Superannuation system reforms
The Federal Government will introduce legislation to give Australians more control over their superannuation providers and strengthen the prudential framework.
The Government anticipates the reforms will provide a more transparent and accountable compulsory retirement savings system.
Given the compulsory nature of superannuation, Australians rightly expect the industry to be held to the highest standards of transparency and accountability.
The package includes measures that:
- Make superannuation providers more accountable to consumers through the introduction of annual member meetings. This is already a longstanding requirement for the public companies in which superannuation funds invest their members’ money.
- Require funds to report and publish annually more transparent information on how their fund is being managed, including information on how the fund sets its fees and the way it spends members’ money.
- Strengthen default MySuper products including a stronger annual assessment of MySuper product outcomes to ensure the investment and insurance strategies, fees, scale and returns are promoting the financial interests of MySuper members.
- Close a legal loophole that has been used by unscrupulous employers to short-change employees who choose to make salary sacrifice contributions into their superannuation accounts.
- Give APRA more capacity to take preventive and corrective action if it has prudential concerns about a fund or if a fund is not acting in the best interests of members.
- Give APRA greater capacity to refuse or cancel a MySuper authorisation where it believes a licensee will fail to meet its obligations.
- Provide stronger protection for consumers by requiring APRA approval before transferring ownership or control of a licensee to operate a fund.
- Will make directors of superannuation funds who breach their duties to members subject to the same civil and criminal penalties as directors of ordinary managed investment schemes.
- The Government has also tasked APRA with making it easier for consumers to opt-out of automatic life and disability insurance policies provided through superannuation.
The package does not make any changes to the taxation treatment of people’s superannuation.
Many of the measures in the package have been recommended by past reviews into superannuation, commissioned by both Coalition and Labor governments. These are reforms that are already being embedded in the practices of high performing funds.
Minister for Revenue and Financial Services, the Kelly O’Dwyer, said the Government recognises the importance of having a competitive and efficient superannuation system.
“This is why we tasked the Productivity Commission to undertake a review of the system last year. The Government will consider if any further changes to improve the superannuation system are required in light of any recommendations made by the Productivity Commission,” Ms O’Dwyer said.
The Exposure Draft Bill and Explanatory Memorandum are available on the Treasury website.
Submissions will close on Friday, 11 August 2017.
25 July 2017.