Superannuation fund governance update

The Government has introduced 3 Bills into the Senate affecting superannuation fund governance. They are expected to receive strong industry super fund opposition.

UPDATE 5 December 2017: Bills withdrawn by Government due to lack of crossbench support.

The Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017 amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) to introduce new trustee arrangements requiring registrable superannuation (RSE) licensees to have at least one-third independent directors and for the Chair of the Board of directors to be one of these independent directors

The Bill also amends the SIS Act to require RSE licensees that are a group of individual trustees to have at least one-third of the trustees that are independent.

APRA will have the power to make prudential standards relating to the appointment and removal of independent directors. It will also have the capacity to determine if a person is, or is not, independent.

The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 amends the SIS Act to strengthen the obligation on superannuation trustees to consider the appropriateness of their MySuper product offering annually including how that product continues to deliver appropriate outcomes to MySuper members.

The Bill, if passed, will impose civil and criminal penalties on directors of RSE licensees who fail to execute their responsibilities to act in the best interests of members, or who use their position to further their own interests to the detriment of members.

It also amends the SIS Act to strengthen APRA’s supervision and enforcement powers to include the power to issue a direction to an RSE licensee where APRA has prudential concerns.

The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017 amends the Superannuation Guarantee (Administration) Act 1992 to ensure employees under workplace determinations or enterprise agreements have the right to choose their superannuation fund. This applies only to new workplace determinations and enterprise agreements made on or after 1 July 2018.

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