The registration of regulations to support the Your Future, Your Super reforms was completed on Thursday, except for Portfolio Holdings Disclosure regulations which will be finalised in the coming weeks following further consultation.
The reforms passed Parliament on 17 June, 2021, and would:
- Ensure the final methodology applied for the annual performance test was further strengthened to incentivise underperforming products to reduce fees as soon as possible;
- Prescribe the definition of a ‘stapled fund’, including tie‑breaker rules for determining which fund was to be an employee’s stapled fund where they had multiple existing funds;
- Specify how products would be ranked on the online YourSuper comparison tool;
- Prescribe the information that must be included with the notice of an Annual Members’ Meeting; and
- Further strengthen the prohibition on funds offering inducements to employers.
In a joint statement, Treasurer Josh Frydenberg and the Minister for Financial Services, Superannuation and the Digital Economy, Senator Jane Hume, said: “The Your Future, Your Super reforms will ensure the superannuation system works harder for all Australians, saving workers $17.9 billion over 10 years by putting strong downward pressure on fees, removing unnecessary waste and increasing accountability and transparency.
“The final performance test methodology will see the administration fee component of the test based on the administration fee charged by the product over the most recent financial year, benchmarked against peers.
“This approach for the performance test addresses historical anomalies, including with respect to millions of multiple unintended and inactive accounts, and will create a strong incentive for superannuation funds to reduce fees in order to avoid failing the test.”
In doing so, they said, the change would enable the reforms to deliver immediate benefits to consumers in the form of lower fees.
“This builds on previous changes to strengthen the performance test including ensuring that administration fees are part of the performance test and by adding Australian unlisted infrastructure and unlisted property as specific asset classes covered by the performance test,” they said.
“The annual performance test will protect members from poor outcomes. Funds will be required to notify members if they fail the test and persistently underperforming products will be prevented from taking on new members. Members will be notified by 1 October, 2021, if their fund fails this test.
“The Your Future, Your Super reforms are the most significant since the introduction of compulsory superannuation in 1992 and build on the Government’s prior reforms which have included consolidating 3.5 million unintended multiple accounts worth almost $4.7 billion, capping fees on low balance accounts, banning exit fees and ensuring younger Australians do not pay unnecessary insurance premiums.”
Reaction in the industry to the bill had been polarising, with some supporting particular regulations, while others saying the bill was flawed.