On 28 June the Superannuation Legislation Amendment (MySuper Measures) Regulation 2013 was registered. The Regulation is extensive and provides a multitude of amendments affecting superannuation fund trustees including material changes to trustees’ disclosure obligations. Below is a simplified summary of those new disclosure obligations.
Product Disclosure Statements (that are issued on or after 31 December 2013)
Section 1 of the short-form document will need to contain statements describing:
- where members can find product dashboard and remuneration disclosure on a fund’s website; and
- a trustee’s process for transitioning accrued default amounts into a MySuper product (until such time as this occurs).
Section 6 is subject to new disclosure requirements including, but not limited to:
- amended fee and fee example templates (and specific rules if a MySuper product is a life-cycle MySuper product);
- further additional explanations of Fees and Costs and changes to the definition of “indirect cost ratio”; and
- the application, adoption or incorporation of the various MySuper fee definitions.
Periodic Statements (in respect of reporting periods ending on or after 30 December 2013)
Aside from changes to certain prescribed wording, periodic statements must include:
- a notice to members identifying the MySuper product that accrued default amounts will be transferred to, and when the proposed transfer will occur; and
- a Product Dashboard in respect of the investment options a member is invested in (in addition to the already required long-term return disclosure).
Product Dashboards (from 31 December 2013 for MySuper products)
Product Dashboards must detail:
- the investment return target;
- the investment return;
- the comparison between the return target and actual return;
- the level of investment risk (which is to be based on the MySuper Product Dashboard Reporting Standards); and (e) a statement of fees and other costs (PD Data).
The PD Data is to be calculated in accordance with the relevant MySuper Product Dashboard Reporting Standards. If a fund offers a life-cycle MySuper product, the product dashboard must detail the PD Data in respect of each life-cycle stage.
The comparisons of investment return target and return must be graphed in accordance with certain prescribed requirements detailing the return and the moving average return target and return for the relevant 10 year period.
The Choice Investment Product Dashboards will require disclosure from 1 July 2014.
Web-based disclosure (from 31 October 2013)
Fund websites must contain documents including, but not limited to, the following:
- the current version of the trust deed and governing rules;
- rules relating to the appointment and removal of trustee directors;
- a summary of each significant event notice made within the previous two years;
- the name and ABN of each outsourced service provider used in a material outsourcing agreement;
- board meeting attendance records for each director for the last seven years;
- the registers of relevant interests and relevant duties; and
- a summary of when and how the trustee exercised its voting rights in relation to shares in listed companies, during the previous financial year.
Herbert Geer comment
It may be easier for trustees to simply provide hyper-links to copies of each significant event notice, rather than summarise these.
Trustees will need to ensure that all relevant service providers (including custodians and investment managers) provide proxy voting reports in respect of shares held in listed companies.
Trustee and executive remuneration (from 31 October 2013)
The remuneration of each executive officer must be disclosed in a prescribed form including, but not limited to, the following information:
- names of each executive officer, the dates they were appointed or otherwise changed their positions;
- current and post-employment employee benefits of each executive officer divided into prescribed components;
- an executive officer’s termination benefits;
- the (quite comprehensive) details of share-based payments made to executive officers during the past two financial years;
- the terms and conditions of each grant affecting bonuses;
- details of any contract for services, in respect of compensation benefits, negotiated between the trustee and the executive officer; and
- details of any amounts that were paid to Employer- or Member-Sponsors instead of to the Employer- or Member-Representative.
Herbert Geer comment
The term “executive officer” is defined under SIS and is also a subset of the term “Responsible Person” (by virtue of its inclusion as a category of “Senior Manager”) under the APRA Prudential Standard ‘SPS 520 - Fit and Proper’. We believe this will include Chief Executive Officers and non-executive directors and will probably extend to roles such as Chief Financial Officer, Chief Investment Officer and Chief Operations Officer.
The executive remuneration disclosure is a regulatory requirement and trustees and their executive officers will not be able to contract out of the requirement to have such remuneration disclosed.