Australia: Member Outcomes Law Puts Spotlight on ‘Super’ Trustees

Australia: Member Outcomes Law Puts Spotlight on ‘Super’ Trustees

The trustees of superannuation funds in Australia face increased scrutiny and penalties under a law that aims to modernize and increase confidence in the superannuation system — Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2019

Highlights of the Law

Under the law, most of which took effect on 6 Apr 2019:

  • Trustees of superannuation funds and directors of corporate trustees face new civil and criminal penalties for failing to execute their responsibilities and act in the interests of beneficiaries
  • An annual “outcomes assessment” for MySuper and choice products, measured against a series of prescribed benchmarks, replaces the “scale test.”
  • Trustees must organize an annual meeting – either in-person or online – to enable members to ask questions about all areas of their fund’s performance and operation.
  • The Australian Prudential Regulation Authority (APRA) has stronger enforcement and supervision powers. APRA now:  

─     Can intervene early to address prudential concerns

─     Can refuse authority for a change in ownership or control of a registrable superannuation entity (RSE) licensee, issue a direction to an RSE licensee where APRA has prudential concern and remove or suspend an RSE licensee where it is subject to the control of its owner.

─     Can refuse or cancel a MySuper authorization

─     Can gather information on a “look through” basis on the operational and managerial expenses of a fund

  • Trustees or their associates can’t urge employers to nominate the superannuation fund as the default fund or influence employers to encourage their employees to choose a particular fund. The scope of the ban is unclear, and the Australian Securities and Investments Commission (ASIC) is expected to issue guidance.
  • Portfolio holdings disclosure requirements will require publicly accessible fund websites to show detailed asset holding information updated on a semi-annual basis from 31 Dec 2019. Funds will have three months after each reporting date to publish the information on their website.
Fiona Webster
by Fiona Webster

Principal, Mercer’s Law & Policy Group

Paul Shallue
by Paul Shallue

Principal, Mercer Wealth

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