- AIST Policy News - 7 June 2018
AIST Policy News - 7 June 2018
Productivity Commission draft report into superannuation
AIST wants your input for our response to the Productivity Commission draft report. The report includes recommendations on default fund allocation, balance erosion and insurance but does not suggest solutions for under-performing retail choice funds.
AIST is currently preparing a response to the draft report. We circulated a summary of the report in a policy alert sent out earlier this week.
Submissions are due on Friday 13 July, and we expect the Productivity Commission’s final report to be released later this year.
We will be sending out details of our consultation process with AIST member funds later next week, and this may include one or more face-to-face forums. We encourage funds to get involved, including sending us your comments in the meantime.
Some of the topics in the report mirror what the Government included in the Protecting Your Super package of draft legislation released last month. These issues are fee capping and exit fees, insurance in super and inactive low-balance accounts/consolidation into active accounts.
AIST made a submission on the Protecting Your Super package. See here.
We are concerned the Productivity Commission has taken a lopsided approach in its recommendations. The report identifies issues with insurance, fee erosion and underperforming funds. However, it does not suggest solutions for under-performing retail choice funds, despite the Commission finding that profit-to-member super funds systematically outperform for-profit super funds, and feature overwhelmingly in the top-rating MySuper products.
We also have serious concerns about the proposal for new entrants to the workforce to be defaulted into one of ten ‘best in show’ super funds chosen by a new expert panel, and the finding that having at least one-third independent directors represents best practice.
For further information or to provide feedback, please contact AIST’s Senior Policy Manager David Haynes at firstname.lastname@example.org
Protecting Your Super package
The Protecting Your Super package was announced in the 2018-19 Budget. A consultation paper was released on 8 May, covering a cap on administration and investment fees.
The package proposed:
- Banning exit fees;
- A cap on administration and investment fees for accounts with balances below $6,000;
- A requirement for super funds to offer insurance on an opt-in basis on balances below $6,000, for new members under 25 years old, and on accounts which have not received a contribution for 13 months or longer;
- Requiring the transfer of all accounts with balances below $6,000 to the ATO if the account has been inactive for 13 months.
AIST generally supports the package, but changes are needed to better meet members’ best interests:
- The fee cap calculation needs review to help prevent gaming.
- Sell spreads need to be included in the calculation of exit fees to prevent gaming.
- The Insurance in Superannuation Voluntary Code of Practice should be the focus for improving member outcomes rather than the proposed legislation.
- Inactive accounts should be directly transferred to active accounts.
- A greater lead time is needed, given both process change and ATO processes already in train.
AIST is seeking further consultations to help better meet the proposals’ objectives.
ASIC issues disclosure relief for AFCA disclosure documentation
ASIC has given superannuation trustees transitional disclosure relief for updating documentation about the Australian Financial Complaints Authority (AFCA).
The relief means that, generally, super trustees will have until 1 July 2019 to ensure that the mandatory disclosure documents, such as product disclosure statements and financial services guides, include details about AFCA.
The relief also provides that trustees do not need to issue significant event notices to existing members regarding events associated with the transition to AFCA.
If a trustee wishes to rely on the relief then, from 1 November 2018, they must ensure that the following items include current information about the AFCA scheme and how to access it:
- Fund websites
- Non-mandatory documents describing dispute resolution arrangements
- Non-mandatory documents relating to internal dispute resolution
ASIC has also updated RG 165Licensing: Internal and external dispute resolution,which now includes the disclosure requirements for IDR final response letters prior to the commencement of AFCA.
More detail about the relief can be found in ASIC’s media release here.
AFCA rules consultation opens
The Australian Financial Complaints Authority (AFCA) has released a consultation paper along with the proposed AFCA rules for comment.
The proposed AFCA rules govern the scheme’s jurisdiction and complaints handling process and seek to replicate the current jurisdiction of the Superannuation Complaints Tribunal. To view the rules and other consultation documents please click here.
AIST will be preparing a submission and are interested in your views. If you would like to comment, please contact Jake Sims at email@example.com or on (03) 8677 3855 byWednesday 20 June 2018.
Early release of superannuation for victims of crime
Treasury has released a consultation paper containing two draft proposals that would provide victims of crime with access to a perpetrator’s superannuation in certain circumstances.
Treasury is seeking views on the effectiveness of two proposals that seek to allow victims of crime to access a perpetrator’s superannuation:
- The first proposal is for a ‘claw back’ mechanism for superannuation contributions made by criminals to shield their assets from use in compensating victims of crime.
- The second proposal is to allow victims of serious, violent crimes to be able to access a perpetrator’s superannuation, where other assets have been exhausted, subject to limits and thresholds.
AIST will be preparing submission and are interested in your views. If you would like to comment please contact Jake Sims at firstname.lastname@example.org or on (03) 8677 3855 byTuesday 12 June 2018.
ASIC extends relief for disclosure obligations
ASIC has once again extended the relief period for two disclosure obligations relating to shorter PDS regime relief and for website publication of employer sub-plan information.
The extension of relief was first provided for shorter PDS’s in 2012. The extension this time takes the period of relief to 30 June 2022. For website publication of employer sub-plan info, the period of relief has been extended until 30 June 2024.
AIST has long argued that retail super funds need to produce dashboards for better reporting transparency.
Big Super Day Out seeking volunteers
AIST and First Nations Foundation are seeking volunteers to help members of the Indigenous community sort out their super at the Big Super Day Out events in Brisbane and Cairns.
The Big Super Day Out – organised by AIST’s charity partner First Nations Foundation – will be a fun day including entertainment, giveaways, prizes and is your opportunity to help the Indigenous community better engage with the super system.
What we need:
- RG146 compliant advisers comfortable with navigating the myGov website and providing general advice if necessary.
- Passionate volunteers from the super industry happy to assist with ad-hoc duties including collecting data, directing foot traffic, and more.
- Volunteers must be available on Friday 6th July 2018 in either the Brisbane or Cairns locations for the shift times specified below.
- BSDO sponsor organisations have guaranteed allocated volunteer positions based on their sponsorship agreements.
- Please note every year we are oversubscribed so don’t wait!
FRIDAY 6 JULY 2018- MUSGRAVE PARK FAMILY FUN DAY- BRISBANE
Musgrave Park- South Brisbane 8:30-3:30
FRIDAY 6 JULY 2018- FRIDAY IN THE PARK NAIDOC- CAIRNS
Fogarty Park, The Esplanade- Cairns 9:30-4:00
Interested? Contact First Nations Foundation with your expression of interest by 20 June 2018 by emailing email@example.com For queries- call Jordie on 0433 249 477