Explanatory Memorandum(Circulated by the authority of the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP)
General outline and financial impact
On 16 December 2010, the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, announced the Stronger Super reforms.
Stronger Super represents the Government's response to the review of the governance, efficiency, structure and operation of Australia's superannuation system, the Super System Review. The Government released the Super System Review's final report on 5 July 2010.
To provide input on the design and implementation of the Stronger Super reforms, the Government undertook extensive consultations with industry, employer and consumer groups. The Government announced its decisions on the key design aspects of the Stronger Super reforms on 21 September 2011.
The reforms include MySuper, a new, simple and cost-effective superannuation product that will replace existing default products. MySuper products will have a simple set of product features, irrespective of who provides them. This will enable members, employers and market analysts to compare funds more easily based on a few key differences. It will also ensure members do not pay for any unnecessary 'bells and whistles' they do not need or use.
The Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 (the Bill) implements some of the key aspects of the Stronger Super reforms relating to MySuper.
To this end, the Bill:
- defines a MySuper product;
- limits a regulated superannuation fund to offering only one MySuper product, except in certain circumstances;
- allows registrable superannuation entity (RSE) licensees to apply to the Australian Prudential Regulation Authority (APRA) for authorisation to offer a MySuper product;
- sets out rules on the payment of contributions and account transfers for MySuper products; and
- sets out the fees that can be charged and the basis on which those fees can be charged to members of a MySuper product.
Date of effect: The provisions amending the Superannuation Industry Supervision Act 1993 (SIS Act) commence on 1 January 2013 or an earlier day fixed by Proclamation. The provision amending the Superannuation Guarantee (Administration) Act 1992 (SG Act) commences on 1 October 2013, from which date employers must make contributions for employees that do not have a chosen fund to a fund that offers a MySuper product.
Proposal announced: On 16 December 2010, the Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, announced the Stronger Super reforms. On 21 September 2011, he announced the Government's decisions on the key design aspects of the Stronger Super reforms.
Financial impact: This Bill has no significant financial impact on Commonwealth expenditure or revenue.
Summary of regulation impact statement
Impact: The regulation impact statement (RIS) for Stronger Super implementation can be found at http://ris.finance.gov.au. The relevant sections of the RIS covered in this Bill are lifecycle investment options, multiple brands and permitted fees in MySuper products. A RIS exemption was granted for the authorisation of large employer tailored MySuper products. This and other elements of this Bill will be subject to a post-implementation review.