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The landmark Your Future, Your Super bill – which is set to significantly change the way superannuation is delivered to members - has been referred to the Senate Economics Legislation Committee with the report due 22 April 2021.
The referral of the Bill to the Senate Committee – which AIST called for in our meetings yesterday with parliamentarians and the media - allows for deeper parliamentary consideration of the more controversial measures in the bill.
The bill – which was introduced to Parliament yesterday with only moderate changes to the draft legislation – covers three key areas: stapling; addressing underperformance in MySuper; and introducing a best ‘financial’ interest duty.
AIST has recommended several amendments to the bill, including a delay to the proposed stapling measures until underperformance across the entire super sector is substantially addressed.
We are also seeking to remove some measures in the bill, which we believe are not in members’ bests interests and represent an overreach of government power.
We will keep members abreast of the dates of any committee hearings or further opportunities to make submissions on the bill.
AIST has this week obtained guidance from Treasury on the interaction of proposed stapling laws and EBAs that do not currently allow choice of fund.
A number of EBAs do not allow choice of fund and will only do so once a new EBA commences.
Treasury confirmed that stapling reforms (contained in the Your Future Your Super Bill which is currently before parliament) will impose the requirement to use a stapled fund, over any fund specified in an existing EBA (including existing agreements that restrict choice), when the employee does not (or cannot) exercise choice.
The amendments in Schedule 1 to the Bill primarily amend the choice of fund rules in Part 3A of the Superannuation Guarantee (Administration) Act 1992 (SGAA).
If an employee has a stapled fund and started their employment on or after 1 July 2021, the employer would not be able to rely on the choice of fund rules relating to:
Employers can continue to make contributions of this kind in compliance with the choice of fund rules if the employee does not have a stapled fund.
Similarly, contributions to these funds could be covered by another of the existing choice of fund rules (for example, contributions to a fund specified in a workplace determination would comply with the choice of fund rules in relation to an employee who selected that fund on their choice of fund form).
In a scenario where an employee with a stapled fund wants to choose a fund outside of an enterprise agreement that restricts choice, they would not be able to do so. Stapling legislation will only override existing restricted choice EBAs to give effect to stapling, not to provide choice to employees.
AIST has raised a number of concerns about APRA’s proposed standard on remuneration, including that the revised draft standard does not consider the different remuneration features of RSE licensees.
AIST supports strong prudential standards and recognises that remuneration structures can impact culture, conduct and performance, but we are concerned that the standard is overly focused on variable remuneration.
Our submission on Draft Prudential Standard CPS 511 Remuneration notes that while Commissioner Hayne stated that variable remuneration had helped drive poor customer outcomes in financial services, his comments were not targeted at the profit-to-member superannuation sector.
The profit-to-member sector’s member-based ethos is different to the other sectors that CPS 511 covers. Variable remuneration is less common and less complex in the profit-to-member superannuation sector.
Our submission highlights that many of the specific requirements in the draft standard will introduce complexity and cost in an already highly regulated sector that will make it more difficult to deliver on members’ bests interests.
The approach and motivations of super funds towards investing in Australian export industries will be examined as part of a new parliamentary inquiry.
The inquiry into the prudential regulation of investment in Australia’s export industries, commenced this week and is being conducted by the Joint Standing Committee on Trade and Investment Growth. It will examine the advice and guidance provided by financial regulators which affects the investment opportunities for Australian exporters, as well as the “changing practices” of super funds, banks, insurers and corporate Australia in relation to investing in the export sector.
The Committee Chair, George Christensen MP, said that the inquiry would be opportunity to examine an issue which could have significant ramifications for the country's economic recovery from COVID-19 and beyond.
Submissions are invited by Wednesday, 31 March 2021.
APRA is re-consulting on revisions to insurance in super prudential standard 250 following queries raised by the industry in November discussions last year.
Draft SPS 250 has been updated in response to the feedback and draft SPG 250 provides guidance on the new proposed requirements.
The key proposed changes to the standard address two recommendations from the Royal Commission, regarding independent certification of related party insurance arrangements and priority and privilege arrangements, and that the rules for status attribution for a beneficiary are fair and reasonable. Additional proposed changes reflect recommendations by Government for trustees to facilitate easy opt-out of insurance by superannuation members, and to ensure that premiums don’t inappropriately erode members’ retirement income.
The revisions appear to provide greater and clearer guidance, although the process and timing to be followed where the fund does not obtain independent certification of related party insurance arrangements still seems to require more clarity.
AIST intends to make a submission and invites member feedback by 26 February ahead of the 5 March submission deadline. For further information contact AIST senior policy manager, David Haynes at email@example.com
AIST, ASFA and the Financial Services Council – the joint owners of the 'Insurance in Superannuation Voluntary Code of Practice' – are seeking feedback on vulnerable member provisions.
In 2020, the code owners convened a working group, comprising of funds, insurers, and administrators to ensure the Code was appropriately responding to the needs of vulnerable members.
The working group has made several revisions to the vulnerable members section of the Code and seeks feedback from interested stakeholders on these amendments. The draft provisions can be found here and stakeholders have been asked to consider these questions when submitting their responses.
The consultation period will close on 29 March 2021. Responses can be emailed to firstname.lastname@example.org.
The current status of superannuation Bills currently before Parliament can be found here.
18 February 2021