New regulatory guidance has confirmed that funds transitioning over to MySuper will be expected to do so in a timely manner.
In its Prudential Practice Guide SPG 410 MySuper Transition (SPG 410), released yesterday, the Australian Prudential Regulation Authority (APRA) states: “APRA expects the attribution of accrued default amounts to a MySuper product would occur at the earliest opportunity possible, where it is in the best interests of beneficiaries to do so.”
It also says: “In exercising its powers and performing its duties in the best interest of members, an RSE [Registrable Superannuation Entity] licensee would ordinarily consider the timing of the transition as well as any change in the bundle of benefits that is to be assigned to each group of members as part of the transition.”
Australian Institute of Superannuation Trustees (AIST) project director David Haynes told InvestorDaily that the new guidance underlines the requirement that APRA is expecting funds to transfer member monies across sooner rather than later. “Funds shouldn’t be dawdling,” he said.
In a submission to a previous prudential practice guide, the AIST raised the issue of funds charging additional or duplicate fees to members whose new contributions were being directed into a MySuper product before their existing balance had been transferred.
There is a four-year transition period from 1 July this year and 1 July 2017 for funds to transition into the MySuper regime, and during that time some members could spend some time paying double fees, Mr Haynes said.
“Our position is the MySuper regime shouldn’t involve people paying two lots of administration fees. APRA hasn’t imposed a prohibition on this but they’ve said the onus should be on the fund to show why duplicate fees are in a member’s best interests,” he said.
“I think it would be difficult to show why an extra $100 per year for a tardy super fund would be in a member’s best interests,” he added.
SPS 410 also covers a few other matters that have been the subject of extensive discussion and engagement, Mr Haynes said, including the process that funds follow when they rebadge an existing default account as a MySuper option.
“Because one of the things that’s available by virtue of the MySuper prudential standard is there is a fast track mechanism available to the badging process,” he said.
But to qualify, funds need a MySuper product with identical investment strategies, investment fees, administration fees, and insurance cover and premiums, Mr Haynes said.
