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Changes to the default system
The budget contains significant changes to the default superannuation system.
Members stapled to their first fund
It introduces a mechanism to ‘staple’ members to their existing super fund when they change jobs from 1 July 2021.
It is unclear which fund members with more than one existing fund will be stapled to. Over time the measure would impact funds’ ability to provide occupation-specific products and services. It would also leave open the possibility of members being stapled to underperforming funds. It is also unclear how this proposal will interact with a range of State and Territory legislation which prescribe the default fund.
The Government intends that as of 1 July 2022, communications between the employer’s payroll system and the ATO system will be automated, removing the need for the employer to manually enter into their payroll system their employees’ superannuation fund details.
The mechanics of how the stapling measure will be implemented are not yet clear.
YourSuper, Your Future page 20
Super comparison tool
Alongside the stapling mechanism, the budget introduces an “assisted member choice” type online superannuation comparison tool called ‘YourSuper’ by 1 July 2021. The tool provides a league table of MySuper products ranked by fees and investment returns with the intention that members use the portal to assist them to choose a super product.
The comparison tool will be based on information that superannuation funds report to APRA and will be developed in consultation with the Treasury.
YourSuper, Your Future page 21
Super fund performance
The budget introduces an annual performance test for MySuper products from 1 July 2021 and eligible choice products from 1 July 2022. If a MySuper product underperforms, members must be informed by 1 October 2021, and the product will be marked as underperforming in the online comparison tool. The product will also not be allowed to accept new members if it fails two performance tests in a row, and will not be able to reopen until their performance improves.
The performance test will involve APRA constructing an individual benchmark for superannuation products based on each product’s asset allocation, fees and tax; against which each product will be tested. Underperforming products will be those that fail to reach their return benchmark by 0.5% pa over an eight-year period.
YourSuper, Your Future Appendix 2 and page 24
APRA’s annual benchmarking of super products will be funded by additional levies on regulated financial institutions.
Eligible Choice products are APRA-regulated accumulation superannuation products where the trustee has control over the design and implementation of the investment strategy; and where the investment strategy covers more than one asset class.
New measures would require trustees to meet a new duty to act in the best financial interests of members, and provide information to members on how they manage and spend members’ money before the Annual Members’ Meetings.
The Government will implement regulations that will require the notice of meetings to members to include the following:
YourSuper, Your Future page 27
Additional payment for pensioners
The Government will provide $2.6 billion for two additional Economic Support Payments of $250 to pensioners and other eligible recipients. These payments are additional to the $9.4 billion in support provided through the two previous Economic Support Payments of $750 to social security and other eligible recipients.
Personal tax cuts
The government announced the lowering of personal income taxes consistent with their 2018-19 plan. The table below provides a summary of the income tax rates.
Current thresholds (from 1 July 2019)
Income range ($)
Thresholds from 1 July 2020 (stage 1)
18,201 – 37,000
18,201 – 45,000
37,001 – 90,000
45,001 – 120,000
90,001 – 180,000
120,001 – 180,000
Summary of the Stage 2 income tax cuts that are expected to come into effect as at 1 July 2024.
Threshold from 1 July 2024 ($)
0 – 18,200
45,001 – 200,000
Infrastructure and investment
Since the start of the year, the Government has committed an additional $14 billion in new and accelerated infrastructure projects over the next four years. These projects will support a further 40,000 jobs during their construction. (This investment is part of the Government’s record 10-year transport infrastructure investment pipeline, which has been expanded to $110 billion)
Fast tracking ‘shovel ready’ projects includes:
Affordable housing bonds
The Government will increase its guarantee of the National Housing Finance and Investment Corporation (NHFIC) by $1 billion, enabling NHFIC to increase its bond issuance into the wholesale capital market. This will attract institutional investment into affordable housing for Australians.
The Government will provide $2 billion over 4 years to further support aged care, including $1.6 billion over 4 years for the release of an additional 23,000 home care packages across all package levels.
It appears that none of the regulators have received a substantial increase in funding, and that there is a significant reduction in the amount of money allocated to the ATO to administer SG.
Delayed start dates
List of areas with no change
06 October 2020