MySuper

MySuper is part of the Stronger Super[1] reforms announced in 2011 by the Julia Gillard-led government for the Australian superannuation industry. From 1 January 2014, employers must only pay default superannuation contributions to an authorised MySuper product. Given that the majority of employees do not deviate from their employers default fund, it is expected that the majority of Australians would be in a MySuper product from this date.

What is MySuper

A MySuper product is one which complies to a regulated set of features, including:

The intention of the MySuper legislation is for market participants to create a range of easily comparable, relatively simple products, which in turn will focus competition on net costs and returns. The Australian Prudential Regulation Authority (APRA) will foster this competition by publishing fee tables for example.[3]

Superannuation funds have until 2017 to move existing default customers into a complying MySuper product, though many funds are simply renaming their existing default option, so that their existing customers are automatically included in a MySuper product. Customers must be given an opportunity to opt out of MySuper, with a minimum of 90 days' notice before the transfer.

MySuper timeline

21 September 2011 The Government announces its decisions on key design aspects of the Stronger Super reforms.
3 November 2011 The first tranche of MySuper legislation was tabled in Parliament.
16 February 2012 The second tranche of MySuper legislation was tabled in Parliament.
19 September 2012 The Third tranche of MySuper legislation was tabled in Parliament.
29 November 2012 The fourth tranche of MySuper legislation was tabled in Parliament
1 January 2013 First date for lodgements of MySuper applications.
14 February 2013 Sunsuper was announced as the first superannuation fund in Australia to be awarded a MySuper authority.
28 June 2013 Final regulations released
1 July 2013 MySuper products can be launched.
1 January 2014 Only authorised MySuper products can receive default super contributions from an employer.
1 July 2017 Last date for superannuation funds to transfer existing balances of default members to a MySuper product.

After 1 January 2014, members who do not make an investment choice, or who actively choose a fund's default option, must be invested in a complying MySuper product.[4]

MySuper product authorities

On 14 February 2013, Sunsuper was announced as the first superannuation fund in Australia to be awarded a MySuper authority. The Minister for Financial Services and Superannuation Bill Shorten said he congratulated Sunsuper for being an industry leader.[5] It is estimated that Sunsuper spent 2,000 hours preparing their MySuper authority application, which would indicate why Sunsuper was the first fund to be granted approval.[6]

On 20 February 2013, Cbus was announced as the second fund to receive an authority,.[7] A complete list of MySuper authorities is listed on the APRA website.[8] APRA anticipates that fewer than 120 MySuper authorities will be granted in total by the mandatory start date of 1 January 2014, which has been revised down from earlier estimates.[9]

The URL www.mysuper.com.au is registered to OnePath Australia Limited.

As at 6 January 2014, 115 funds have been granted their MySuper authorisation:

MySuper investments

MySuper products are required to have a single investment option. Many funds, such as HESTA and CBUS, have announced that they will simply use their existing default investment option as their MySuper offering – typically Balanced or Growth.[10] An estimated 80% of not-for-profit funds will reportedly retain their existing products for MySuper.[11] This enables a simple transition to the MySuper regime. However, critics of this approach argue that offering a single investment option that doesn't change over an entire working life and into retirement does not reflect customers' changing attitudes to risk as they age nor as their retirement prospects change.

Lifecycle investment strategies

For these reasons, the government has allowed lifecycle investment options to be the default choice for a MySuper product. Lifecycle investment options enable trustees to automatically move members into a different investment mix based on their age and other permitted factors including balance, gender, time to retirement (or combination thereof), and can be particularly relevant as part of a transition to retirement.[12] Sunsuper was the first fund to receive approval for their lifecycle strategy.[6] However, a number of lifecycle strategies have since been released from companies including Aon, Suncorp, BT and First State.

MySuper fees

Fees a member can be charged in MySuper products will be limited to:

In addition, trustees may charge fees for certain member‑specific costs initiated by the member or a court; for example, account splitting following a family law decision.

All fees charged for MySuper products must be able to be included under these standard descriptions. This will make it simpler for members to understand what they pay and to compare fees against other MySuper products.

MySuper insurance

MySuper products will be required to offer a standard, default level of life and Total and Permanent Disability (TPD) insurance. Members of MySuper products will be able to increase or decrease their insurance cover (if offered by the trustee) without having to leave the MySuper product.

There may be particular factors at a workplace level that influence the appropriate level and structure of insurance for employees at that workplace. Therefore, within a MySuper product, it will be possible for the standard insurance cover to be replaced by a default insurance strategy tailored to meet the specific requirements of the employees of a particular employer.[12]

References

  1. ↑ Federal Government (1 July 2011). "Stronger Super Overview of Reforms". Retrieved 21 February 2013.
  2. ↑ APRA (12 January 2013). "Superannuation reforms 2011–2013". Retrieved 21 February 2013.
  3. ↑ Bill Shorten (29 November 2012). "Big win for consumers as MySuper laws pass Parliament". Retrieved 21 February 2013.
  4. ↑ ASFA (29 January 2013). "Super Reforms Timeline – MySuper". Retrieved 21 February 2013.
  5. ↑ Bill Shorten (14 February 2013). "Sunsuper awarded first MySuper authority". Retrieved 14 February 2013.
  6. 1 2 Justine Davies (27 February 2013). "Spotlight on Sunsuper". Retrieved 19 March 2013.
  7. ↑ Mark Smith (20 February 2013). "Cbus MySuper fund gets green light". Retrieved 21 February 2013.
  8. ↑ APRA (21 March 2013). "APRA MySuper Authorities". Retrieved 21 March 2013.
  9. ↑ AFR (21 March 2013). "APRA lowers MySuper forecast". Retrieved 21 March 2013.
  10. ↑ HESTA (19 March 2013). "HESTA's MySuper Option". Retrieved 19 March 2013.
  11. ↑ Annette Sampson (22 September 2012). "MySuper unleashes competition and value". Retrieved 8 April 2013.
  12. 1 2 3 Treasury Department (19 March 2013). "Stronger Super". Retrieved 19 March 2013.

External links

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