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

I would like to thank the honourable members who have contributed to the debate on this bill. The Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012 is the third tranche of legislation implementing the government's MySuper and governance reforms as part of Stronger Super. Tranches 1 and 2 have now passed the parliament, and I will be introducing the final tranche of the MySuper and governance reforms into the House tomorrow morning.

The bill implements the remaining measures relating to MySuper, as well as introducing data collection and publication powers for APRA and disclosure requirements for trustees that were announced as part of Stronger Super. MySuper will provide a cost-effective default product that all Australians can rely on. It will be limited to a common set of features to make it easier for members, employers and other stakeholders to compare performance across MySuper products, placing downward pressure on fees. Passage of this bill by the House completes the measures needed to provide trustees with certainty to lodge applications with APRA to offer a MySuper product.

The bill comprises seven schedules. Schedule 1 has new fee rules for superannuation funds that mean that conflicted remunerations, such as commissions, cannot be charged in relation to MySuper products; that ban entry fees and limit exit fees, switching fees and buy-sell spreads to cost recovery in all superannuation funds; and that impose parameters that must be complied with when a trustee agrees to a performance based fee with an investment manager in relation to a MySuper product. These rules ensure that members of MySuper products do not pay unnecessary fees, ensure that a trustee does not enter into performance-fee arrangements that are not in the members' best interests, and limits certain fees to ensure that they do not unfairly inhibit a member from making active choices.

Schedule 2 covers the insurance arrangements for MySuper products. Trustees will be required to provide members of a MySuper product with life and TPD—total and permanent disability—insurance on an opt-out basis. This provides an important safety net to members of MySuper who may not actively consider their insurance needs.

Schedule 3 implements new data collection and publication powers for APRA in relation to superannuation, and imposes new disclosure obligations on trustees, including publishing their full portfolio holdings on a product dashboard on their website. Transparency of key performance information is crucial to a competitive and efficient superannuation system. For this reason, APRA will have new data collection and publication powers in relation to superannuation. Members are entitled to information about their investments. Therefore, superannuation funds will be required to disclose their full portfolio holdings, and a product dashboard to provide key information to members at a glance. The government will consider broadening this requirement to other managed investments as part of its response to the parliamentary inquiry into the Trio Capital collapse.

Schedule 4 makes consequential amendments to the Fair Work Act to ensure that only a fund that offers a MySuper product may be nominated in a modern award or enterprise agreement. This will ensure that employees who have their contributions directed to a fund nominated in a modern award or enterprise agreement will benefit from having their contributions placed in a MySuper product if they do not wish to choose another superannuation product.

Schedule 5 exempts defined benefit funds and defined benefit arrangements from the requirements of the MySuper regime. This will allow defined benefit funds to continue to be used as the default fund by employers. Defined benefit members are entitled to benefits that are not altered by the charging of fees or the investment strategy adopted. Therefore, the MySuper regime is not designed to apply to defined benefit arrangements.

Schedule 6 requires trustees of superannuation funds to transfer the accrued default amounts of members to a MySuper product by 1 July 2017. Moving existing balances to MySuper will ensure that members are able to obtain the benefits of MySuper and in particular a ban on commissions for their existing superannuation balance as well as for future contributions.

I am aware that there have been some concerns with the definition of the amounts that must be transferred to MySuper. Following further consultation with industry I will today be moving amendments to the definition of accrued default amounts and on several other issues to address these concerns.

Schedule 7 introduces new authorisation requirements for eligible rollover funds. This will ensure that APRA is able to assess whether eligible rollover funds are meeting their intended objective of reconnecting members with their lost superannuation and are promoting the financial interests of members. I commend the bill to the House.

Question agreed to.

Bill read a second time.