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AIST supports the objectives of the Your Future Your Super package to hold super funds to account for their performance, address the creation of unintended multiple accounts, empower members and increase transparency and accountability.
The legislation before Parliament does not achieve these objectives, and in fact will result in significant member detriment as currently drafted. AIST opposes the legislation in its current form and is concerned the regulations do little to allay our concerns about the package as a whole.
AIST calls on Treasury to advise the Government of these shortcomings in relation to the regulations, and for the regulations to be put on hold until the issues in the primary legislation are addressed. This is not possible in the 37 days from the date of this submission to 1 July. Attempts to persist with this schedule will especially adversely impact the 800,000 employers that would be required to implement premature and ill-formed requirements for stapling from 1 July 2021.
The legislative flaws are the result of the Government not adequately addressing key recommendations of both the Productivity Commission (PC) and the Financial Services Royal Commission (FSRC). The package also relies too heavily on these regulations to prescribe substantive and contested measures that should be included in the primary legislation.
While the regulations make some improvements to investment indices and require that administration fees are taken into account in the determination of net returns, these changes are too little, too late, and improvements have not been made to correct other fundamental flaws.
Furthermore, the regulations exacerbate problems with legislation by further limiting the scope of performance assessment, excluding products holding the majority of assets in choice products, and confirming arrangements that will staple many super fund members to underperforming funds.
The rushed and poorly coordinated approach to the package is underlined by the regulations not being released in time to be considered by the Senate Inquiry into the Your Future Your Super Bill, reducing the efficacy of that inquiry, particularly given the depth of outcomes that are reliant on these regulations.
In addition to the legislation being overly reliant on regulations, these regulations themselves are silent on several areas in which regulatory guidance is appropriate and needed. This leaves significant areas of uncertainty that make member outcomes unclear and implementation highly problematic.
Several measures in these regulations are not related to the Bill and so are untested, having not been subject to the Senate Inquiry or submission process at all. These new measures, which are material to member outcomes, are the annual member meeting notice requirements, changes to section 68A and portfolio holdings disclosure.