The Government has dropped the core part of its ‘Protecting Your Super’ package – changing insurance in superannuation for young people – to get the Bill through the Senate with the support of the Greens, despite Labor saying it supports the Bill.
The Government’s Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 had three parts – capping fees for low-balance accounts, making insurance in super opt-in for younger members and consolidating more inactive super with the ATO.
Update: The amended ‘Protecting Your Super’ Bill has passed the House of Representatives, and awaits Assent.
The second part – opt-in insurance – has now been dropped in a deal between the Government and the Greens.
“The legislation passed, despite the Labor Party’s attempts to put the interests of superannuation funds ahead of superannuation members,” said a statement by Treasurer Frydenberg and Assistant Treasurer Stuart Robert following the passage of the Bill. The statement is unusual, given Labor voted to keep the Coalition’s proposals in the Bill and that the Government plans to reintroduce the insurance changes to the House in a new Bill.
According to the Government the insurance changes would have benefited “about five million Australians, saving them $3 billion in insurance premiums”.
The Government announced the package of measures in the 2018/19 Budget, but the last time the Bill was debated in the Senate was in June. Since the start of 2019 Government Ministers have been frequently calling on Labor to support the Bill – to which Labor said the Government should put it to a vote.
The deal between the Government and the Greens is despite the Bill apparently enjoying the support of Labor. As recently as Wednesday Shadow Treasurer Chris Bowen said that Labor supports the Protecting Your Super Bill, along with the Member Outcomes 1 Bill, and would be “moving amendments to strengthen these bills”.
One change under the Labor amendments would be to allow super funds to apply to the regulator to keep insurance in super opt-out for young members and low balance accounts if it, among other conditions, represented ” exceptionally good value for money for a member of that kind” or met a need for insurance of the member, such as occupational risk.
Late last year Assistant Treasurer Stuart Robert announced that the Government would move amendments to retain opt-out insurance for dangerous occupations.
Some time frames in the Bill were extended from 13 to 16 months – changes that were included Labor and Greens amendments – while Labor’s amendments pushing back start dates failed.
Shadow Minister for Financial Services Clare O’Neil said, on Twitter, that the Government had “gutted” their own Bill.
“Literally took out the whole of the centrepiece which was designed to protect young people.”
It is as yet unclear what the impact of dropping the insurance change would have on the federal budget. The Protecting Your Super package was estimated to increase the budget by “around $850 million in fiscal balance terms and around $1,750 million in underlying cash balance terms over the forward estimates”.
As the Bill was amended in the Senate it will need to return to the House of Representatives for further votes. The House is sitting next week, unlike the Senate – which only has two more sitting days scheduled before an expected May election.
The Senate also passed the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017, with amendments – meaning it too will need to return to the House.
Improving Accountability and Member Outcomes Bill also passes Senate
Another superannuation Bill passed the Senate – the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 – with amendments from the Government, Labor and the Greens.
Some of these amendments extend the ‘annual outcomes assessment’ from MySuper products – as in the original draft of the Bill – to Choice products. The amendments also implement two recommendations of the Banking Royal Commission – applying civil penalties for breaches of trustee or directors covenants and prohibiting ‘treating’ of employers to get them to select a default super fund.
“With the passage of Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 through the Senate, these two recommendations are on their way to becoming law,” said a joint statement by the Treasurer and Assistant Treasurer.
“The legislation will also see directors of superannuation funds face criminal penalties for breach of their best interests duty and provide the Australian Prudential Regulation Authority with more powers to deal with underperforming superannuation funds.”
“In contrast and in their rush to score a political point and look tough in response to the Royal Commission, Labor completely bungled their amendments to this legislation, proposing retrospective penalties on superannuation fund directors back to October 2015. Put forward without consultation, they had the potential to set a very dangerous precedent and resulted in yet another Labor backdown.”
The Bill now needs to go to the House, not because it was amended but because it was introduced in the Senate and has not passed the House.
This article has been updated since publication with additional information around the amendments, successful and unsuccessful, to the Bill.
Current status of superannuation legislation
Status of current major superannuation Bills
- Treasury Laws Amendment (Your Future, Your Super) Bill 2021
- Assent 22/06/2021
- 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
- Assent 22 June 2021
- Increase maximum number of SMSF members from 4 to 6
- Treasury Laws Amendment (More Flexible Superannuation) Bill 2020
- Assent 22 June 2021
- Allow people aged 65 or 66 to use the three-year non-concessional contributions bring-forward rule.
- Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020Assent 22 March 2021
- Transfer superannuation held by Eligible Rollover Funds (ERFs) to the ATO, and close ERFs by 30 June 2021.
Last updated: 23/06/2021