Treasury Laws Amendment (Your Future, Your Super) Act 2021 (46 of 2021)

Schedule 2 Addressing underperformance in superannuation

Part 1 Main amendments

Superannuation Industry (Supervision) Act 1993

9 After Part 6

Insert:

Part 6A - Annual performance assessments etc.

60B Meaning of Part 6A product

A Part 6A product is:

(a) a MySuper product; or

(b) a class of beneficial interest in a regulated superannuation fund, if that class is identified by regulations made for the purposes of this paragraph.

60C Regulator to make annual performance assessments

(1) This section applies in relation to each entity that is a regulated superannuation fund (other than a regulated superannuation fund with fewer than 5 members).

(2) APRA must determine in relation to each financial year, for each Part 6A productoffered by the entity, whether the requirement in subsection 60D(1) has been met.

(3) APRA must give the trustee or trustees of the entity a notification of the determination. The notification must include a copy of the determination.

(4) APRA must make the determination and give the notification:

(a) in writing; and

(b) within a period, starting after the end of the financial year, worked out under regulations made for the purposes of this subsection.

(5) APRA must ensure that a description of the contents of every notification it gives under subsection (3) in relation to a financial year is published, within the period mentioned in paragraph (4)(b), on a website maintained by APRA.

60D Requirements for assessment

Meeting requirements specified in regulations

(1) The requirement in this subsection is met for a Part 6A product in relation to a financial year if:

(a) where the Part 6A product is in a class of Part 6A products specified in regulations made for the purposes of this subsection - the requirements (if any) specified in regulations made for the purposes of this subsection for that class of Part 6A product are met for the Part 6A product in relation to the financial year; or

(b) the Part 6A product is not in a class of Part 6A products specified in regulations made for the purposes of this subsection.

Requirements specified in regulations

(2) Regulations made for the purposes of subsection (1) may specify requirements in respect of:

(a) investment returns; and

(b) any other matter (whether or not related to investment returns).

(3) The investment returns mentioned in paragraph (2)(a) may be investment returns net of fees and/or tax.

(4) Regulations made for the purposes of subsection (1) may do any of the following:

(a) specify requirements that depend on the exercise of a discretion by APRA;

(b) if the regulations specify requirements that depend on the exercise of such a discretion - specify matters that APRA must or may take into account in exercising that discretion;

(c) if the regulations specify requirements that depend on the exercise of such a discretion - allow APRA to make specified assumptions in exercising that discretion.

Comparing actual return and benchmark return

(5) Regulations made for the purposes of subsection (1) may specify requirements based on a comparison of the actual return for a Part 6A product for a period with a benchmark return for the Part 6A product, or a class of Part 6A products, for the period.

Methods for determining return - general

(6) In specifying requirements mentioned in subsection (5), regulations made for the purposes of subsection (1) may:

(a) specify one or more methods for determining the actual return for a Part 6A product, or a class of Part 6A products, for a period; and

(b) specify one or more methods for determining the benchmark return for a Part 6A product, or a class of Part 6A products, for a period.

Methods for determining return - assumptions

(7) In specifying a method or methods mentioned in subsection (6), regulations made for the purposes of subsection (1) may:

(a) specify assumptions to be made in applying that method or methods; and

(b) allow APRA to determine, by legislative instrument, specified alternative assumptions that:

(i) are to be made in applying that method or methods; and

(ii) replace one or more of the assumptions mentioned in paragraph (a); and

(8) The assumptions mentioned in subsection (7) may include assumptions as to any of the following matters:

(a) rates of fees for a period;

(b) rates of taxation for a period;

Methods for determining return - regulations to replace assumptions

(9) Subsections (10) and (11) apply if:

(a) APRA makes a determination mentioned in paragraph (7)(b) that specifies an assumption (the earlier assumption ); and

(b) the earlier assumption is to be made in applying a method or methods in relation to a matter in respect of a period (the relevant period ).

(10) Regulations made for the purposes of subsection (1) may later specify an assumption (the later assumption ) that:

(a) is to be made in applying that method or methods in relation to that matter in respect of the relevant period; and

(b) replaces the earlier assumption.

(11) However, if the regulations mentioned in subsection (10) are made after the end of the relevant period, the later assumption must be the same as the earlier assumption.

Scope of regulations not limited

(12) Subsections (2) to (11) do not limit the scope of regulations that may be made for the purposes of subsection (1).

Incorporation by reference

(13) Despite subsection 14(2) of the Legislation Act 2003, regulations made for the purposes of subsection (1) may make provision in relation to a matter by applying, adopting or incorporating, with or without modification, any matter contained in an instrument or other writing as in force or existing from time to time.

60E Trustee to notify beneficiaries of fail assessment

(1) This section applies if:

(a) APRA gives the trustee or trustees of an entity a notification of a determination under subsection 60C(2); and

(b) the determination is that the requirement in subsection 60D(1) has not been met for a Part 6A product offered by the entity, in relation to a financial year.

(2) Each trustee of the entity must ensure that each beneficiary of the entity who holds the Part 6A product is given notice of the determination in accordance with subsections (3), (5) and (6).

(3) The notice must be given no later than:

(a) 28 days after APRA gave the notification; or

(b) if APRA or ASIC informs the trustee or trustees of the entity of a later day in accordance with subsection (4) - that later day.

(4) For the purposes of paragraph (3)(b), APRA or ASIC may, no later than 28 days after APRA gave the notification, inform the trustee or trustees of the entity in writing of a later day.

(5) The notice must consist of:

(a) unless paragraph (b) applies - both of the following:

(i) a letter sent to the beneficiary by pre-paid post or by courier to the address of the place of residence or business of the beneficiary last known to the trustee;

(ii) an electronic communication (within the meaning of the Corporations Act 2001) sent to the beneficiary to the nominated electronic address (within the meaning of that Act) in relation to the beneficiary; or

(b) if there is no nominated electronic address (within the meaning of that Act) in relation to the beneficiary - a letter sent to the beneficiary by pre-paid post or by courier to the address of the place of residence or business of the beneficiary last known to the trustee.

(6) The notice must:

(a) be in the form specified in regulations made for the purposes of this subsection; and

(b) contain information of a kind specified in regulations made for the purposes of this subsection that relates to:

(i) the ranking of Part 6A products according to relative fee levels, investment returns or any other criterion; or

(ii) any other matter (whether or not related to the matter mentioned in subparagraph (i)).

Note: Regulations made for the purposes of this subsection may refer to regulations made for the purposes of section 60J, which may specify formulas as a basis for ranking such products.

(7) Regulations made for the purposes of subsection (6) may specify kinds of information by applying, adopting or incorporating any matter contained in an instrument or other writing, as in force or existing from time to time, if the instrument or other writing is published on a website maintained by the Australian Taxation Office.

(8) Regulations made for the purposes of subsection (6) may specify information that is a standard text or standard texts.

(9) Subsection (8) does not limit the scope of regulations that may be made for the purposes of subsection (6).

60F Consequences of 2 consecutive fail assessments

Application of section

(1) Subsection (2) applies if both of the following conditions are satisfied:

(a) APRA gives the trustee or trustees of an entity a notification of a determination under subsection 60C(2) that the requirement in subsection 60D(1) has not been met for a Part 6A product offered by the entity, in relation to a financial year;

(b) APRA gives the trustee or trustees of the entity a notification (the second notification ) of another determination under subsection 60C(2) that the requirement in subsection 60D(1) has not been met for that Part 6A product, in relation to the next financial year.

No new beneficiaries for the Part 6A product

(2) Each trustee of the entity must ensure that:

(a) a person who, on the day when the second notification is given, is not a beneficiary of the entity does not become a beneficiary of the entity who holds the Part 6A product; and

(b) a person who, on that day, is a beneficiary of the entity who does not hold the Part 6A product does not start to hold the Part 6A product.

Exemption determination

(3) Subsection (2) does not apply in relation to a Part 6A product offered by an entity if a determination made by APRA under subsection (4) that specifies the Part 6A product and the entity is in force.

(4) APRA may make a determination, in writing, that specifies a Part 6A product offered by a specified entity, if APRA considers that requirements specified in regulations made for the purposes of this subsection have been met in relation to the Part 6A product and the entity.

(5) The determination comes into force on:

(a) the day on which the determination is made; or

(b) a later day specified in the determination.

(6) APRA must give a copy of the determination to the entity as soon as practicable after making it.

(7) A determination under subsection (4) is not a legislative instrument.

(8) To avoid doubt, if APRA makes a determination under subsection (4) in relation to a Part 6A product:

(a) APRA may later give notifications for the purposes of subsection (1) in relation to the Part 6A product in relation to financial years ending after APRA made the determination; and

(b) subsection (3) does not prevent subsection (2) from applying in relation to the Part 6A product as a result of those notifications.

Family law payment splits

(9) Subsection (2) does not apply in relation to:

(a) a person becoming a beneficiary of an entity who holds a Part 6A product, if this occurs as a result of a payment split (within the meaning of Part VIIIB of the Family Law Act 1975); or

(b) a person starting to hold a Part 6A product, if this occurs as a result of such a payment split.

Notifications to Fair Work Commission

(10) If:

(a) subsection (2) starts to apply in relation to a Part 6A product that is a MySuper product offered by an entity; or

(b) APRA makes a determination under subsection (4) in relation to a Part 6A product that is a MySuper product offered by an entity;

APRA must notify the Fair Work Commission in writing of that fact.

60G Multiple Part 6A products treated as one Part 6A product in certain circumstances

(1) This section applies if regulations made for the purposes of this subsection:

(a) specify one or more kinds of circumstances; and

(b) specify provisions of this Part in relation to each of those kinds of circumstances.

(2) In circumstances of a kind specified in the regulations, for the purposes of provisions of this Part specified in the regulations in relation to that kind of circumstances:

(a) treat 2 or more Part 6A products (the single Part 6A products ) as being one Part 6A product (the combined Part 6A product ); and

(b) treat anything that happened in relation to a single Part 6A product as having happened in relation to the combined Part 6A product; and

(3) Subsection (4) applies if a Part 6A product (the replaced product ) ceased to exist because it was incorporated into one or more single Part 6A products (whether or not the entity that offered the replaced productbefore it ceased to exist is the entity offering the single Part 6A product or any of the single Part 6A products).

(4) For the purposes of paragraph (2)(b), treat anything that happened in relation to the replaced product as having happened in relation to the single Part 6A product.

(5) Regulations made for the purposes of subsection (1) may:

(a) specify different provisions of this Part in relation to different kinds of circumstances; and

(b) in specifying provisions of this Part, specify all the provisions of this Part (apart from this section).

(6) Regulations made for the purposes of subsection (1) may do any of the following:

(a) specify requirements that depend on the exercise of a discretion by APRA;

(b) if the regulations specify requirements that depend on the exercise of such a discretion - specify matters that APRA must or may take into account in exercising that discretion;

(c) if the regulations specify requirements that depend on the exercise of such a discretion - allow APRA to make specified assumptions in exercising that discretion.

(7) Subsections (5) and (6) do not limit the scope of regulations made for the purposes of subsection (1).

60H Requirements for contributions to blocked fund not enforceable

(1) This section applies if there is a requirement in:

(a) a Commonwealth law or a Territory law; or

(b) a Commonwealth industrial award or a Territory industrial award;

that an employer make contributions to a specified superannuation fund (or to a superannuation fund in a specified class or group of superannuation funds) on behalf of an employee.

(2) This section also applies if there is a requirement in

(a) a State law; or

(b) a State industrial award;

that an employer make contributions to a specified superannuation fund (or to a superannuation fund in a specified class or group of superannuation funds) on behalf of an employee.

(3) The requirement is not enforceable to the extent that the employer cannot make contributions to the superannuation fund (or to any of those superannuation funds) on behalf of the employee because of section 60F (consequences of 2 consecutive fail assessments).

(4) In this section, the following terms have the same meaning as in the Superannuation Guarantee (Administration) Act 1992:

(a) Commonwealth industrial award ;

(b) employee ;

(d) State industrial award ;

(e) Territory industrial award .

60J Formulas for ranking products

(1) APRA may give the following, in writing, to the Australian Taxation Office in relation to a period or periods:

(a) a description of one or more methods for ranking Part 6A products;

(b) information relating to all Part 6A products that allows that method or those methods to be used to rank those Part 6A products.

(2) In giving the description mentioned in paragraph (1)(a), APRA may take into account regulations mentioned in subsection (3).

(3) Regulations made for the purposes of this section may:

(a) specify one or more formulas as a basis for ranking Part 6A products, or classes of Part 6A products, according to relative fee levels, investment returns or any other criterion; and

(b) specify one or more methods for ranking Part 6A products according to that formula or those formulas.

(4) As soon as practicable after receiving the information, the Commissioner of Taxation must ensure that the information, to the extent that it relates to Part 6A products that are MySuper products, is made available on a website maintained by the Commissioner of Taxation.

Note: If the disclosure of information is for the purposes of this Act, subsection 56(3) of the Australian Prudential Regulation Authority Act 1998 provides an exception to the secrecy offence in subsection 56(2) of that Act.

(5) For the purposes of subsection (4), the information may be made available by:

(a) making it available only in response to a query by a particular person; and

(b) making it available in the form of a ranked list or ranked lists of Part 6A products, or classes of Part 6A products.

(6) Subsection (5) does not limit the ways in which the information may be made available for the purposes of subsection (4).

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