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AIST CEO Eva Scheerlinck has met with key Parliamentarians in Canberra this week as the Senate Committee review of the Your Future, Your Super Bill gets underway.
AIST, while supporting the policy intent of the proposed legislation, has fundamental concerns with the Bill which, in its present form, is unworkable and will adversely impact super fund members.
These concerns include the risk of members being stapled to a ‘dud’ fund if the performance testing is not extended across all APRA-regulated super products before stapling begins; the risk of a distortion in performance if the benchmarking does not include administration fees; and the proposed ‘best financial’ interests duty, which includes the power for the Minister to ban payments and investments, even when they are in the members' best financial interests.
The referral of the Bill to the Senate Standing Committee on Economics – which AIST called for in last week - allows for deeper parliamentary consideration of the more controversial measures in the Bill.
The Committee today announced that submissions are due by 18 March, with the Committee to report back by 22 April.
We will keep members abreast of the dates of any committee hearings.
The Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020 has passed the Senate today, effectively putting an end to one of super’s oldest acronyms.
The Bill amends provisions across several legislative instruments to facilitate the closure of eligible rollover funds (ERFs) by 31 January 2022.
The Bill responds to recommendation five of the Productivity Commission’s report by allowing ERF trustees to voluntarily transfer balances to the ATO with a requirement that all accounts with a balance below $6,000 be transferred to the ATO by 30 June 2021. All remaining accounts will need to be transferred to the ATO by 31 January 2022. The amendment Bill will need to be passed again by the House of Representatives, but this is expected to be a straightforward process.
The Bill also allows for a superannuation provider to pay to the Commissioner any amount it holds on behalf of a member, former member or non-member spouse. This can occur if the provider reasonably believes that paying the amount to the Commissioner is both in the best interests of the member, former member, or non-member spouse and for reunification of those accounts. For example, this could assist in the facilitation of remediation payments to exited members.
The Senate has also today passed the Financial Sector Reform (Hayne Royal Commission Response No.2) Bill 2020 without amendments. Importantly, the Bill limits the charging of advice fees but allows for funds to continue to offer intra-fund advice, and – in a change from the draft legislation – allows for funds to deduct fees for non-ongoing financial advice from MySuper products.
The government has released a terms of reference for the review of the Australian Financial Complaints Authority (AFCA), and is seeking stakeholder feedback on its functions and performance.
Since 1 November 2018, AFCA has received over 150,000 complaints and secured over $650 million in compensation and refunds for consumers and small businesses through its dispute resolution and systemic issues work.
The review, which is required under the enabling legislation that authorises AFCA, will allow Government to test if AFCA is working effectively to meet the needs of users and its members.
The review will be independent of AFCA and conducted by Treasury, with a report to be finalised by 30 June 2021.
Targeted questions have been included as part of the terms of reference, and Treasury is commencing the review by seeking submissions from interested parties. AIST will be making a submission and has also been invited to a Treasury roundtable on 17 March. Submissions are due on 26 March 2021.
Superannuation Minister Jane Hume has denied the Government has plans to allow Australians to access a deposit for their home through superannuation.
Asked on Sky News about calls from Liberal backbencher Tim Wilson to allow first home buyers access to their super for a home deposit, Ms Hume dismissed the idea, saying the government had “no plans at this stage” to open up super for purposes other than retirement.
The Minister - who last week met with the AIST board to discuss key issues impacting superannuation – said: “super is to save for your retirement, we want to make sure Australians have the best retirement outcomes possible.”
Mr Wilson has recently upped the ante in his bid to allow first home buyers to access their super, arguing super funds should be banned from investing in housing unless the early access rules are changed.
While governments do not currently have the power to dictate how super funds invest, this is set to change if the Your Future, Your Super Bill passes through Parliament in its current form.
The Bill gives the Minister of the day the power to ban specific superannuation fund investments. Confusingly, the Bill also states that this could happen regardless of whether that investment is in members’ best interests.
AIST has argued that such government intervention is not only heavy-handed, interventionist and unprecedented in this country, but it would also create investment uncertainty that would harm returns for members.
As outlined above, the Bill is now subject to a Senate Committee inquiry.
Following industry consultation, ASIC has extended the deadline for providing feedback on proposed updates to its derivative transaction rules.
The closing date for feedback on ASIC Consultation Paper 334 – released in November last year - has been extended by two weeks to 15 March 2021.
The updates to the rules released in 2013 aim to bring them in line with more recent international developments and to simplify reporting requirements.
The National Seniors Association (NSA) wants the government to investigate the benefits and costs of a universal age pension.
The Association’s pre-budget submission argues that providing the age pension to all retirees would simplify our retirement income system and remove distortions created by the pension asset test. It notes that universal age pensions are common in many OECD countries, including the Netherlands, Denmark, Canada, and New Zealand.
The Association says a universal pension would mean retirees would be rewarded for saving more. It says appropriate tax reform would be needed and supports reforming superannuation tax concessions to improve equity.
APRA has re-scheduled its webinar on Phase One of the Superannuation Data Transformation which will provide a summary of pilot data provided by funds.
The webinar is now scheduled for March 15 at 3.30pm. To register, click here.
The current status of superannuation Bills currently before Parliament can be found here.
25 February 2021