The Government will propose amendments to its own superannuation legislation, as it tries to get some of the measures through the Senate this week.
The Government planned to have the Senate debate as many as six of its superannuation Bills this week. Though none of the Bills came up for debate on Monday or Tuesday.
On Wednesday, speaking at the Association of Superannuation Funds of Australia (ASFA) Conference in Adelaide, Assistant Treasurer Stuart Robert detailed some of the “practical amendments” the Government planned to make to the Bills.
Keeping insurance opt-out for young people in dangerous occupations
The Government will move an amendment to its Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 – which implements measures announced in the 2018/19 Budget, including making insurance opt-in for younger super fund members. The amendment will reverse this change – retaining opt-out – for young people in dangerous occupations.
“While the Senate Committee recommended the Bill be passed without amendment, the Government has heard from stakeholders that workers in dangerous occupations are likely to benefit from default insurance in superannuation, as they may face barriers to accessing insurance elsewhere,” said Robert.
“Therefore, the Government has decided to make available an exception to the opt‑in changes for new members in prescribed dangerous occupations, such as police officers, truck drivers, farmers or concreters, who are under 25 years old or have an active low balance account, where trustees elect to apply it.”
“In determining which occupations will be considered dangerous for the purpose of the exception, we will consider risks across all occupations, and will consult publicly, in the time available, on the exempt occupations,” said Robert, suggesting that the occupations will be set by regulation.
‘Stick’ added to ‘carrot’ of Super Guarantee amnesty
The Government will move to add a ‘stick’ to the ‘carrot’ of the amnesty for employers who haven’t paid their Super Guarantee obligations – in the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018, amongst other measures.
Robert said the amnesty is needed because the “ATO has not had good enough visibility over SG non-compliance in the past” – so the Government is extending Single Touch Payroll and increasing the frequency of fund reporting – “but the Government strongly believes employees with long-standing SG owed to them should not miss out”.
So far the Bill has been easy on employers – a change that could send employers to jail for not paying Super Guarantee is contained in a separate Bill. Robert told the conference that the amnesty Bill would be amended to increase penalties for SG non-compliance.
“The amnesty always had a carrot and stick approach. And our amendment makes for a much bigger stick. This amendment will ensure any employer who chooses not to come forward under the amnesty will face a minimum 100 per cent Part 7 penalty when they are caught.”
“This penalty is on top of their workers’ entitlements, and can be extended up to 200 per cent at the ATO’s discretion.”
“This amendment will ensure the ATO applies tough penalties when employers don’t take advantage of this chance at a clean slate and pay their workers what they are owed.”
Extending new MySuper rules to Choice products
The Government intends to amend the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 to extend some of the rules in the Bill to Choice products, and clarify the operation of the Bill.
The ‘outcomes test’ in the Bill requires super fund trustees to assess if their superannuation product is promoting the financial interest of the members – including by assessing product features and comparing performance against other products. As originally drafted this would only apply to MySuper products, but the Government now wants it to also apply to Choice products.
“The Government has listened to industry concerns and in response we will amend the Bill to extend the outcomes test to choice products as well as MySuper products,” said Robert.
“Our amendment makes sure that trustees are considering the outcomes being provided to all members, including those with over $1 trillion in APRA-regulated assets outside of the MySuper sector.”
Labor have already proposed an amendment which would extend the obligations from just MySuper products to Choice products as well.
“We are also making a change in response to concerns around the consistency of disclosure. I want to put beyond doubt that the portfolio holdings disclosure applies to all choice products, even where there is a no investment option,” said Robert.
“I would like to make it clear that there was no carve-out for platform products in the original Bill, however this change will put any concerns to rest.”
Robert said the Government was planning to table the amendments, “as well as some other minor amendments”, on Wednesday.