Jill Hall (Shortland, Australian Labor Party) Share this | Hansard source

I rise to support the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011. The proposed bill implements the core elements of MySuper, the government's election commitment to introduce a simpler, cost-effective superannuation product that will replace existing default products. The bill will enable authorised APRA-regulated superannuation funds to offer a MySuper product from 1 July 2013 and will make it mandatory for employers to make contributions to superannuation funds that offer MySuper products from 2013 in order to meet the superannuation guarantee requirement.

MySuper is a major reform stemming from the landmark Cooper review into superannuation. Part of the terms of reference of the Cooper review was for a comprehensive examination and analysis of the governance, efficiency, structure and operation of Australia's superannuation system, including both compulsory and voluntary aspects. It was conducted around the concept of the best interests of the members and maximising the retirement incomes for Australians. Every member of this House knows how important superannuation is in achieving maximum retirement incomes for Australians. Particularly in a society where we have an ageing population, superannuation is becoming more and more important.

Also in the review's terms of reference was a major emphasis on improving the regulation of the superannuation system, reducing business costs within the system, a systematic examination that included all superannuation fund sectors, having regard to the communique of principles for superannuation, and comparatively examining international jurisdictions and consulting with experts as needed.

The final report recommendation was provided to the government in June 2010. There has been ongoing consultation in relation to the report, which made the case for reform. The report contained 177 recommendations, including MySuper and choice of fund default arrangements, trustee governance, investment governance, transparency of fund operation, insurance arrangements and fees, prudential requirements, retirement products and advice, self-managed superannuation funds, and back office industry arrangements.

At the conclusion of the Cooper review and consultation, the government indicated that further consultation would be undertaken with stakeholders before the implementation of the reforms. So this legislation before us today has been developed following on from a review and in an environment where there has been maximum consultation with all parties. There have been some areas where there has been some disagreement. Obviously those on the other side of this House will always find something to disagree with, even when the legislation is going to really benefit the majority of Australians. On this side of the parliament we listen to what constituents say to us. We are very interested in designing products, policies and systems that are going to maximise the benefits to the people we represent in this parliament.

MySuper is one of those pieces of legislation. The bill before us today introduces the core elements of the MySuper reforms which the government committed to during the 2010 election. Many problems had been identified with the default system that had been in place. Being a government that was committed to reform and a government that wanted to maximise retirement benefits for Australian workers, we set about putting in place the MySuper reforms. The MySuper products will be simple, cost-effective default superannuation products that will replace existing default products. This has been shown to be needed, because the current default products have many problems with them, and at the end of the day superannuation, as I mentioned earlier, is about maximising income in retirement. We believe that putting in place the MySuper products will maximise returns to those people that are currently being disadvantaged in relation to superannuation in their retirement years.

I might just take a moment to mention that in Australia we have an ageing population. The electorate I represent in this parliament is one of the oldest electorates in the country, and I know how important it is to a person when they retire to know that they are going to have a decent income on which they can enjoy a good quality of life and be able to do all those things that people dream about doing in their retirement. This is not possible if you have superannuation products that are not delivering the returns that people need in order to achieve this standard of living, particularly as we are moving more to a system with the compulsory superannuation that has been in place for some time now, where we are hopeful that people will be able to rely on their superannuation to finance their retirement.

So it is very, very important that we get this right, and I believe that the legislation we have before us today is good legislation that will help us do just that. Under the legislation, authorised superannuation funds will be able to offer MySuper products to members from July 2013. That gives superannuation funds a lead-in period of 12 months to be able to develop the products that not only will be attractive but will deliver the income stream that people require when they retire. All default superannuation contributions from employers will be required to be paid to a fund that offers a MySuper product from 2013 so employees can be confident that their superannuation contributions are being put into a product that is secure and that has been designed to benefit them. Funds will not be able to accept default contributions after this time unless they either offer a MySuper product or are a defined benefit fund. In other words, contributors to superannuation and employers that contribute to superannuation on behalf of their employees will not be able to use a default fund other than one that is a MySuper product after July 2013. Trustees will be required to apply to APRA for authorisation for each super product they wish to offer. I should just correct that default date; it is after 1 October 2013, not July 2013. I just correct that for the record. Before receiving authorisation, trustees will need to ensure that the governing rules and trustees of the fund are changed to reflect the enhanced trustee obligation required for MySuper products, which once again is delivering surety to those workers whose superannuation is being put into those funds that the product is a sound product, as well as ensuring that MySuper products will comply with the MySuper characteristics introduced in this bill, including the requirement of diversified investment strategy. That may be for the life cycle.

Trustees will be restricted to one MySuper product per fund unless they meet a branding goodwill exemption or a large employer exemption. The branding goodwill exemption will allow merger superannuation funds in which there was material branding goodwill prior to the merger to maintain their existing brand names and continue offering different MySuper products. The large employer exemption will allow funds to offer a tailored MySuper product to employers that contribute to the fund for the benefit of at least 500 employees and associates to suit the needs of a particular workplace. Funds will be required to charge all members the same set of fees in regard to MySuper products. However, some employers will be able to negotiate a discount administration fee for their employees in the generic MySuper product. This will allow trustees to provide more flexibility to certain employees and employers and will result in some members not being forced to pay higher fees as a result of the introduction of MySuper. The remaining elements of MySuper reform, including enhanced trustee duties, insurance arrangements and disclosure, will be introduced in subsequent pieces of legislation. MySuper products will have a single diversified investment strategy. They will be able to offer standard sets of fees generally available to all members. However, funds will be able to offer discounted administration fees to employees of particular employers, reflecting the administrative efficiency of the funds. I have already been through the timing of the implementation. The basis of the policy commitments is that the legislation is about ensuring that MySuper is a product that will benefit employees whose superannuation goes into a default fund. It is about making sure that the MySuper products that are being offered are products that will deliver on the expectation that has been established in the Cooper review into superannuation. This is legislation that has been developed after widespread consultation with all sectors: employers, providers of superannuation and employer groups. I commend the legislation to the House.

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