Federal Government’s Superannuation Reform Bills To Be Introduced Following Consultation
Thursday 21 January 2016 @ 12.26 p.m. | Legal Research
Public submissions on two exposure drafts on superannuation reform closed yesterday. The two draft bills were released for consultation in December last year. The Superannuation Legislation Amendment (Governance) Bill 2015: Extending superannuation choice to enterprise agreements aims to extend choice of superannuation funds to employees covered under enterprise agreements. Currently, employers are required to comply with choice of fund requirements, but there is an exemption for contributions made in accordance with enterprise agreements or workplace determinations. The proposed Bill would remove this exemption for enterprise agreements or workplace determinations that are made after 1 July 2016.
The Superannuation Legislation Amendment (Transparency Measures) Bill 2015: Product dashboards aims to improve the quality and disclosure of information available to consumers, to allow them to more easily compare products. Currently, larger superannuation funds must provide a “product dashboard” (a summary of information for consumers) for all the fund’s choice products. Under the new Bill, the fund will only have to provide a “product dashboard” for the fund’s 10 largest choice investment options, and regulations will prescribe how this is to be displayed and what information it should include.
Assistant Treasurer Kelly O’Dwyer told The Australian that it was an important area to regulate, given its size:
“We are talking about $2 trillion worth of funds held by super funds that will rise to $9 trillion by 2050. We need to make sure we have the world’s best standards when it comes to governance because, after all, it is members’ money. Superannuation is money that is taken from individuals and placed into super funds for people’s retirement future. We have to make sure there are the best possible governance standards to protect that money.”
She also told the Sydney Morning Herald that:
“While most employees can already choose the fund their compulsory superannuation is paid to, in cases where their enterprise agreement specifies a fund, employees have no choice…
You're forced to put money away, it's your retirement savings, why can't you choose where it goes?”
Criticism
Retail industry superannuation fund REST expressed concerns about the default fund changes to the Australian Financial Review, saying:
“Ultimately, employers would prefer to leave the responsibility for selecting default superannuation funds to those for whom it is core business… If this were to change, employers would need to make a choice of default fund which would provide them with an onerous and potentially challengeable duty of care to select the appropriate fund.”
Chief executive of Industry Super Australia, David Whiteley, also told the Australian Financial Review that “neither the government nor the royal commission [who originally recommended the change] had done their homework”, saying:
"If you do the sums you can see this change might end up affecting as few as 160,000 people… We've seen no cost benefit analysis as to whether this will actually end up costing business and consumers more.”
The Bills are expected to be introduced into Parliament sometime early this year.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Superannuation Legislation Amendment (Governance) Bill 2015: Extending superannuation choice to enterprise agreements - Draft and Explanatory Material as reproduced in TimeBase LawOne
Superannuation Legislation Amendment (Transparency Measures) Bill 2015: Product dashboards - Draft and Explanatory Material as reproduced in TimeBase LawOne
