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Super legislation and regulatory update

Media release - 19 January 2023

Legislation update

Downsizer eligibility age reduction

Bill: Treasury Laws Amendment (2022 Measures No. 2) Bill 2022

Content: The Bill reduces the eligibility age of the Downsizer regime from age 60 to 55.

Stage: The Bill has passed both houses of parliament and received Royal Assent on 12 December 2022.

Effective: 1 January 2023.

Faith-based performance test carve outs removed from Bill

Bill: Treasury Laws Amendment (2022 Measures No. 3) Bill 2022

Content: Schedule 5 of the Bill provided for a supplementary annual performance test for faith-based superannuation products. The government moved an amendment to remove this schedule from the Bill in order to consider the broader question of values-based investments, including ESG investments, in the Your Future, Your Super review.

Stage: The amendment was agreed and the schedule removed from the Bill on 28 November 2022.

Effective: To be determined.

Asset test exemption and deeming rate

Bill: Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Act 2022

Content: The Bill gives pensioners an extra 12-month asset test exemption for the proceeds of selling their home before it affects their age pension. It also changes the deeming rate on the proceeds of selling a principal home from 2.25 to 0.25% per annum.

Stage: The Bill has passed both houses of parliament and received Royal Assent on 25 November 2022.

Effective: 1 January 2023.

Financial reporting and auditing

Bill: Treasury Laws Amendment (2022 Measures No. 4) Bill 2022

Content: Schedule 6 of the newly introduced Bill carries additional financial reporting requirements for RSE licensees, who would need to:

  • Prepare and lodge financial reports for each financial year with ASIC.
  • Make certain reports publicly available.
  • Appoint an auditor to conduct an audit of the RSE and prepare an audit of the RSE’s financial report.
  • Report contraventions of the Corporations Act to ASIC.
  • Meet auditor independence and rotation requirements.
  • Publish auditor transparency reports.
  • Maintain financial and accounting records for seven years.

Stage: Bill introduced 23 November 2022.

Effective: Measures scheduled to commence 1 July 2023.

Financial Accountability Regime Bill delayed

Bill: Financial Accountability Regime Bill 2022

Content: The Bill establishes a financial accountability regime to impose accountability, key personnel, deferred remuneration and notification obligations on directors and senior executives of financial entities in the banking, insurance and superannuation industries.

Stage: The Bill will be delayed until 2023.

Effective: To be determined.

Regulatory update

Transfer planning and SFTs

Regulator: Australian Prudential Regulation Authority (APRA)

Content: APRA released a discussion paper with measures to heighten obligations in relation to successor fund transfers and transfer planning.

Measures include:

  • requiring all RSE licensees are appropriately prepared to transfer or receive members, this was previously guidance;
  • new requirements for the transfer of MySuper product assets in the event of MySuper product authority cancellation;
  • updated transfer planning guidance to replace existing Prudential Practice Guide SPG 227 Successor Fund Transfers and Wind-ups.

Stage: Feedback is requested by 10 March 2023.

Effective: APRA expects to release the draft transfer planning enhancements in the first half of 2023.

Read more.

Improving super transparency

Regulator: Australian Government

Content: The Australian Government announced three measures designed to improve the transparency of the superannuation system so that “meaningful, detailed information is made available to members, easily and consistently.”

Measures include:

  • Introducing legislation aligning super funds’ financial and accounting reporting obligations with those on public companies. This includes filing annual, publicly-available financial reports with ASIC.
  • Launching new annual Super Transparency Report – a single source of granular, consistent information for members to compare funds’ performance and expenditure.
  • Reforming existing rules so every reporting stream serves a distinct purpose, eliminating duplication and enhancing clarity.

Stage: Media release published 23 November 2022.

Read more.

Legislating the objective of superannuation

Regulator: Australian Government

Content: The Australian Government announced its intention to legislate the objective of superannuation. The announcement comes in the context of a series of proposals and initiatives relating to using super for housing, paying of HECS debt, estate planning and the pandemic early release scheme.

By legislating a clear objective, the Government expects any proposed initiatives to be assessed for opportunities “where the national interest and member interests align”.

Stage: Media release published 8 November 2022.

Read more.