It’s time to stop talking about superannuation reform and implement changes, writes Fiona Reynolds.
In the next 12 to 18 months, the industry faces the Herculean task of implementing a raft of changes as the Stronger Super and the Future of Financial Advice (FoFA) reforms pass through Parliament and become law.
These changes will strengthen our system and hopefully deliver improved net returns to members.
But before this happens, superannuation funds will need to ensure they are well-positioned in what promises to be a very different and highly-competitive landscape.
In the first six months of this year alone, the Australian Institute of Superannuation Trustees (AIST) has calculated that there are more than 22 deadlines concerning changes to super contributions regulations, administration requirements, selfmanaged super funds and financial advice.
Many of the old ways of doing things will disappear and be replaced by new procedures and expectations. Computer systems will need to be enhanced, product disclosure statements will need to be updated or re-written, staff will need fresh training…the list goes on. The deadline for MySuper is particularly tight, with the final tranche of legislation concerning the new default product guidelines not expected to be in place until the middle of this year. This doesn’t give super funds a lot of time to prepare and license their MySuper products ahead of the proposed launch date of July 2013. Another key date is 30 July this year, when many of the FoFA reforms are scheduled to begin. The release later this month of the parliamentary joint committee report on the FoFA reforms is therefore eagerly anticipated. In particular, we are still in the dark about the details concerning the opt-in requirements for financial advisers.
Many funds also face the challenge of completing a successful merger as they seek ways to limit the costs to members of these new requirements. AIST will continue to push the government to re-think its position on the capital gains tax (CGT) treatment of deferred tax assets for merging super funds. For many funds, a lack of certainty on CGT relief in the case of a merger is proving to be an obstacle.
The industry must also prepare for a new regulatory environment driven by APRA’s imminent standards making powers. The development of 12 new prudential standards – the first of which is expected to be released by mid-year – will impose requirements on super funds in a variety of areas ranging from investment governance, operational risk reserves, outsourcing, business management, risk management and more.