Explanatory Memorandum
(Circulated by the authority of the Deputy Prime Minister and Treasurer, the Hon Wayne Swan MP)General outline and financial impact
Data and payment standards relating to superannuation and retirement savings
Schedule 1 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the Retirement Savings Accounts Act 1997 (RSA Act) to introduce a framework to support the implementation of superannuation data and payment regulations and standards that will apply to specified superannuation transactions undertaken by superannuation entities/retirement savings account providers(RSA providers) and employers.
Date of effect : These amendments apply to:
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- trustees of a superannuation entity/RSA providers in relation to conduct that occurs on or after 1 July 2013;
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- an entity that is a medium to large employer (20 or more employees) on 1 July 2014 in relation to conduct that occurs on or after 1 July 2014; and
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- an entity that is a small employer (fewer than 20 employees) on 1 July 2014 in relation to conduct that occurs on or after 1 July 2015, unless the regulations prescribe an alternate application date after 1 July 2015.
Proposal announced : This measure was announced in the then Assistant Treasurer and Minister for Financial Services and Superannuation'sMedia Release No. 131 of 21 September 2011.
Financial impact : Nil.
Human rights implications : This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 1, paragraphs 1.107 to 1.111.
Compliance cost impact : This measure is expected to temporarily impose additional compliance costs on employers, regulated superannuation entities and RSA providers that engage in the superannuation industry. Compliance costs will vary across these stakeholders depending on the role they perform in the system and the manner that engagement with the data and payment regulations and standards occurs. Ongoing compliance costs will reduce over the medium to long term for all stakeholders.
Summary of regulation impact statement
Regulation impact on business
Impact : A Regulation Impact Statement (RIS) has been finalised for the implementation of the Stronger Super reforms and can be found on the Office of Best Practice Regulation's website. The relevant section of the Stronger Super RIS covered in this Bill is the chapter on SuperStream.
Schedule 1 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012 amends the SIS Act and the RSA Act to introduce a framework to support the implementation of superannuation data and payment standards that will apply to specified superannuation transactions undertaken by superannuation entities, Retirement Savings Account providers and employers.
The SuperStream Advisory Council will oversee the implementation and the ongoing effectiveness of the SuperStream changes.
Main points :
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- Estimates undertaken by the Superannuation industry have identified that SuperStream will save in the order of $1 billion each year in processing costs. Averaged over the approximate 33 million accounts existing today, this saving is in the order of $30 per account each year.
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- The cost of implementing the SuperStream reforms is $467 million in total (from 2012-13 to 2017-18) and $121 million in 2012-13 to be paid for by a new SuperStream levy on Australian Prudential Regulatory Authority regulated funds. If you averaged the full levy increase of $121 million to apply in 2012-13 (and the highest amount of levy to be collected) across the approximate 33 million accounts existing today, the cost is in the order of $4 per account.
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- These amendments will temporarily increase compliance costs for superannuation funds, Approved Deposit Funds, RSA providers and employers, though the impact will vary considerably and is dependent on whether compliance with the data and payment standards is outsourced to a third party provider (such as a clearing house or administrator) or an information system upgrade is undertaken (and the extent that the data and payment standards are integrated into payroll and human resource systems). In the longer term, the costs of administration will reduce significantly as a result of these reforms.
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- These amendments will improve the quality of data across superannuation transactions by removing the multitude of different data and system requirements across the superannuation industry that employers need to interact with significantly improving the employer experience.
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- For superannuation entities and RSA providers, these amendments will simplify the processing of superannuation transactions by introducing standardised formats and e-commerce that will reduce the number of multiple, inactive or lost member accounts.
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- A new penalty regime will be introduced to ensure that superannuation entities, RSA providers and employers comply with the superannuation data and payment standards.
Costs of implementing SuperStreammeasures
Schedule 2 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012amends the Australian Prudential Regulation Authority Act 1998 to enable costs associated with the implementation of the SuperStream measures to be included in the determination specifying the amount of the levy that is payable to the Commonwealth.
Date of effect : 1 July 2012.
Proposal announced : This measure was announced on 10 December 2010 as part of the Government's Stronger Super package of reforms.
Financial impact : Commonwealth costs associated with the implementation with SuperStream is $467 million over 7 years. SuperStream costs of $467 million will be collected through the Superannuation Supervisory Levy from 2012-13 to 2017-18.
Human rights implications : This Schedule does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.24 to 2.28.
Compliance cost impact : Nil.
Amendment to the Superannuation Supervisory Levy Imposition Act 1998
Schedule 1 of the Superannuation Supervisory Levy Imposition Amendment Bill 2012 amends the Superannuation Supervisory Levy Imposition Act 1998 to enable the Treasurer to make more than one determination for a financial year.
Date of effect : 1 July 2012.
Proposal announced : A levy on funds regulated by the Australian Prudential Regulation Authority (APRA) to collect costs associated with SuperStream was announced on 10 December 2010 as part of the Government's Stronger Super package of reforms.
Financial impact : Nil.
Human rights implications :This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 3, paragraphs 3.11 to3.15.
Compliance cost impact : Nil.