Stronger Super legislation in various forms is currently being considered by both Houses of Parliament, the superannuation industry, and government bodies trusted to implement the reforms.
The Stronger Super reforms are designed to improve Australia’s superannuation system by removing unnecessary cost and provide better safeguards. The total reform package is due to commence from 1 July 2013 and consists of four key areas:
- MySuper
- Super Stream
- Self-managed superannuation funds
- Governance
The Stronger Super reforms have been progressively introduced into the Parliament in tranches. When finalised, the reforms will have a major impact on the way employers provide employee benefits.
Tranche 1 - Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 Introduced 3 November 2011 – Before the Senate
Tranche 2 - Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012 Introduced 16 February 2012 – Before the Senate
Tranche 3 - Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 Exposure draft released late April 2012 and has not been introduced into Parliament.
Tranche 4 It is anticipated a fourth tranche will be required to clarify issues which have been raised during the consultation process associated with tranches 1, 2 and 3.
MySuper
MySuper was designed as a low cost default superannuation product and is intended to be available from 1 July 2013. It is being introduced to simplify default superannuation products and improve their transparency and comparability for members. The Government intends MySuper to replace existing default arrangements for those employees who do not exercise “Choice of Fund”.
Key dates for the implementation of MySuper are:
1 July 2013
Superannuation funds will be able to offer MySuper products from this date
1 January 2014
Employers must make super guarantee contributions for employees who have not made a “Choice of Fund” nomination to a fund which offers a MySuper product.
1 July 2017
Trustees of superannuation funds offering MySuper products will need to transfer the existing balances of default members to a MySuper product.
In addition to the Stronger Super measures, the Government is currently considering the Productivity Commission’s paper Default Superannuation Funds in Modern Awards.
It is not clear at this stage how superannuation funds will implement MySuper, nor is it clear how modern awards will be impacted following the introduction of MySuper. At this stage the legislation is not complete and the Regulations have not been drafted. Industry bodies, including the Association of Superannuation Funds of Australia (ASFA), have lobbied the Government to defer the commencement date of MySuper to allow the superannuation industry sufficient time to make the necessary changes to their businesses.
SuperStream
SuperStream is a package of measures designed to make superannuation administration more efficient. It includes standard data formats for superannuation funds to use when sending money to each other and for employers to send contributions to the superannuation funds chosen by their employees. There are also measures to streamline the process of consolidating multiple superannuation accounts. To pay for the implementation of SuperSteam, super funds will be required to pay a SuperStream levy to APRA from 2012-13, estimated to raise $467 million over the next six years. Key dates for the implementation of SuperStream are:
July 2012
A new ATO online facility allowing members to view their active and lost member accounts and other superannuation monies held by the ATO. Funds must obtain member consent to search account information, using a member’s Tax File Number (TFN).
October 2012
All funds to report details of all accounts held by persons aged 48 and older (the data is required to administer the new contribution rules for those over age 50).
January 2014
Commencement of auto consolidation of accounts less than $1,000 where no contribution or rollover has been received in the previous two years.
July 2014
New data standards and use of e-commerce becomes mandatory for large and medium employers making contributions and enrolling new members in default funds (this refers to all employers with more than 20 staff). Small employers will not need to comply till July 2015.
July to December 2014
A new process will be introduced where an ATO central portal can be used to provide information on members’ superannuation accounts and allow members to facilitate account consolidation when they commence employment with a new employer.
