CLIENT UPDATE 2 August 2010
Government to Introduce MySuper Yesterday, in the first part of its response to the Cooper Review into Australia’s Superannuation System (Cooper Review), the Government announced that it will introduce MySuper. Superannuation fund trustees will be able to offer MySuper products from 1 July 2013. MySuper is a new, low-cost and simple superannuation product that replaces existing default funds. Under the Government’s announced policy, MySuper will adopt most of the Cooper Review proposals. The main features of MySuper will include: •
No entry fees, with exit fees limited to cost-recovery
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A ban on hidden fees and commissions in relation to retail product distribution and advice by financial advisers
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Removal of commissions in relation to Group insurance (but keeping the Future of Financial Advice process for consultation on individual risk commissions)
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New duties that require MySuper trustees to be licensed by APRA and deliver value for money
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A single investment strategy set by the MySuper trustee
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Standardised reporting requirements in plain English
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Acceptance of all types of superannuation contributions (unless otherwise prevented by law)
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New standards for the payment of performance fees to fund managers
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A requirement that switching fees are not payable to the MySuper trustee in its personal capacity
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Permitting a member to opt out of MySuper to another fund, including a self-managed superannuation fund
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The automatic payment of contributions by employees who do not nominate a super fund into a MySuper product
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MySuper funds to be the only funds eligible to be nominated as a default fund in a modern Award or industrial agreement
The Government is still considering the regular benchmarking of MySuper funds and permitting some limited flexibility for MySuper trustees to determine life-cycle allocations for members. This is a departure from the Cooper Review recommendations which proposed that post-retirement products would be a mandatory part of MySuper products. Another departure is that separate accounting structures for different options recommended under the Cooper review will not be required. The Government has also stated that it will work with the superannuation industry to streamline the administration of the superannuation system under the SuperStream proposals also recommended under the Cooper Review. The use of Tax File Numbers as primary account identifiers to locate lost accounts and help members consolidate and switch accounts under SuperStream will start from 1 July 2011.
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