Guidance

The guidance relates to the new product dashboard requirements for MySuper products, and the new fees and costs disclosure requirements for product disclosure statements (PDSs) and periodic statements.

Product dashboard

From 31 December 2013, trustees will be required to publish and keep up to date, a product dashboard for their new MySuper products. MySuper products are the new default products in superannuation, replacing over time existing default funds. The product dashboards will enable consumers to compare their super with other funds and products.

Information Sheet 170 MySuper product dashboard requirements for superannuation trustees (INFO 170) explains what information must be provided for each of the following measures:

• the return target
• the returns for previous financial years
• a comparison between the return target and returns for previous financial years
• the level of investment risk, and
• a statement of fees and other costs.

INFO 170 also contains an example of what the product dashboard may look like, which incorporates some of the feedback from the independent consumer testing conducted by Latitude Insights.

The results of the testing have been released as ASIC Report 378 Consumer testing of the MySuper product dashboard (REP 378).

Recently the Australian Government released a Discussion Paper 2013 Better regulation and governance, enhanced transparency and improved competition in superannuation which looks at, among other things, the choice product dashboard.

ASIC Commissioner Greg Tanzer said: ‘We hope that the dashboard example provided by ASIC will help trustees see the potential of the product dashboard and its benefits to consumers.’

It is an example only to help illustrate the potential of the dashboard: not all of the content requirements are specifically required by the legislation, or by APRA’s Reporting Standard SRS 700.0 Product Dashboard.

In 2014, ASIC plans to publish information from the product dashboards on its MoneySmart website, based on data provided by APRA.

Fees and costs disclosure

The Superannuation Legislation (MySuper Measures) Regulations 2013 changed the existing superannuation and managed investment fee disclosure requirements under the Corporations Regulations 2001. ASIC has issued FAQ guidance to help super trustees with respect to these changes.

Importantly, ASIC guidance emphasises that there should not be double counting of fees.

Consultation

ASIC has also released Consultation Paper 219 Keeping superannuation websites up to date (CP 219), which considers what ‘up to date at all times’ means in the context of s29QB of the Superannuation Industry (Supervision) Act 1993 (SIS Act). These requirements relate to executive officer remuneration disclosure and other systemic transparency measures.

ASIC proposes giving trustees a ‘safe harbour’, so that they are taken to comply with the updating obligation in s29QB if they update the fund website within a specified time. That time is generally 14 days.

ASIC is seeking feedback by 3 February 2014.

In relation to s29QB, ASIC has also recently amended its Class Order [CO 13/830] to extend the timeframe for compliance with the requirements of this section until 1 July 2014.

Further, ASIC has issued FAQs in relation to the s29QB disclosure requirements, including providing guidance on the definition of executive officers. This information is available on its superannuation page.

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Changes to super will reduce paperwork.

The coming three months will see Australian employers and their myriad of superannuation providers digest some of the biggest systems reforms since the introduction of the GST.

The joint employer and super industry effort will deliver Australians one of the most streamlined retirement systems in the world – enabling people to consolidate funds or change their provider in days without cumbersome paperwork.

According to Link Group (Link), Australia’s leading super administrator, the upcoming changes to electronic contributions and rollovers for superannuation funds will have the most transformational impact on Australia’s super system since the savings scheme was introduced.

As part of the wide ranging Stronger Super reforms, four key deadlines are looming for the industry and employers:

• From 1 January 2014, all APRA regulated super funds must process and fund a member rollover request within three days – rather than the current 30 days.
• From 1 January 2014, all APRA regulated super funds must be compliant with sending and receiving electronic rollover (eRollover) instructions.
• From 1 July 2014, all Australian employers with more than 20 employees will be required to send employee super contributions electronically (eContributions).
• From 1 July 2015, all Australian employers will be required to send eContributions resulting in 800,0001 employers potentially being affected by eContribution changes.

John McMurtrie, Managing Director of Link and chair of super administrators industry group, Affiliation of Superannuation Practitioners, said the industry was likening the impact of eContributions changes to the introduction of GST, fundamentally altering the way businesses interact with clearing houses, payroll systems, superannuation administrators and funds.

He said while many employers were already making super contributions electronically, anecdotal evidence suggests approximately half of companies across Australia still used some form of paper-based instructions.

“The changes signal a major coming of age for our superannuation system and now require the time and attention of all employers. After 20 years, the days of receiving employee contribution cheques with instructions written on the back of a pizza box or Post-It note are coming to an end,” Mr McMurtrie said.

He said the changes would substantially benefit all players in the long run, but in the short term the pressure was on super funds as well as employers to establish how they can best comply with the new rules while maintaining reasonable costs for members.

McMurtrie also suggested that the incoming Government reduce red tape by abolishing the $3,800 fine to be levied on employers who contribute non-conforming data.

Easing the transition

To ensure a smooth transition, Link is working closely with the ATO to pilot eContributions before 1 July 2014, minimising the impact to businesses while still ensuring the rigour and efficiency of digital contributions.

“As part of the consultation process, we are working with the Government and regulators to look at range of e-Contributions solutions. Many employers are already adopting a form of eContribution payments which may not be specifically compliant with new ATO standards. We believe these non-compliant systems, which effectively provide the same outcome, should be accommodated in order to minimise compliance costs for employers,” Mr McMurtrie said.

Link is the first administrator to be fully compliant with each wave of the new regulatory deadlines, making the industry’s first official eRollover transaction for AIMST, Christian Super and Russell Superannuation Master Trust under the new system on 26 August this year. Major super fund administration clients such as REST, CARESuper and Kinetic are also fully compliant with the eRollover requirements ahead of deadline.

Changes expected to awaken members

From 2014 Australians will also see major improvements in the ease with which they can change super funds – including the ability to switch funds online.

While prompting improved fund consolidation, the easier rollover processes may also see an increase in fund switching, and have coincided with some of Australia’s leading super funds redoubling their marketing presence in an effort to attract and retain members.

According to McMurtrie, changing or consolidating super funds has proved so cumbersome to date and conservatively estimate that more than half of people who embark on the process end up giving up before the process is completed.

“Members are fed up with the red tape around their super and we are pleased to be leading the charge amongst administrators to drive home reforms that will ultimately benefit every Australian – in particular the opportunity for people to feel more in control and to become more engaged with their super fund,” Mr McMurtrie said.

He said a more mobile member base would continue to put pressure on super funds to offer a best of breed suite of investment, insurance and other services – while still maintaining competitive costs.

McMurtrie also recommended that the complex, risky and very expensive Government initiated auto-consolidation program be dropped.

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