Disclaimer. If further advice is required, AIST offers Compliance consulting for its Members.

Transcription

1 Disclaimer This course and the information contained in all associated materials are intended as information only and should not be used in the place of legal or other advice. In particular, such information is not intended to, and does not constitute financial advice of any kind. The Australian Institute of Superannuation Trustees (AIST) has made every effort to provide current and accurate information at the time of printing. AIST expressly disclaims all liability and responsibility to any person who relies in full or in part on any of the information contained in this course, or is omitted from it. If further advice is required, AIST offers Compliance consulting for its Members.

2 Overview Agenda Stronger Super MySuper SuperStream Governance SMSFs Questions

3 Audience voting about to begin Proudly supported by our Gold Industry Partner

4 Question Do you believe that the stronger Super Reforms will produce better outcomes for fund members? A) Yes B) No

5 Overview Cooper review 177 Recommendations Stronger Super accepted 139 recommendations Design & implementation consultation with industry Peak Consultative Group MySuper SuperStream Governance SMSF AIST involved in each group: over 60 meetings

6 Overview Consultations with super industry concluded in July Govt response expected in late August 2011 Legislation to be introduced November 2011 Challenges and opportunity for funds Presentation on most likely (but not certain) outcome

7 What to watch out for... Political uncertainty means no clear path to implementation Some sectors looking to slow, thwart changes FOFA (Future Of Financial Advice) will be considered by Parliament first, flow-on effect to Stronger Super Many initiatives may be implemented via new APRA standardsmaking power

8 What does the future look like? APRA will have standards making power Greater involvement from the ATO Heightened obligations on trustee directors Default arrangements to change Efficient back office better member experience Increased oversight of SMSF sector

9 MySuper key features A default investment option for those who allow the trustee to make investment decisions for them and the disengaged Can be offered from 1 July 2013 A 2 or 3 year transition period will be established After transition period is complete, only MySuper products can be a default fund

10 MySuper key features Existing APRA RSE licences will be extended to include MySuper conditions APRA and ASIC costs funded by levy on APRA regulated super funds New duties for trustees, including: a specific duty to deliver value for money as measured by longterm net returns To consider annually whether the fund has sufficient scale (for assets & number of members)

11 MySuper key features A single diversified investment strategy: Allowed to include life-cycle investment strategy Greater consideration of risk New fee requirements: Admin, investment, exit & switching fees allowed No commissions for super & group insurance Performance Fee Standard

12 MySuper key features A fair and reasonable allocation of costs between MySuper and other products Standardised reporting requirements Death and total and permanent disability (TPD) insurance (where available) on an opt-out basis

13 MySuper Awards & workplace agreements Productivity Commission to design a process: For the selection and ongoing assessment of the super funds to be included in modern awards or enterprise agreements as default funds Fair Work Australia to review super funds named in awards for MySuper compliance Reviews will be completed prior to MySuper transition Politically contentious

14 MySuper - contentious issues Multiple MySuper options allowed when M&A s occur Can a MySuper option have more than one price? How will existing default members transition to MySuper? Intra-fund advice: not mandatory, review in 2 years Pension products: not mandatory, review post-transition

15 SuperStream key features Data standards to be mandated for all super transactions July 2012 July 2013 July 2014 July 2015 Standards available for use For all fund-to-fund rollovers For medium & large employers For small employers New governing body to oversight, review & amend standards

16 SuperStream acronyms SBR Standard Business Reporting Govt initiative to reduce the regulatory reporting burden Defines SuperStream terms and reporting message formats XBRL extensible Business Reporting Language Open, global standard for exchanging business information using the XML syntax AUSkey Government developed authenticated solution to allow secure on-line connection (must have an ABN to register)

17 SuperStream Account Consolidation 12 Million workers 30 Million accounts $19 Billion lost super Objective: to remove ~ 10M accounts to slow the proliferation of new accounts

18 SuperStream Account Consolidation TFNs now allowed to be used to find accounts (1 July 2011) July Consolidation of lost, 2 yr inactive accs <$1,000 July Combined TFN/choice/consolidation form Default to new workplace fund Consolidation for 2 yr+ inactive accounts

19 SuperStream Securing Super Government election promise to include actual super paid on payslip, but Most payroll systems record accruals, not payments Implementation proposed when technology catches-up Funds to send quarterly SMS/ contributions received/not received Employer concerns about costs & increased liabilities

20 Governance key features APRA to get standards making power Fundamental change More oversight In line with Banking & Insurance industries Will facilitate introduction of Stronger Super APRA to have administrative power to impose fines

21 Governance key features Industry to pursue single voluntary Code of Trustee Governance Voting Rights Independent Trustee Director Overall review of Binding Death Nominations APRA to develop Operational Risk Reserve requirements Consider costs & risks in Investment Strategy

22 Governance key features Government proposed new Trustee Director role Consultations agreed with the intent of the recommendation, but New role not required to achieve intent Concern about trustee liability Propose clarifying SIS with two lists: Individual director duties Corporate trustee responsibilities

23 SMSFs key features AIST focus on achieving a level playing field: Collectibles and Personal Use assets Auditor Registration & Independence Acquisition and Disposal of Assets Annual Valuation market value Collection of SMSF data performance data

24 What are the benefits of the reform? Simple, transparent & comparable default offering Reduction in accounts and lost super Reduced fees paid by members Increased SMSF integrity and available information Improved trustee & fund decisions and effectiveness Standardised reporting and communication between parties

25 Likely timetable from here... Government response to Cooper is still to pass into legislation Time August 2011 Sept/Oct 2011 November 2011 February 2012 Detail Government response Consultation on legislation Introduced to Federal parliament Debated in parliament

26 Thank you Questions?