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Protecting Your Super measures become law

Prior to the cessation of the 45th Parliament just before the recent federal election was held, the much anticipated Protecting Your Super Bill became law on 12 March 2019 implementing measures announced in the 2018-19 federal Budget.

These measures:
  • cap administration fees, investment fees and indirect costs at 3 per cent p.a. where members have an account balance of less than $6,000, and remove exit fees,
  • require the cancellation of insurance for inactive accounts (where no contributions have been received for an extended period) with members needing to actively elect to retain cover, and
  • require the transfer of certain low balance accounts to the Australian Taxation Office with the intention that these will be consolidated by the ATO back into the active account of the member. .

Refer to Sunsuper's Product update 2019 for more detail on the insurance changes and how they may impact members’ accounts.

Further legislation passed strengthens obligations on super trustees to consider the appropriateness of their MySuper product offering annually, gives APRA enhanced capacity to refuse a new authority to offer a MySuper product or to cancel an existing authority, and imposes civil and criminal penalties on trustee directors failing to act in the best interests of members.

The federal election

The recent federal election delivered a majority Liberal-National Coalition government. Senator Jane Hume is now the Assistant Minister for Superannuation, Financial Services and Financial Technology with Stephen Jones appointed as Shadow Minister for Financial Services. Parliament resumed on 2 July.

The returned Treasurer, Josh Frydenberg, has flagged a review of the retirement income system (as recommended by the Productivity Commission). The expectation is that the government will move quickly to commence the review. The Treasurer has also suggested a number of outstanding superannuation reforms will resurface.  

The resumption of Parliament saw the reintroduction of measures to extend the requirement to only offer insurance on an opt-in basis for members under 25 years (new members from 1 October 2019) and also members with balances below $6,000. This was referred to the Senate Legislation Committee for consultation.

Other items expected to resurface include legislation mandating Independent trustee director requirements and Choice of Fund extension to EA and Workplace Determinations. Timing is unknown (with governance-related items expected to receive early attention).

Regulator activity

APRA released two notable information papers in the quarter: the outcomes of the Review of APRA's 2013 superannuation prudential framework and APRA’s analysis of the Self-assessments of governance, accountability and culture. APRA intends to consult on enhancements to a number of Prudential Standards and Guidance over the next 12–18 months with harmonisation of the Risk Management Prudential Standard SPS 220 and the Cross Prudential Standard CP 220 expected to be an initial focus. APRA’s risk governance analysis identified attention to risk culture, embedding clear accountability and ensuring governance and remuneration are aligned as key themes. These will continue to shape supervisory activity and focus. APRA has also flagged a review of “remuneration” aspects of Prudential Standards in the shorter term.

As expected, APRA has commenced its related party thematic review with information requests issued as the first phase.    

APRA has also noted its review of the Sole Purpose Test has commenced, albeit at an early stage of information gathering – any progression on legislation on the “objective” of superannuation will impact this review.  

Trustee boards can expect engagement with APRA to move to a more “flexible and agile” approach with additional focus on board capability, processes and effectiveness.

ASIC’s recent commentary continues to reinforce its role as a conduct regulator in promoting cultural and behavioural changes across the financial services industry to support fairer consumer outcomes. Its review into Internal Dispute Resolution practices has commenced.