Stronger Super tranche approach raises concerns
The Federal Government has been warned against seeking to deliver its Stronger Super bills, including MySuper, in a series of legislative tranches without allowing the industry an extended transition period.
The warning is contained in a submission from global financial services house, Mercer, to the Parliamentary Joint Committee reviewing the MySuper legislation, and has urged a transition period extending up to 18 months beyond 1 July 2013.
The Mercer warning on the multiple tranche to the Stronger Super legislation follows on from similar criticism of the Government's two-tranche approach to its Future of Financial Advice bills and speculation that it may require a third tranche.
"The current enquiry relates only to the MySuper element, however, we note the MySuper Bill 2011 only encompasses a part of the legislative package that will be necessary to cover MySuper," the Mercer submission said.
"As can be seen [in] the Explanatory Memorandum (EM), there is a considerable number of items which need to be covered in subsequent tranches of legislation.
"We note the list in the EM does not appear to be exhaustive. Legislation covering the other components of the reform will also impact on MySuper."
The Mercer submission said the total package of legislation represented a significant shift in legislative requirements for superannuation, and each of the four components would require significant work by trustees to ensure current practices and fund design were modified to comply with the new requirements.
"Whilst we appreciate the Government is trying to get as much detail out as early as possible, the lack of detail on a number of issues is creating a serious dilemma for superannuation funds as they try and develop benefit designs to operate in the MySuper environment - both MySuper products and non-MySuper (Choice), in an extremely short timeframe.
"Whilst the level of difficulty will vary depending on the type of fund and its current structure, it is critical that all details be made available as soon as possible," it said.
It warned that the short time frame was expected to have adverse implications for trustees, employers and employees.
The submission said this was likely to be particularly challenging for those funds that intended to have multiple MySuper products and multiple Choice products to redesign, and suggested that even the extended transition period it had recommended might prove a challenge for such funds.
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