new MySuper default investment option, fully outsource or make other changes to benefits in conjunction with the introduction of MySuper, then a comprehensive communication strategy is key,” Adams says.

Many funds will be ready to help with free communication tools and information for employees. REST is encouraging HR professionals and employers to visit its website to access its MySuper resources.

“They should also consider inviting a representative from their superannuation fund to discuss the product changes in more detail and answer any questions employees may have,” says Damian Hill, CEO of industry super fund REST.

While Murphy believes HR practitioners also needs to assist employees understand if there are any changes to their insurance or fees.

“For many employers, the fee or insurance structure may not fit comfortably into what they have now. Insurance is a big issue in the Stronger Super environment as there are additional requirements on fund trustees in terms of insurance sustainability, so this will be a real issue for some employers,” he explains.

The investment options on offer also need to be explained.

“For most employees, MySuper will mean the introduction of a new default investment option or the renaming of an existing investment option, so employees will need to be advised,” Adams says.

Many MySuper funds are also likely to use a so-called ‘lifecycle’ approach for their investment strategy, which alters the investment mix as the member ages. This is an area where HR professionals will need to gain some basic knowledge so they understand the implications.

The implications of the planned compulsory consolidation of existing superannuation accounts also needs to be outlined.

Many employees will face two sets of account fees if they fail to take action during the period between the 2014 start date of MySuper and the 2017 deadline for transfer of all accrued default contributions.

“MySuper will involve the transition of existing balances to the MySuper option if the employee has not exercised an investment choice. Employees will need to understand what is going to happen with their existing balances,” Adams explains.

 

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The introduction of MySuper


From the functional HR perspective, the MySuper regime introduces some new responsibilities.

“Many of these obligations involve amendments to payroll systems and these will need to be considered,” says Tim Furlan, director of superannuation at international consulting firm Russell Investments.

He believes HR needs to start planning for the changes and open a dialogue with senior management.

“This depends on the organisation and where the responsibility rests within it for super and payroll expenditure. They should also talk to their super fund to understand what its offer will be and to find out what any potential problems are likely to be,” Furlan says.

Mike Murphy, partner and head of Aon’s Australian financial and retirement management practice, believes that HR also needs to identify how many senior executives versus award employees they have and the implications of that in terms of superannuation.

“They will need to analyse their employee base, talk to their super providers and also consider whether they need to retest the market for their superannuation arrangements in light of the changes.”

A review of the on-boarding process, including the information being provided to employees about their super, will be a key HR task. “It is likely that product disclosure statements provided to employees will require updating and it will be important to ensure new employees get the updated MySuper version,” Garry Adams, Mercer’s talent business leader – Pacific, explains.

“The SuperStream changes mean you will need to be remitting data (such as contributions, etc.) electronically and there will be some changes to reporting requirements on payslips that need to be covered.”

Talking to employees

Another step will be for HR professionals to ensure employees understand what the new MySuper regime means for their superannuation savings.

“If a decision is taken to change the current arrangements, such as adding a new MySuper default investment option, fully outsource or make other changes to benefits in conjunction with the introduction of MySuper, then a comprehensive communication strategy is key,” Adams says.

Many funds will be ready to help with free communication tools and information for employees. REST is encouraging HR professionals and employers to visit its website to access its MySuper resources.

“They should also consider inviting a representative from their superannuation fund to discuss the product changes in more detail and answer any questions employees may have,” says Damian Hill, CEO of industry super fund REST.

While Murphy believes HR practitioners also needs to assist employees understand if there are any changes to their insurance or fees.

“For many employers, the fee or insurance structure may not fit comfortably into what they have now. Insurance is a big issue in the Stronger Super environment as there are additional requirements on fund trustees in terms of insurance sustainability, so this will be a real issue for some employers,” he explains.

The investment options on offer also need to be explained.

“For most employees, MySuper will mean the introduction of a new default investment option or the renaming of an existing investment option, so employees will need to be advised,” Adams says.

Many MySuper funds are also likely to use a so-called ‘lifecycle’ approach for their investment strategy, which alters the investment mix as the member ages. This is an area where HR professionals will need to gain some basic knowledge so they understand the implications.

The implications of the planned compulsory consolidation of existing superannuation accounts also needs to be outlined.

Many employees will face two sets of account fees if they fail to take action during the period between the 2014 start date of MySuper and the 2017 deadline for transfer of all accrued default contributions.

“MySuper will involve the transition of existing balances to the MySuper option if the employee has not exercised an investment choice. Employees will need to understand what is going to happen with their existing balances,” Adams explains.

 

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