Delivering Better Financial Outcomes
Paper: Better Financial Outcomes – reducing red tape and other measures
Summary: Treasury released Exposure Draft Treasury Laws Amendment (2024 Measures No. 1 Bill) 2024 for consultation.
The draft amendment responds to several recommendations from the Quality of Advice Review Report including:
- Recommendation 7 to clarify that a financial advice fee may be deducted from a member’s super account to pay a financial advisor for personal financial advice which is wholly or partly about the member’s interest in the super fund and confirm fees for personal advice are tax deductible for the fund and are not considered a super benefit payment.
- Recommendation 8 to replace the annual Fee Disclosure Statement with simplified disclosure and consent requirements.
- Recommendation 10 to allow financial advice providers to direct clients to read the Financial Services Guide on their website as an alternative means of disclosure.
- Recommendations 13.1, 13.2 and 13.3 to clarify monetary and non-monetary benefits paid to a licensee by a retail client and payment of an advice fee from a super account to a licensee do not constitute conflicted remuneration.
- Recommendation 13.4 to remove the exception to the ban on conflicted remuneration that applies where the licensee or a representative has not given financial product advice in relation to a financial product in the preceding 12 months.
Stage: The consultation period ended 6 December 2023.
For more information on ART’s response to these reforms, please see our article.
Payday super
Paper: The Securing Australians’ Superannuation Budget 2023-24 Consultation Paper
Summary: In October 2023, the government sought feedback on proposed changes to the Securing Australians’ Superannuation package that was announced in the 2023-24 federal Budget. Designed to change the superannuation guarantee (SG) framework in preparation for payday super, key changes announced in the Consultation Paper (linked above) include:
- requiring employers to pay SG each time they pay their employees from 1 July 2026
- establishing a new database to match employer payroll data with super funds’ member account data. This will help the ATO identify when employers pay SG late or the wrong amount.
The paper requests feedback on a range of technical challenges including:
- defining a ‘payday’ as every time an ordinary times earning (OTE) component is paid
- updating the SG charge from a quarterly to more frequent payment schedule
- the pros and cons of using the New Payments Platform for super contributions
- potential improvements to stapling, including developing a new digital ATO service to make it easier for employers to find stapled funds.
Stage: The consultation period ended 3 November 2023.
Senate inquiry into insurance in super
Information: Improving consumer experiences, choice, and outcomes in Australia’s retirement system
Summary: An inquiry largely relating to insurance in super has been referred to the Senate Economics References Committee.
The inquiry will review:
- how regulation impacts the development and uptake of insurance products in super
- policy options to support flexibility in the retirement income system
- the relationship between different types of insurance and social security benefits and their impact on retirement outcomes
- the impact of climate change on insurance premiums and asset valuations.
Stage: Closing date for submissions is 23 February 2024 with the committee due to report to parliament by 30 June 2024.
Increased flexibility for social security eligibility
Information: Security and Other Legislation Amendment (Supporting the Transition to Work) Bill 2023
Summary: The Bill allows pensioners to earn more before the pension income test is applied and their pension payments are reduced. It amends the Social Security Act 1991 and Veterans’ Entitlements Act 1986 to allow a $4,000 work bonus concession balance for eligible age pensioners and veteran entitlement recipients, and a permanent increase to the maximum concessional balance they can accrue.
Stage: The Bill was passed into law on 28 November 2023.