Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Chapter 1: Faith-based products - Parliamentary Amendments

Outline of chapter

1.1 The Parliamentary amendments to the Bill remove the amendments to the SIS Act which would provide a supplementary annual performance test for faith-based superannuation products.

Context of amendments

1.2 Consistent with recommendation 4 of the Productivity Commission's report, Superannuation: Assessing Efficiency and Competitiveness, Schedule 2 to the Treasury Laws Amendment (Your Future, Your Super) Act 2021 and supporting regulations established an annual superannuation performance test to hold superannuation trustees to account for product underperformance. The performance test measures investment performance (including investment fees and taxes) and administration fees for individual products.

1.3 Schedule 5 to the Bill introduces a supplementary annual performance test for faith-based superannuation products to allow investment in accordance with faith-based principles to be taken into account when assessing the performance of a product against benchmarks.

1.4 Following the Bill being referred to the Senate Economics Legislation Committee on 28 September 2022, these changes would benefit from being considered in the context of the broader Your Future Your Super review. Accordingly, the amendments will remove schedule 5 from the Bill, and the Government will consider this measure as part of the broader review.

Detailed explanation of amendments

1.5 Amendment 1 removes table item 5 from clause 2 of the Bill so that the table no longer includes commencement information for the faith-based products measure. [Amendment 1]

1.6 Amendment 2 removes Schedule 5 to the Bill. Schedule 5 to the Bill amends the SIS Act to provide a supplementary annual performance test for faith-based superannuation products. [Amendment 2]