The MySuper Bill (Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011) was introduced into Parliament this morning. This is the first of several tranches of legislation to introduce the Government’s Stronger Super package. The MySuper Bill is substantially the same as the Exposure Draft and leaves many of the issues raised by industry during the consultation process unresolved.
Key changes from the Exposure Draft are:
- the exception to the rule that a trustee offer one MySuper product per fund where there is "material goodwill" in another product, will only be available for transfers after 1 July 2013. There is no longer a window to justify separate MySuper products based on goodwill for transfers before 1 July 2013. It is unclear why existing products with distinct features and branding should be treated differently to future products. The impact that this might have on fund rationalisations before 1 July 2013 is also open for speculation;
- the conditions for the large employer exception to the one MySuper product per fund rule have been refined - the changes are technical in nature recognising that former employees might remain in an employer plan and that associated employers can contribute for an employee in a large employer plan;
- if APRA rejects an application for a large employer MySuper product, there will be a grace period of three months during which the trustee can accept employer SG contributions - the change is important to give time for employers and trustees to make other arrangements but, again, technical rather than substantive;
- the definition of "administration fee" has been broadened to include “costs incurred by the trustee of the fund” - this is an important change since the MySuper rule, which limits the fees a trustee can charge to the prescribed fees, is also intended to prohibit trustees deducting costs and expenses from MySuper assets unless they fall within one of the definitions of the prescribed fees. There are also other technical amendments to other fee provisions;
- MySuper products are still prohibited from paying pensions but an exception for disability pensions is recognised;
- the "streaming" provisions which previously related only to "income" have been changed to apply only to "gains and losses". This could create confusion and it would be preferable to refer to income, gains and losses; and
- the lifecycle investment option exception will remain primarily based on age but there will be power for regulations to be made for other factors to be available, as long as age remains one of the factors.
A description of the contents of the MySuper Bill and some of the issues to be worked through is in our previous alert MySuper Core Provisions Draft Bill released.