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AIST has warned that the Government’s Your Future Your Super reforms will repeat the consumer harm of past legislative carve-outs by failing to address underperformance across the super sector.
Appearing before the Senate Economics Legislation Committee second day of public hearings into the YFYS legislation, AIST senior policy manager David Haynes, drew parallels between flaws in the YFYS legislation and previous carve outs which adversely impacted the retirement outcomes of many thousands Australians and became a key focus of the Hayne Royal Commission.
Mr Haynes reminded the Committee that during the introduction of MySuper back in 2012/13, hundreds of thousands of Australians were left to languish for many years in high-fee Accrued Default Amounts (ADAs).
“The extent of consumer harm arising from that featured heavily at the Financial Services Royal Commission and is still the subject of legal proceedings, Mr Haynes told the Committee. “AIST strongly advocated against the ADA regime but here we are again warning against locking people in underperforming funds.”
Mr Haynes said AIST had for many years been calling for all APRA-regulated super products to be subject to the same high standards that apply to MySuper products.
“The case studies at the Royal Commission also revealed that there were some very bad Choice products in which people suffered enormous harm. Across the board, the government really needs to look at improving standards, disclosure and transparency for all products, not just MySuper products.”
Noting that there were just 69 days from the time the Senate Committee releases it report to the proposed legislative implementation date of 1 July, Mr Haynes said it was “simply not possible” for funds to implement all of the requirements, especially when so detail much had been left to regulations which were yet to be released.
In the last appearance of the day, Treasury representatives were tight-lipped about when YFYS regulations would be released, noting this was a decision for Government. However Treasury did confirm that the regulations will be exposed for consultation. Asked about the likely impact of its performance test as it is currently designed, Treasury estimated that 3 million MySuper accounts would be classified as underperforming.
AIST is one of 24 organisations who appeared at the two-day Committee hearings which concluded today. The Committee is due to publish its report on 22 April. AIST’s opening statement before the committee can be accessed here.
The Day One transcript from the hearings covers appearances by: The Conexus Institute (pg 7), ASFA (pg 11), Super Consumers Australia (pg 19), Law Council of Australia (pg 24), AMP Australia (pg 29), Australian Industry Group (pg 35), Financial Services Council (pg 41), Rest Super (pg 47), QSuper (pg 51), Australian Securities and Investments Commission and Australian Prudential Regulation Authority (pg 54).
The House of Representatives inquiry into family, domestic and sexual violence has recommended measures to reduce the complexity in family law super splitting.
The inquiry’s final report released last week recommended the following measures to enable the identification of financial information and facilitate superannuation splitting:
AIST welcomes both of these measures as they reflect ongoing advocacy and work by AIST, Women in Super, the Women’s Legal Service Victoria and a number of AIST member funds. In particular, work has begun to develop plain-English splitting order templates that are intended to be rolled out for use by all super funds. These templates have been approved by the Federal Circuit Court Legal Committee and a trial of their use is now being arranged.
Tania Clarke, manager, policy & campaigns for the Women’s Legal Service Victoria – a leading advocate for measures to make super splitting easier for women - said allowing the ATO to share all relevant financial information with the courts would be a huge win for women experiencing economic abuse and seeking a fair financial outcomes through the family law system.
An instrument to support amendments to the Reuniting More Superannuation regulations 2021 has been released.
The instrument supports the amendments by no longer requiring or permitting superannuation providers to transfer certain amounts to eligible rollover funds and enabling the Commissioner of Taxation to pay interest on amounts the Commissioner receives from eligible rollover funds or other voluntary payments received from superannuation providers.
This instrument amends the Public Sector Superannuation Scheme Trust Deed as a consequence of the Family Law Amendment (Western Australia De Facto Superannuation Splitting and Bankruptcy) Act 2020, and addresses matters relating to delegation by the Finance Minister.
Stay up-to-date on the current status of superannuation Bills currently before Parliament here.
08 April 2021