SolePurposeTest

Status of current major superannuation Bills

• Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020
  • Assent 22 March 2021
  • Transfer superannuation held by Eligible Rollover Funds (ERFs) to the ATO, and close ERFs by 30 June 2021.
• Treasury Laws Amendment (Your Future, Your Super) Bill 2021
  • Before the House of Representatives | Second reading moved 17/02/2021
  • Various changes, including ‘stapling’ new employees to super funds, annual performance tests of MySuper products and other super products by APRA, and create best financial interests duty test.
• Treasury Laws Amendment (Self Managed Superannuation Funds) Bill 2020
  • Before the Senate | Second reading moved 02/09/2020 (introduced to Senate first)
  • Increase maximum number of SMSF members from 4 to 6
• Treasury Laws Amendment (More Flexible Superannuation) Bill 2020
  • Before the Senate | Second reading moved 31/08/2020
  • Allow people aged 65 or 66 to use the three-year non-concessional contributions bring-forward rule

Current status of government superannuation policies

The status of government superannuation policies in development and implementation.

Recent changes

Transferring all money from ERFs to the ATO

• The Government announced the intention to effectively shut down Eligible Rollover Funds, with a plan to require them to transfer all super holdings to the ATO.
• In July 2020 the Government announced that the Bill would be amended to push back the start dates of the measure by up to 12 months. “These amendments respond to requests from superannuation funds to provide additional time and flexibility for superannuation funds to transfer amounts to the ATO,” said the Economic and Fiscal Update July 2020.
• Passed the Parliament in March 2021 in the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, with payments going to the ATO between 30 June 2021 and 31 January 2022.

Allow victims of domestic violence to access

• Announced late in 2018, victims of domestic and family violence would be able to access some of their superannuation. Legislation has yet to be introduced to Parliament. Recent Freedom of Information documents show the policy has “no announced start date”. The Government has now announced this change will not proceed.

Expand super choice to cover more workers

• Passed the Parliament in August 2020 in the Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019.

Currently before Parliament

• Increase SMSF member cap to 6
  • Was included in the Liberal Party’s list of election policies. Prior to that, was included in a Bill put to the Parliament before the election, but removed by amendment. Legislation would need to be reintroduced to Parliament.
  • On 30 June 2020, the Government revised the start date from 1 July 2019 (which had already passed) to from “Royal Assent of the enabling legislation”. At the time of announcement the enabling legislation was not before the Parliament.
  • Introduced to Parliament in a Bill in early September 2020, yet to pass.

• Extending non-concessional contribution bring-forward to ages 65 & 66
  • Announced as part of the 2019/20 Budget, the Government proposed that people aged 65 or 66 be able to use the non-concessional contribution bring-forward rule. The legislation is currently before Parliament.
• Transferring all money from ERFs to the ATO
  • In mid-December the Government announced the intention to effectively shut down Eligible Rollover Funds, with a plan to require them to transfer all super holdings to the ATO. The legislation is currently before Parliament.
  • In July the Government announced that the Bill would be amended to push back the start dates of the measure by up to 12 months. “These amendments respond to requestsfrom superannuation funds to provide additional time and flexibility for superannuation funds to transfer amounts to the ATO,” said the Economic and Fiscal Update July 2020.

Unknown dates

• Three year audits for SMSFs
  • Outcomes of consultation were “currently being considered”, as of June 2019. Public consultation on draft legislation by Treasury closed in August 2018.
• Allow victims of domestic violence to access superannuation
  • Announced late in 2018, victims of domestic and family violence would be able to access some of their superannuation. Legislation has yet to be introduced to Parliament. Recent Freedom of Information documents show the policy has “no announced start date.”
• Review of early release of superannuation rules
  • Consultation on the review closed in February 2019. According to Freedom of Information documents, “stakeholders are anticipating a Government response”.
• At least one-third independent directors for large super funds
  • Legislation lapsed at last Federal Election, and has yet to be reintroduced.
• Setting objective for superannuation system in legislation
  • Bill to put objectives for superannuation in legislation was introduced to Parliament in November 2016, but hadn’t passed by last Federal Election, and so lapsed. Bill would need to be reintroduced to Parliament.

From the 2019/20 Budget

• Streamlining ECPI
  • Announced in the 2019/20 Budget, this change is meant to apply from 1 July 2020, This would include allowing super funds in both accumulation and retirement phases to be able to choose the method of calculating ECPI, and removing a redundant requirement for super funds fully in retirement phase and using the proportionate ECPI method to obtain an actuarial certificate. Draft legislation has yet to be released.
  • On 30 June 2020, the Government announced the start date would be pushed back from 1 July 2020 to 1 July 2021. Legislation still needs to be passed through Parliament for this change.
• Raising Work Test age
  • It is proposed that, from 1 July 2020, people aged 65 or 66 will be able to make voluntary super contributions without having to meet the ‘work test’. Announced as part of the 2019/20 Budget, this has yet to be legislated.
• Raising age limit for spouse contributions
  • The Government has proposed increasing the age limit for spouse contributions would be increased from 69 to 74. This has yet to be legislated.
• Superannuation Consumer Advocate
  • The 2019/20 Budget included $100,000 for an “expression of interest process” around a Superannuation Consumer Advocate. Treasury started the process in early December.

Delayed

• SuperStream for rollovers for SMSFs delayed
  • Including rollovers for SMSFs in the SuperStream system was delayed to 31 March 2021, and now 1 October 2021.
• Comprehensive Income Products for Retirement (CIPR)
  • A recommendation of the Coalition’s Financial System Inquiry, under which super fund trustees would pre-select an income product for the retirement of members. The start date was delayed until July 2022.

• Retirement Income Covenant
  • The Retirement Income Covenant involves a change to the SIS Act to add a new covenant – requiring funds to have a retirement income strategy. This was announced in the 2018/19 Budget and was to start on 1 July 2020. But in May 2020 it was announced it was to be delayed to an unspecified date. According to the Economic and Fiscal Update July 2020 the new start date will be 1 July 2022 – the same date as the related Comprehensive Income Product for Retirement (CIPR). In May, Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume said the deferral was “necessary to allow continued consultation and legislative drafting to take place following the Coronavirus crisis” and “will also allow drafting of this measure to be informed by the Retirement Income Review”. “Of course, there is nothing stopping funds and their trustees from developing retirement income strategies now and we’d encourage them to do so.  Trustees don’t need to wait for us to legislate the Covenant,” Hume said.

• Portfolio Holdings Disclosure
  • The Government passed changes to the Portfolio Holding Disclosure (PHD) legislation earlier in 2019. But the implementation is dependent on regulations, which have yet to be made. ASIC has again needed to delay the start date for PHD, this time until 31 December 2021, due to the lack of regulations. PHD was originally meant to start on 1 July 2015

Recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

On 8 May 2020 the Government announced a 6 month “deferral” of the implementation of its responses to the Royal Commission, due to COVID-19.

• 3.1 – No other role or office for trustees of super funds. The Government said it would “address the risks” of dual regulated entities with such a prohibition. Legislation to be introduced by 30 June 2020.
• 3.2 – Ban on deducting advice fees from MySuper accounts. Legislation to be introduced by 30 June 2020.
• 3.3 – Limits on deducting advice fees from Choice product accounts. Government agreed, “consistent” with requirements around ongoing fee arrangements. Legislation to be introduced by 30 June 2020.
• 3.4 – Prohibition on ‘hawking’ of superannuation products. Legislation to be introduced by 30 June 2020.
• 3.5 – A person should have only one default account. The Government agreed with the recommendation, but there is no details on the method or any timeframe for it to be implemented. The Government says the recommendation will be “considered in the context” of related recommendations from the Productivity Commission – which the Government has had since late 2018 and to which it has yet to respond.
• 3.8 – Adjustment to roles of APRA and ASIC in respect of superannuation. Legislation to be introduced by 30 June 2020.
• 3.9 – Extend Banking Executive Accountability Regime (BEAR) to large super fund trustees (RSEs). Legislation to be introduced by 31 December 2020.