NEED TO KNOW

The Federal Government has today released a discussion paper entitled Better regulation and governance, enhanced transparency and improved competition in superannuation on regulation, governance, transparency and competition in the superannuation sector, inviting consultation from the industry.  Hot on the heels of the release of the terms of reference for the Financial Systems Inquiry, this is another development which will have the superannuation industry in a frenzy.  Many of the issues raised in the discussion paper were canvassed as part of the Super System Review led by Jeremy Cooper and the industry could be forgiven for feeling a sense of déjà vu. 

BACKGROUND

Through four main legislative tranches and associated amending legislation and regulations to implement the Government’s stronger super reforms following the Super System Review, the former Labor Government made significant changes to the superannuation system including, broadly, the following key aspects:

  • introduction of ‘MySuper’, a default superannuation product designed to be a simple and cost-effective superannuation offering with easily comparable key characteristics;
  • introduction of ‘SuperStream’, a package of measures designed to enhance transactions and the back-office administrative functions;
  • a range of measures relating to self managed superannuation funds to improve the operation and efficiency of the sectors; and
  • governance standards and transparency measures, including providing APRA with powers to set prudential standards for superannuation funds.

A portion of the reforms have already commenced such as:

  • the APRA prudential standards for superannuation taking effect;
  • the requirement that Registrable Superannuation Entity (RSE) licence holders be authorised to offer a MySuper product and that employers pay default contributions to a fund in which the RSE licensee is authorised to offer a MySuper product. 

However, certain elements of the Stronger Super reforms are outstanding including, without limitation:

  • introduction of regulations providing the display requirements for information and content on the dashboard for superannuation ‘choice’ products (ie products other than MySuper products); and
  • finalisation of regulations prescribing the portfolio holdings disclosure requirements for superannuation fund trustees.

As part of the current Government’s policy for superannuation which the Government describes as a commitment to improving regulation, governance and enhancing transparency but a pledge not to make unexpected detrimental policy changes, the Government has released a discussion paper for industry submissions ahead of making any exposure draft legislation or regulations. 

The discussion paper seeks feedback in relation to superannuation prudential and governance policy proposals, outstanding aspects of the MySuper reforms, competition in default super funds in modern awards and a possible deferral of the commencement date of the MySuper transparency measures beyond 1 July 2014 as well as the regulatory costs of proposed policy measures. 

SUMMARY OF THE KEY ISSUES RAISED IN THE DISCUSSION PAPER

The table below summarises the issues and measures raised in the discussion paper on which feedback is sought. 

Click here to view table.

TIMING OF CONSULTATION  

The closing date for submissions on the discussion paper is Wednesday, 12 February 2014.

Following receipt of submissions, the Government proposes further consultation on any exposure draft legislation and regulations which are developed following consultation on the discussion paper.