The Assistant Treasurer has released an Information Pack containing further details of the Stronger Super Reforms.
Legislation is planned to be introduced in several tranches, over the coming months and in the first half of 2012.
The further information covers the following areas:
Fees
As MySuper products will have a single, diversified investment strategy, they will have to be offered at a standard set of fees generally available to all members. However, funds will be able to offer discounted administration fees to employees of particular employers, reflecting the administrative efficiencies for the fund in dealing with the employer. Any discounted fee will be reported to APRA and published by the fund. MySuper public offer funds will be able to be compared on fees.
In addition, funds will be able to offer employers with more than 500 employees a MySuper product tailored to the needs of the particular workplace including the investment strategy, member services and fees. The details of all separately tailored MySuper products will be required to be reported to APRA.
Transition
From 1 October 2013, employers must make contributions for employees, who have not chosen their fund, to a fund offering a MySuper product. All new superannuation payments will be commission free.
By 1 July 2017, funds will need to transfer the existing default balances of members to a MySuper product. However, the Government will consult further on a mechanism to allow for this period to be extended in certain, limited circumstances, recognising there may be instances where existing obligations affect a trustee’s ability to transfer balances.
Consolidation
The Government will help superannuation funds and their members locate and consolidate multiple member accounts. New processes will see lost and inactive accounts, with balances under $1,000 and in eligible rollover funds, consolidated into the member’s current active account, unless the member opts out. This reform will reduce the amount of fees paid on multiple accounts and maximise retirement benefits.
Reporting of contributions
Employers will disclose on payslips when contributions are due to be paid. This will provide an early warning if superannuation entitlements aren’t being paid.
The use of e-commerce and data standards will enable money to be allocated to member accounts in a more timely manner and reduce the likelihood of member accounts being lost due to incomplete or incorrect information being provided to funds.
The data and e-commerce standards will be mandated for superannuation funds from 1 July 2013. The Government will extend the data and e-commerce standards to large and medium sized employers from 1 July 2014.
The information pack also discusses SMSF auditors and governance issues.
