The timing around applications for MySuper products could prove challenging for Australia’s superannuation sector, a Henry Davis York (HDY) partner has claimed.
HDY partner, specialising in superannuation, Anne MacNamara said while the timing of the MySuper draft legislation, released by Treasury yesterday, was consistent with an earlier announcement made by the Minister for Financial Services Bill Shorten, the timing framework contained in the draft Bill is a bit of a concern.
MacNamara said looking at the timing it appears that an industry participant can make an application for a MySuper product from 1 January 2013 or earlier, and then offer the product from 1 July 2013 if approved to do so.
However, she said participants cannot offer a MySuper product until they are authorised to do so, however, they have the added challenge that from 1 October 2013 they can only make super guarantee contributions to a MySuper product.
“So the window I think is going to be quite tight for offers of MySuper products. Effectively they are going to have to be ready to go, have their approvals lodged and hopefully approved by APRA [Australian Prudential Regulation Authority] if not prior to 1 July 2013 to have at least lodged the application prior to that date,” she said.
“Otherwise they can’t make a MySuper offering without the authorisation and they won’t be able to take the super guarantee contributions without it.”
MacNamara said another potential challenge to the timing is that while the MySuper draft legislation states that APRA has 60 days to issue the product authorisation, this in fact could extend as far as 120 days.
“So they [the government] are obviously allowing APRA a bigger window to actually process the authorisations,” she said.
“I really think that the message to the industry is you’ve got to be ready to go. I think that’s very challenging particularly given this is just the first exposure draft.”
The draft MySuper legislation provides guidelines on the definition for the products, the fee structure to which it must comply and the licensing regime for responsible entities.
It proposes changes to the existing Superannuation Industry (Supervision) Act 1993 and the Superannuation Guarantee (Administration) Act 1992.
The amendments are open for consultation and submissions should be made to Treasury by close of business on Thursday 13 October 2011.
The government intends to release further MySuper and Stronger Super legislation details in further tranches.
