Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 (Cth)

Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 No. 171, 2012 Compilation No. 2 Compilation date: 1 July 2013 Includes amendments up to: Act No. 21, 2015 Registered: 10 April 2015 About this compilation This compilation This is a compilation of the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 that shows the text of the law as amended and in force on 1 July 2013 (the compilation date). This compilation was prepared on 10 April 2015. The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on ComLaw (www.comlaw.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on ComLaw for the compiled law. Application, saving and transitional provisions for provisions and amendments If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on ComLaw for the compiled law. Self‑repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents 1 Short title 2 Commencement 3 Schedule(s) 4 Acquisition of property Schedule 1—Fees and costs Part 1—Amendments Superannuation Industry (Supervision) Act 1993 Part 2—Application Schedule 2—Provision of benefits Part 1—Amendments Superannuation Guarantee (Administration) Act 1992 Superannuation Industry (Supervision) Act 1993 Part 2—Application Schedule 3—Collection and disclosure of information Part 1—Amendments Australian Prudential Regulation Authority Act 1998 Corporations Act 2001 Financial Sector (Collection of Data) Act 2001 Superannuation Industry (Supervision) Act 1993 Part 2—Application and transitional provisions Schedule 4—Modern awards and enterprise agreements Part 1—Amendments Fair Work Act 2009 Superannuation Guarantee (Administration) Act 1992 Superannuation Industry (Supervision) Act 1993 Part 2—Transitional Schedule 5—Defined benefit members Superannuation Guarantee (Administration) Act 1992 Superannuation Industry (Supervision) Act 1993 Schedule 6—Moving accrued default amounts Superannuation Industry (Supervision) Act 1993 Schedule 7—Eligible rollover funds Part 1—Main amendments Superannuation Industry (Supervision) Act 1993 Part 2—Other amendments Retirement Savings Accounts Act 1997 Schedule 8—Other amendments Superannuation Guarantee (Administration) Act 1992 Superannuation Industry (Supervision) Act 1993 Endnotes Endnote 1—About the endnotes Endnote 2—Abbreviation key Endnote 3—Legislation history Endnote 4—Amendment history An Act to amend the law in relation to superannuation and for related purposes 1 Short title This Act may be cited as the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 4 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 3 December 2012 2. Schedule 1, items 1 to 6 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 3. Schedule 1, item 7 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. Does not commence However, the provision(s) do not commence at all if item 1 of Schedule 3 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 commences on or before that time. 4. Schedule 1, items 8 to 16 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 5. Schedule 1, items 17 and 18 Immediately after the commencement of the provision(s) covered by table item 24. 1 January 2013 6. Schedule 1, items 19 and 20 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 7. Schedule 1, item 21 Immediately after the commencement of the provision(s) covered by table item 24. 1 January 2013 8. Schedule 1, items 22 to 36 Immediately after the commencement of item 9 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 9. Schedule 1, items 37 and 38 The day after this Act receives the Royal Assent. 4 December 2012 10. Schedule 1, item 39 Immediately after the commencement of the provision(s) covered by table item 24. 1 January 2013 11. Schedule 1, items 40 and 41 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 12. Schedule 2, item 1 Immediately after the commencement of item 1 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2014 13. Schedule 2, items 2 to 4 1 July 2013. 1 July 2013 14. Schedule 2, item 5 The day this Act receives the Royal Assent. 3 December 2012 15. Schedule 2, items 6 and 7 1 July 2013. 1 July 2013 16. Schedule 3, items 1 to 39 1 July 2013. 1 July 2013 17. Schedule 3, item 40 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 18. Schedule 3, items 41 to 47 1 July 2013. 1 July 2013 19. Schedule 4, items 1 to 8 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 20. Schedule 4, items 9 and 10 1 January 2014. 1 January 2014 21. Schedule 4, items 11 to 13 Immediately after the commencement of the provision(s) covered by table item 24. 1 January 2013 22. Schedule 5, items 1 to 3 1 January 2014. 1 January 2014 23. Schedule 5, items 4 to 10 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 24. Schedule 6 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 25. Schedule 7 1 July 2013. 1 July 2013 26. Schedule 8, item 1 Immediately after the commencement of item 1 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2014 27. Schedule 8, item 2 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 However, the provision(s) do not commence at all unless item 1 of Schedule 3 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Act 2012 commences on or before that time. 28. Schedule 8, item 3 Immediately after the commencement of item 2 of Schedule 1 to the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012. 1 January 2013 Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. 4 Acquisition of property (1) This Act does not apply to the extent (if any) that its operation would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph). (2) The following subsections do not limit subsection (1). (3) If, apart from this section, this Act would result in such an acquisition of property because, as a result of a repeal or an amendment made in a Schedule to this Act, a person would be required or permitted to use, disclose or publish information, then despite any other provision of this Act, the person is not required or permitted to use, disclose or publish the information in the circumstances that would result in such an acquisition. (4) To avoid doubt, any provision that does not result in an acquisition of property continues to apply in relation to the use, disclosure and publication of information. Schedule 1—Fees and costs Part 1—Amendments Superannuation Industry (Supervision) Act 1993 1 Section 4 (after table item dealing with Part No. 11) Insert: 11A General fees rules 2 Subparagraph 6(1)(a)(v) Repeal the subparagraph, substitute: (v) Parts 8 to 11A (other than section 99F); 3 Before subparagraph 6(1)(c)(ii) Insert: (iia) section 99F; and 4 Subsection 10(1) Insert: activity fee has the meaning given by subsection 29V(7). 5 Subsection 10(1) Insert: administration fee has the meaning given by subsection 29V(2). 6 Subsection 10(1) Insert: advice fee has the meaning given by subsection 29V(8). 7 Subsection 10(1) Insert: buy‑sell spread has the meaning given by subsection 29V(4). 8 Subsection 10(1) Insert: entry fee has the meaning given by subsection 99B(2). 9 Subsection 10(1) Insert: exit fee has the meaning given by subsection 29V(6). 10 Subsection 10(1) Insert: financial product has the same meaning as in Chapter 7 of the Corporations Act 2001. 11 Subsection 10(1) Insert: financial product advice has the same meaning as in Chapter 7 of the Corporations Act 2001. 12 Subsection 10(1) Insert: general fees rules means the rules in Part 11A. 13 Subsection 10(1) Insert: insurance fee has the meaning given by subsection 29V(9). 14 Subsection 10(1) Insert: investment fee has the meaning given by subsection 29V(3). 15 Subsection 10(1) Insert: personal advice has the same meaning as in Chapter 7 of the Corporations Act 2001. 16 Subsection 10(1) Insert: switching fee has the meaning given by subsection 29V(5). 17 At the end of paragraph 29S(2)(f) Add: ; (iii) section 29SAC. 18 After section 29SAB Insert: 29SAC Election not to charge MySuper members for payment of conflicted remuneration (1) An RSE licensee that applies for authority to offer a class of beneficial interest in a regulated superannuation fund as a MySuper product makes an election in accordance with this section if: (a) the RSE licensee elects that, if the authority is given, the RSE licensee will not charge any MySuper member a fee in relation to the MySuper product, all or part of which relates directly or indirectly to costs incurred by a trustee or the trustees of the fund: (i) in paying conflicted remuneration to a financial services licensee, or a representative of a financial services licensee; or (ii) in paying an amount to another person that a trustee of the fund knows, or reasonably ought to know, relates to conflicted remuneration paid by that other person to a financial services licensee, or a representative of a financial services licensee; and (b) the election is in writing; and (c) the election is in the approved form. (2) In this section: conflicted remuneration has the same meaning as in Part 7.7A of the Corporations Act 2001, subject to the extension of that meaning in subsection (3). representative, of a financial services licensee, has the same meaning as in Part 7.6 of the Corporations Act 2001. (3) In this section, conflicted remuneration also has the meaning it would have if: (a) financial product advice provided to the RSE licensee mentioned in subsection (1) by a financial services licensee, or a representative of a financial services licensee, mentioned in subparagraph (1)(a)(i) or (ii) were provided to the RSE licensee as a retail client; and (b) financial product advice provided to the other person mentioned in subparagraph (1)(a)(ii) by a financial services licensee, or a representative of a financial services licensee, mentioned in that subparagraph were provided to the other person as a retail client. 19 Paragraph 29T(1)(i) After "is likely to comply with", insert "the general fees rules and". 20 Paragraph 29U(2)(d) After "is likely to comply with", insert "the general fees rules and". 21 At the end of subsection 29U(2) Add: ; or (k) APRA is satisfied that the RSE licensee has failed to give effect to an election made in accordance with section 29SAC (election not to pass costs of conflicted remuneration to MySuper members). 22 At the end of subsection 29V(1) Add: ; (g) an advice fee; (h) an insurance fee. 23 Subsection 29V(2) Omit "the fund" (first occurring), substitute "a superannuation entity". 24 Subsection 29V(2) Omit "the fund (that are not otherwise charged as an investment fee, a buy‑sell spread, a switching fee, an exit fee or an activity fee)", substitute "the entity that: (a) relate to the administration or operation of the fund; and (b) are not otherwise charged as an investment fee, a buy‑sell spread, a switching fee, an exit fee, an activity fee, an advice fee or an insurance fee". 25 Subsection 29V(3) Omit "the fund" (first occurring), substitute "a superannuation entity". 26 Paragraph 29V(3)(b) Omit "the fund (that are not otherwise charged as an administration fee, a buy‑sell spread, a switching fee, an exit fee or an activity fee)", substitute "the entity that: (i) relate to the investment of assets of the entity; and (ii) are not otherwise charged as an administration fee, a buy‑sell spread, a switching fee, an exit fee, an activity fee, an advice fee or an insurance fee". 27 Subsection 29V(4) After "or the trustees,", insert "of a superannuation entity". 28 Subsection 29V(4) Omit "the fund", substitute "the entity". 29 Subsection 29V(5) Repeal the subsection, substitute: (5) A switching fee is a fee to recover the costs of switching all or part of a member's interest in a superannuation entity from one class of beneficial interest in the entity to another. 30 Subsection 29V(6) Omit "the fund", substitute "a superannuation entity". 31 Subsection 29V(7) Repeal the subsection, substitute: (7) A fee is an activity fee if: (a) the fee relates to costs incurred by the trustee, or the trustees, of a superannuation entity that are directly related to an activity of the trustee, or the trustees: (i) that is engaged in at the request, or with the consent, of a member; or (ii) that relates to a member and is required by law; and (b) those costs are not otherwise charged as an administration fee, an investment fee, a buy‑sell spread, a switching fee, an exit fee, an advice fee or an insurance fee. (8) A fee is an advice fee if: (a) the fee relates directly to costs incurred by the trustee, or the trustees, of a superannuation entity because of the provision of financial product advice to a member by: (i) a trustee of the entity; or (ii) another person acting as an employee of, or under an arrangement with, a trustee or trustees of the entity; and (b) those costs are not otherwise charged as an administration fee, an investment fee, a switching fee, an exit fee, an activity fee or an insurance fee. (9) A fee is an insurance fee if: (a) the fee relates directly to either or both of the following: (i) insurance premiums paid by the trustee, or the trustees, of a superannuation entity in relation to a member or members of the entity; (ii) costs incurred by the trustee, or the trustees, of a superannuation entity in relation to the provision of insurance for a member or members of the entity; and (b) the fee does not relate to any part of a premium paid or cost incurred in relation to a life policy or a contract of insurance that relates to a benefit to the member that is based on the performance of an investment rather than the realisation of a risk; and (c) the premiums and costs to which the fee relates are not otherwise charged as an administration fee, an investment fee, a switching fee, an exit fee, an activity fee or an advice fee. 32 Subsection 29VA(1) After "may only charge a fee", insert "in relation to the MySuper product". 33 At the end of section 29VA Add: Advice fees (9) This rule is satisfied if: (a) the fee is an advice fee that relates directly to financial product advice provided to a member; and (b) the member holds a MySuper product; and (c) the fee is charged to the member. Insurance fees (10) This rule is satisfied if: (a) the fee is an insurance fee that relates directly to either or both of the following: (i) insurance premiums paid by the trustee, or the trustees, of a superannuation entity in relation to a member; (ii) costs incurred by the trustee, or the trustees, of a superannuation entity in relation to the provision of insurance for a member; and (b) the member holds a MySuper product; and (c) the fee is charged to the member. 34 Paragraph 29VB(1)(d) Repeal the paragraph, substitute: (d) the fee is in accordance with subsection (2), (3) or (4); and (e) the fee is in accordance with subsection (5). 35 At the end of section 29VB Add: (5) The total amount of the administration fee charged in relation to the employee members is at least equal to an amount that reasonably relates to costs that: (a) are incurred by the trustee, or the trustees, of the fund in the administration and operation of the fund in relation to those members; and (b) are not otherwise charged as an investment fee, a buy‑sell spread, a switching fee, an exit fee, an activity fee, an advice fee or an insurance fee. 36 At the end of Division 5 of Part 2C Add: 29VC Activity fees and insurance fees to be charged on a cost recovery basis (1) If the trustee, or the trustees, of a regulated superannuation fund charge an activity fee or an insurance fee to a member in relation to a MySuper product, the fee must be no more than it would be if it were charged on a cost recovery basis. (2) The regulations may prescribe the way in which an activity fee or an insurance fee charged on a cost recovery basis is to be worked out. 29VD Performance‑based fees (1) This section applies if: (a) a regulated superannuation fund offers a MySuper product; and (b) the trustee, or the trustees, of the fund enter into an arrangement with an investment manager for the investment of an asset or assets of the fund attributed, in whole or in part, to the MySuper product; and (c) under the arrangement, a fee payable to the investment manager is determined, in whole or in part, by reference to the performance of the investments made by the investment manager on behalf of the trustee or trustees of the fund (a performance‑based fee). (2) The trustee, or the trustees, of the regulated superannuation fund must ensure that the arrangement complies with this section. Base fee must be set or adjusted to give incentive to obtain performance‑based fee (3) If, under the arrangement, a fee is or fees are payable to the investment manager in addition to the performance‑based fee, the other fee or fees must be set or adjusted so that they are lower than they would be if the arrangement did not include the performance‑based fee. Period to which performance‑based fee relates (4) The period over which entitlement to the performance‑based fee is determined under the arrangement must be appropriate to the kinds of investment to which the performance‑based fee relates. Performance of investment must be measured against an appropriate benchmark (5) Under the arrangement, the performance of the investment must be measured by comparison with the performance of investments of a similar kind. Performance‑based fee to be worked out on after‑costs, after‑tax basis (6) For the purposes of working out the performance‑based fee payable under the arrangement, the performance of the investment must be determined on an after‑costs and, where possible, an after‑tax basis. Disincentives to underperformance (7) Under the arrangement, the performance‑based fee must be calculated in a way that includes disincentives for poorly performing investments. Best interests of MySuper members (8) A trustee of a regulated superannuation fund does not breach this section to the extent that the asset or assets of the fund invested under the arrangement are attributed by the trustee or the trustees of the fund to a MySuper product if, despite the fact that the arrangement does not comply with one or more of the provisions of this section, the arrangement promotes the financial interests of the beneficiaries of the fund who hold the MySuper product. 37 After paragraph 31(2)(d) Insert: (da) the charging of fees (including the calculation of the amount of fees) to: (i) members of a fund; and (ii) members who hold a particular class of beneficial interest in a fund; (db) the attribution of costs between classes of beneficial interest in a fund; 38 After section 33 Insert: 33A Relationship between operating standards, this Act and the regulations (1) A standard applicable to the operation of a superannuation entity may be prescribed that elaborates, supplements or otherwise deals with any aspect of: (a) a matter relating to the operation of the entity to which a covenant referred to in sections 52 to 53 or prescribed under section 54A relates; or (b) a matter relating to the operation of the entity to which a provision of this Act or another provision of the regulations relates. (2) However, a standard applicable to the operation of a superannuation entity is of no effect to the extent that it conflicts with this Act. 39 At the end of section 55B Add: ;or (d) an election made in accordance with section 29SAC (election not to pass costs of paying conflicted remuneration onto MySuper members). 40 After Part 11 Add: Part 11A—General fees rules 99A Application The rules set out in this Part do not apply to self managed superannuation funds. 99B No entry fees (1) The trustee, or the trustees, of a regulated superannuation fund or an approved deposit fund must not charge entry fees. (2) An entry fee is a fee, other than a buy‑sell spread, that relates, directly or indirectly, to the issuing of a beneficial interest in a superannuation entity to a person who is not already a member of the entity. 99C Buy‑sell spreads, switching fees and exit fees to be charged on a cost recovery basis (1) If the trustee, or the trustees, of a regulated superannuation fund or an approved deposit fund charge a buy‑sell spread, a switching fee or an exit fee, the fee must be no more than it would be if it were charged on a cost recovery basis. (2) The regulations may prescribe the way in which a buy‑sell spread, a switching fee or an exit fee charged on a cost recovery basis is to be worked out. 99D Cost of advice to employers not to be borne by members The trustee, or the trustees, of a regulated superannuation fund or an approved deposit fund must not include in any fee charged to any member of the fund an amount that relates to costs incurred by any person, directly or indirectly, in relation to personal advice provided by any person to an employer of one or more members of the fund. 99E Fair and reasonable attribution of costs between classes of beneficial interest in a regulated superannuation fund If there is more than one class of beneficial interest in a regulated superannuation fund, the trustee, or the trustees, of the fund must attribute the costs of the fund between the classes fairly and reasonably. 99F Cost of financial product advice (1) The trustee or the trustees of a regulated superannuation fund must not directly or indirectly pass the cost of providing financial product advice in relation to a member of the fund (the subject member) on to any other member of the fund, to the extent that: (a) the advice is provided by: (i) a trustee of the fund; or (ii) another person acting as an employee of, or under an arrangement with, a trustee or trustees of the fund; and (b) the advice is personal advice; and (c) the advice is provided in any of the following circumstances: (i) the subject member has not yet acquired a beneficial interest in the fund when the advice is given, and the advice relates to whether the subject member should acquire such an interest; (ii) the advice relates to a financial product that is not a beneficial interest in the fund, a related pension fund for the member and the fund, a related insurance product for the member and the fund or a cash management facility within the fund; (iii) the advice relates to whether the subject member should consolidate that member's beneficial interests in 2 or more superannuation entities into a beneficial interest in a single superannuation entity; (iv) at the time the advice is provided, the subject member reasonably expects that a person mentioned in subparagraph (a)(i) or (ii) will periodically review the advice, provide further personal advice or monitor whether recommendations in the original or any later advice are implemented and the results of that implementation; (v) other prescribed circumstances. (2) If: (a) under the governing rules of a regulated superannuation fund (the first fund): (i) a member of another regulated superannuation fund (the second fund) is entitled to become a member of the first fund on the satisfaction of a condition of release of benefits specified in a standard made under paragraph 31(2)(h); and (ii) on becoming a member of the first fund, a pension would be payable out of the assets of the first fund to the member; and (b) the RSE licensee for the first fund is, or is an associate of, the RSE licensee of the second fund; then the first fund is a related pension fund of the second fund for a member of the second fund in relation to whom paragraph (a) is satisfied. (3) I