REFORMS TO GIVE CONSUMERS MORE POWER AT THE HEART OF A STRONGER SUPERANNUATION SYSTEM

The Turnbull Government will introduce legislation to give everyday Australians more power over their superannuation providers and strengthen the prudential framework to deliver a more transparent and accountable compulsory retirement savings system, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, announced today.

“This comprehensive package will help deliver all Australians a strong and modern superannuation system that is solely focused on outcomes for all Australians who rely on these funds to secure their retirement,” Minister O’Dwyer said.

The package has been developed with a clear objective to improve outcomes for consumers. The Turnbull Government believes that, given the compulsory nature of superannuation, Australians rightly expect the industry to be held to the highest standards of transparency and accountability. These reforms will ensure the superannuation system has a strong foundation today and into the future.

The package announced today includes measures that:

Make superannuation providers more accountable to consumers through the introduction of annual member meetings. This is already a longstanding requirement for the public companies in which superannuation funds invest their members’ money.

Require funds to report and publish annually more transparent information on how their fund is being managed, including information on how the fund sets its fees and the way it spends members’  money.

Strengthen default MySuper products including a stronger annual assessment of MySuper product outcomes to ensure the investment and insurance strategies, fees, scale and returns are promoting the financial interests of MySuper members.

Close a legal loophole that has been used by unscrupulous employers to short-change employees who choose to make salary sacrifice contributions into their superannuation accounts.

Give APRA more capacity to take preventive and corrective action if it has prudential concerns about a fund or if a fund is not acting in the best interests of members.

Give APRA greater capacity to refuse or cancel a MySuper authorisation where it believes a licensee will fail to meet its obligations.

Provide stronger protection for consumers by requiring APRA approval before transferring ownership or control of a licensee to operate a fund.

Will make directors of superannuation funds who breach their duties to members subject to the same civil and criminal penalties as directors of ordinary managed investment schemes.

The Turnbull Government has also tasked APRA with making it easier for consumers to opt-out of automatic life and disability insurance policies provided through superannuation.

The package does not make any changes to the taxation treatment of people’s superannuation.

Many of the measures in this package have been recommended by past reviews into superannuation, commissioned by both Coalition and Labor governments. These are sensible reforms that are already being embedded in the practices of high performing funds.

Minister O’Dwyer said the Government recognises the importance of having a competitive and efficient superannuation system.

“This is why we tasked the Productivity Commission to undertake a review of the system last year. The Government will consider if any further changes to improve the superannuation system are required in light of any recommendations made by the Productivity Commission,” Minister O’Dwyer said.

The Government remains committed to previously announced measures relating to governance, transparency, and increasing choice for members.

The Exposure Draft Bill and Explanatory Memorandum are available on the Treasury website.

Submissions will close on Friday, 11 August 2017.