Soon after the coalition’s election win in May, Treasurer Josh Frydenberg outlined the Government’s superannuation priorities for the 46th parliament.
Response to the Royal Commission
A major priority would be to act on the recommendations of the Hayne Royal Commission. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been a time of concern and reflection for the financial services industry, and also for the millions of Australians who trust the companies within the industry to do the right thing.
The final report was tabled in Parliament in February and at the heart of the report’s recommendations is a firm focus on the industry to be fair and honest, not to mislead or deceive and provide services that are fit for-purpose, with a tighter, more transparent accountability framework.
The Treasurer also flagged plans for a principles-based review of the retirement income system. While a formal announcement hasn’t been made, an independent inquiry into the retirement income system was one of the recommendations of the Productivity Commission (PC). The PC recommended the Government review the role of compulsory super as well as the broader retirement incomes system, including the net impact of compulsory super on private and public savings, interactions between super and other sources of retirement income, the impact of super on public finances and the super guarantee eligibility threshold.
Issues facing the super industry
Superannuation peak bodies broadly welcomed the introduction of new Treasury ministers to support the Treasurer. This includes a new Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume.
- The peak bodies also highlight key issues facing the industry over the next three years:
- timelines for implementing the recommendations of the Royal Commission;
- resolving some implementation issues with the Protecting Your Super package; and
- communicating with members holding unnecessary multiple accounts.
There are also some policies from the last term in Parliament that the Government remains keen to pursue, including additional changes to insurance within super. The Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 would prevent super funds from offering insurance to members on an ‘opt-out’ basis for death and TPD insurance if they:
- have a balance of less than $6,000; or
- are under 25.
Currently, many funds offer default insurance from which you may opt-out; these rules, if legislated, are likely to see many funds developing new opt-in rules for younger members. It's important to note these proposals would not apply to defined benefit members and it remains unclear when or if these measures will be passed by the Parliament.