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MySuper Core Provisions: an overview of the new Bill

Stuart Jones, Thomson Reuters

On 3 November 2011, a Bill Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 was introduced into the House of Representatives seeking to implement some of the key aspects of MySuper — the Government's proposed low-cost default superannuation product. Broadly, the Bill will establish the legislative framework to:

  • define core aspects of a MySuper product and set out the permitted fees that can be charged to members;
  • provide for employers of people who do not have a chosen fund to pay the super guarantee contributions for those employees only to a default fund that offers a MySuper product; and
  • enable trustees to apply to APRA for authority to offer a MySuper product.

The Bill is the first piece of legislation that will implement the Government's Stronger Super reforms. Remaining provisions will be released in later legislation covering, for example, specific trustee duties in relation to MySuper products.

The Bill has been referred to the Parliamentary Joint Committee on Corporations and Financial Services for report.

Employer default contributions

For certain employees, employers will need to pay all super guarantee contributions into a MySuper product. The relevant employees are those:

  • who do not have a chosen superannuation fund; and
  • who have not told the trustee, in writing, to have their contributions made to a specified choice product.

The Government expects that for most employers their existing default superannuation fund will offer a MySuper product.

MySuper core requirements

The Bill will require a MySuper product to meet core criteria. Those criteria will need to be set out in the fund's trust deed and governing rules. The key criteria required include[1]:

  • investment strategy  Trustees must adopt a single diversified investment strategy for assets which are attributable to each MySuper product;
  • a lifecycle investment strategy  Trustees must adopt a lifecycle investment strategy, but investments can be varied only on the basis of a member's age;
  • access to options and benefits  All members of a MySuper product must have access to the same options, benefits and facilities;
  • crediting and debiting accounts  Trustees must use the same process and timing in crediting or debiting the accounts of members (except for lifecycle investment strategies). To the extent that an employer chooses to directly subsidise the fees of their employees, the trustees may adopt a different process;
  • contributions and roll-overs  The only limits placed on the source or kind of contributions to a MySuper product may be those imposed by law. Contributions that may be made by or on behalf of members include super guarantee contributions, salary sacrifice contributions, after-tax contributions and spouse contributions;
  • transfers  A member's interest will not be able to be transferred without the member's consent (except to another MySuper product in the fund or as permitted by law);
  • pre-retirement phase only  A MySuper product must not allow for a post-retirement option (eg a pension). However, if an insurer pays a pension benefit to the fund, then it can be paid from a MySuper product if the member has ceased work due to ill health (whether physical or mental).[2]

Permitted fees

The holder of a Registrable Superannuation Entity license (an RSE licensee) will be able to charge only the following fees in relation to MySuper products:

  • administration fee;
  • investment fee;
  • buy-sell spread;
  • switching fee;
  • exit fee; and
  • activity fee.

Entry fees will not be permitted.

As insurance premiums are not fees, they can be deducted from member accounts.

Fee charging rules

If an RSE licensee charges a fee to members of a MySuper product, then it may do so only under one of the fee charging rules to be set out in the Act.[3] The fee charging rules seek to prohibit an RSE licensee from discriminating between members.

However, the fee charging rules do not apply to an administration fee charged to a member of a MySuper product if the member's employer has secured a discounted administration fee under the single employer exemption.

Authorisation to offer MySuper

To offer MySuper branded products, an RSE licensee will need APRA's authorisation.

Generally, an RSE licensee will be authorised to offer only one "generic" MySuper product in a fund. However, the licensee will also be able to apply:

  • in limited circumstances, for authorisation to offer a separately branded MySuper product if there is already goodwill in that product before it is transferred to the fund.
  • for authorisation of extra MySuper products that are tailored for a large employer and its associates and that have at least 500 members.

APRA intends to consult on the proposed MySuper authorisation requirements in mid 2012. APRA also proposes to introduce a transitional prudential standard (SPS 410) for MySuper RSE licensees: see 2011 WTB 41 [1564].

Date of effect

The amendments to the SIS Act will commence on 1 January 2013 or an earlier day fixed by Proclamation. However, RSE licensees will be authorised to offer a MySuper product from only 1 July 2013.

The SGAA amendments will commence on 1 October 2013, from which date the MySuper payment obligations will apply to employers.

Previous announcement

Previously, exposure draft legislation setting out the proposed core provisions for MySuper products was released on 29 September 2011: see an earlier ClearLaw article here. The final Bill is substantially the same as the exposure draft legislation but has been revised in a number of subtle respects — for example, the final Bill allows for the payment of disability pensions.

Source: This article was first published in Thomson Reuters' Weekly Tax Bulletin. To subscribe to Weekly Tax Bulletin, or for more information, please

[1] Proposed s 29TC of the SIS Act.

[2] Proposed s 29TC(1)(i).

[3] Proposed s 29VA of the SIS Act.


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