Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Act 2019 (40 of 2019)

Schedule 1   Annual outcomes assessment

Superannuation Industry (Supervision) Act 1993

6   At the end of section 52

Add:

Covenants relating to regulated superannuation funds - annual outcomes assessments

(9) If the entity is a regulated superannuation fund (other than a regulated superannuation fund with fewer than 5 members), the covenants referred to in subsection (1) include the following covenants by each trustee of the entity:

(a) to determine, in writing, on an annual basis, for each MySuper product and choice product offered by the entity, whether the financial interests of the beneficiaries of the entity who hold the product are being promoted by the trustee, having regard to:

(i) if the product is a MySuper product - a comparison of the MySuper product with other MySuper products offered by other regulated superannuation funds, based on the factors mentioned in subsection (10), and a comparison of the MySuper product with any other benchmarks specified in regulations made for the purposes of this subparagraph; and

(ii) if the product is a choice product - a comparison of the choice product with the comparable choice products in relation to the choice product, based on factors mentioned in subsection (10A), and a comparison of the choice product with any other benchmarks specified in regulations made for the purposes of this subparagraph; and

(iii) the factors mentioned in subsection (11);

(aa) to determine, in writing, on an annual basis, whether each trustee of the entity is promoting the financial interests of the beneficiaries of the fund, as assessed against benchmarks specified in regulations made for the purposes of this paragraph;

(b) to make the determination referred to in paragraph (a), and a summary of the assessments and comparisons on which the determination is based, publicly available on the website of the entity;

(c) to do so within 28 days after the determination is made;

(d) to keep the determination, and the summary of the assessments and comparisons on which the determination is based, on the website until a new determination is made as referred to in paragraph (a).

(10) In comparing a MySuper product with other MySuper products, the trustees must compare each of the following:

(a) the fees and costs that affect the return to the beneficiaries holding the MySuper products;

(b) the return for the MySuper products (after the deduction of fees, costs and taxes);

(c) the level of investment risk for the MySuper products;

(d) any other matter set out in the prudential standards.

(10A) In comparing a choice product with the comparable choice products in relation to the choice product, the trustees must compare each of the following:

(a) the fees and costs that affect the return to the beneficiaries holding the choice products;

(b) the return for the choice products;

(c) the level of investment risk for the choice products;

(d) any other matter specified in the prudential standards.

(11) In determining whether the financial interests of the beneficiaries of the entity who hold a MySuper product or choice product are being promoted by the trustee, the trustee must assess each of the following:

(a) whether the options, benefits and facilities offered under the product are appropriate to those beneficiaries;

(b) whether the investment strategy for the product, including the level of investment risk and the return target, is appropriate to those beneficiaries;

(c) whether the insurance strategy for the product is appropriate to those beneficiaries;

(d) whether any insurance fees charged in relation to the product inappropriately erode the retirement income of those beneficiaries;

(e) any other relevant matters, including any matters set out in the prudential standards.

Covenants relating to regulated superannuation funds - promoting financial interests of beneficiaries

(12) If the entity is a regulated superannuation fund (other than a regulated superannuation fund with fewer than 5 members), the covenants referred to in subsection (1) include a covenant by each trustee of the entity to promote the financial interests of the beneficiaries of the entity who hold a MySuper product or a choice product, in particular returns to those beneficiaries (after the deduction of fees, costs and taxes).

Covenants relating to regulated superannuation funds - MySuper products

(13) If the entity is a regulated superannuation fund that offers a MySuper product, the covenants referred to in subsection (1) include the following covenants by each trustee of the entity:

(a) to include in the investment strategy for the MySuper product the details of the trustee's determination of the matters mentioned in paragraph (9)(a);

(b) to include in the investment strategy for the MySuper product, and update each year:

(i) the investment return target over a period of 10 years for the assets of the entity that are attributed to the MySuper product; and

(ii) the level of risk appropriate to the investment of those assets.