Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

I present a supplementary explanatory memorandum to the bill and seek leave of the House to move government amendments (1) to (6) on sheet BG233, as circulated, together.

Leave granted.

I move amendments (1) to (6) on sheet BG233:

(1) Clause 2, page 2 (table item 2), omit “1 October 2013” (wherever occurring), substitute “1 January 2014”.

(2) Schedule 1, item 9, page 21 (after line 15), at the end of section 29VA, add:

Lifecycle differentiated investment fees

  (9) This rule is satisfied if:

  (a) the fee is an investment fee; and

  (b) the fee would satisfy one of the charging rules in subsections (2) to (4) if the rule were applied to an age cohort identified in the governing rules in relation to the MySuper product for the purposes of this subsection, rather than in relation to all members of the fund who hold the MySuper product; and

  (c) the governing rules identify no more than 4 age cohorts in relation to the MySuper product for the purposes of this subsection; and

  (d) the investment fees for the age cohorts reflect a fair and reasonable attribution of the investment costs of the fund between the age cohorts.

(3) Schedule 1, item 12, page 26 (line 1), omit “1 October 2013”, substitute “1 January 2014”.

(4) Schedule 1, item 12, page 26 (line 6), omit “1 October 2013”, substitute “1 January 2014”.

(5) Schedule 1, item 12, page 26 (line 10), omit “1 October 2013”, substitute “1 January 2014”.

(6) Schedule 1, item 13, page 26 (line 18), omit “1 October 2013”, substitute “1 January 2014”.

The amendments defer the date from when employers must make contributions to a fund that offers a MySuper product from 1 October 2013 to 1 January 2014. While funds will still be able to offer MySuper products from 1 July 2013, the amendments will provide an additional three months transition before it becomes mandatory for contributions to be made to a MySuper product. This will provide more time for funds and employers to prepare for MySuper, facilitating a smoother transition to the new regime. In particular, the amendments will benefit employers in the case where their superannuation fund may have been unable to obtain a MySuper authorisation by the 1 October 2013 deadline.

The amendments also relate to investment fees for life cycle investment strategies. The amendments respond to stakeholder concerns by allowing trustees that operate a life cycle investment strategy for their MySuper product to charge more than one investment fee. APRA must authorise MySuper products with different investment fees within a life cycle investment strategy if it is satisfied that certain criteria are met. In order for them to charge different investment fees, APRA must be satisfied that the following conditions are met: the investment fee charged to each member of an age cohort is the same; there is a maximum of four age cohorts and therefore no more than four investment fees; and the investment fees for the age cohorts reflect a fair and reasonable attribution of the investment costs of the fund between the age cohorts.

This will ensure that members invested in assets with lower investment costs do not cross-subsidise members invested in assets with higher investment costs because they are in different stages of the life cycle. This amendment means that members can be treated fairly and will only have to pay the investment costs that relate to them. This is consistent with a key tenet of MySuper, which is to ensure that members do not pay greater fees than they need to.

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