Call to exclude defined benefit super from product intervention
Defined benefit (DB) superannuation schemes should be exempt from the Government’s proposed new product intervention powers, according to the major industry superannuation fund, UniSuper.
The superannuation fund has used a submission to the Senate Economics Legislation Committee review of the legislation to argue that defined benefit schemes need to be treated equivalently to other default superannuation products such as MySuper.
“Rather than thinking of a DB scheme as a promoter marketing a product, it is better thought of as a trustee managing the deferred remuneration of members (i.e. an entitlement to receive a benefit based on a formula linked back to past service, benefit salary and other relevant factors),” the submission said.
“A DB scheme is, after all, not a product in any conventional sense. In the case of UniSuper’s DB scheme, membership is not open to the general public and it is not distributed in the way conventional financial products are i.e. sold through distribution channels,” the submission said.
“Membership of the DB scheme arises directly as a result being employed in the higher education and research sector. This workplace entitlement, rather than being sold through distribution channels, emanates directly from employment arrangements and the industrial agreements that cover the higher education and research sector.”
The submission said that, further, because UniSuper had no industrial standing in the arrangements, it had limited power to determine who was covered by the agreement.
“The main power UniSuper has is to ensure that our benefit design remains suitable for employees in the sector,” it said. “We submit that this duty is already being met through the exercise of trustee duties under existing governance arrangements applying to the scheme combined with prudential and other regulatory oversight.”
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
