Labor may yet support expansion of super fund choice

Labor will oppose the Government’s superannuation governance and reporting changes, but may yet support an expansion of super fund choice to more employees.

Labor says it will oppose two of the Government’s superannuation Bills, but may support a third if it is amended.

The House of Representatives on Monday passed the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017. The Bill would expand choice of super fund and close the Salary Sacrifice ‘loophole’, which allows employers to claim employees contributions against their SG obligations.

Labor supports closing the loophole, in a Senate committee report on the Bill, but reserved their final voting position pending the outcome of suggested amendments. These include ensuring “that there are no impediments to collective bargaining that would lift superannuation arrangements beyond the community standard”. Labor also wants “sufficient safeguards” for when workers make a choice of fund.

The dissenting report also points out that the Productivity Commission is conducting an inquiry into alternative ways to set default super funds. The Labor Senators “believe a better approach” to the super choice changes would be to wait for the PC inquiry before debating the Bill.

Labor have said they will oppose two other Government Bills:

The Strengthening Trustee Arrangements Bill includes the Government’s policy of at least one-third independent directors for large super funds, among other governance changes.

“Labor Senators believe that no clear evidence has been offered to demonstrate why these changes are necessary,” says the dissenting report.

“A Government which purports to be conservative, non-interventionist and pro-market would be expected to introduce additional regulation only where there is evidence of clear market failure.”

Labor says the governance Bill would “disproportionately impact” industry funds, “when evidence suggests it is the retail and banking sectors which need Government focus”.

Labor says it is not opposed to independent directors, “as a principal”, but says this should not be the subject of an “arbitrary quota” set in legislation.

The Improving Accountability No. 1 Bill gives APRA more powers and changes the reporting requirements on MySuper products.

Labor is concerned that the legislation is focused on the default MySuper sector, with improvements on choice products not given due consideration.

“Labor Senators believe that this bill fails to sufficiently strengthen protections and outcomes for choice products and to sufficiently increase scrutiny of retail funds.”

“When considered alongside the trustee arrangements bill, Labor Senators are concerned that the primary intent of this bill might not be related to policy matters.”

The majority of the Government-dominated committees recommended that all three Bills be passed, without amendment.

The dissenting reports note that the Senate is not sitting for the three weeks after the reports were due, time which “could have been put to good use”.

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